Inflation Hits US...Less Buying and Reduced Donations by Year-End

"Consumer Price Anxiety at 2008 Financial Crisis Level"

(Photo by Reuters)

[Asia Economy Reporter Yujin Cho] Due to soaring prices in the United States, both individuals and businesses are expected to reduce consumption and donations during the year-end shopping season, including Christmas. This is a result of consumer sentiment deteriorating more than ever amid persistently high inflation and a halt in liquidity supply caused by aggressive tightening measures.

According to the Wall Street Journal (WSJ) on the 20th (local time), U.S. consumers and companies have scaled back their spending plans on gifts, donations, and events for Christmas and the year-end holiday season.

WSJ cited a survey by consulting firm Deloitte, which predicted that the average number of gifts purchased by consumers during this year’s holiday shopping season, including Christmas, will drop significantly to 9 from 16 last year. The total expected household expenditure is forecasted to decrease slightly from $1,463 last year to $1,455.

Thomas Tighe, CEO of Direct Relief, an international nonprofit that donates $2 billion annually to medical institutions, said, "Expectations for this year’s donation season are not high."

WSJ introduced the case of the Holtphillip family living in Miami, Florida, highlighting that U.S. consumers’ anxiety over inflation is more severe than ever.

The Phillip couple, who usually placed Christmas stockings and gift bundles by their three children’s beds on Christmas Eve, decided to skip this tradition this year. The monthly rent for their apartment jumped from $1,365 last year to $2,600 this year, increasing financial pressure and forcing them to tighten their belts.

The University of Michigan recently analyzed that the consumer sentiment index over the past six months has deteriorated to a level comparable to the 2008 subprime mortgage financial crisis and record unemployment rates.

This year, monthly inflation rates have outpaced wage increases and risen rapidly, with high inflation lasting longer than initially expected by the market. Despite signs of a cooling labor market and inflation, the cost of living continues to unsettle consumers, WSJ reported.

The Conference Board, a private U.S. economic research organization that releases monthly consumer confidence indices, forecasted that U.S. consumers will spend $618 on gifts this year-end. Although this is a slight decrease from $648 last year, the number of goods that can be purchased with the same amount is expected to drop significantly due to soaring prices.

The Conference Board predicted that spending in categories such as furniture, home appliances, jewelry, equipment, and decorations will see the largest declines.

For middle-class and lower-income households burdened by rising grocery, energy prices, and housing costs, essential expenses may impact gift purchases. According to a survey conducted by the U.S. Census Bureau on households earlier last month, 41% of Americans (approximately 95 million people) reported difficulty managing essential household expenses. This marks a significant increase from 29% the previous year.

In an August survey by consumer finance statistics website Bankrate of 2,451 adults, 84% of year-end shoppers said they plan to reduce spending by using discount coupons, cutting down their shopping lists, or seeking cheaper brands.

With sluggish consumption expected, major toy and fashion companies are planning large discount events to clear inventory. U.S. fashion company Gap has increased discount benefits up to 60%.

However, small business owners who cannot afford to compete with large discount sales are expected to suffer. Kerry Pierce, owner of a toy store in Alberquerque, North Carolina, expressed concern that unlike last year’s strong sales, this year’s sales will inevitably be hit due to a decrease in both online and offline shoppers.

This content was produced with the assistance of AI translation services.