High Inflation Expected to Shrink US Year-End Spending... Gifts per Person Likely to Drop from 16 to 9

[Photo by Xinhua News Agency]

[Asia Economy Reporter Park Byung-hee] The Wall Street Journal (WSJ) reported on the 20th (local time) that Americans, stressed by soaring inflation, are expected to reduce their year-end gift purchases and donations this year.

With the consumer price index expected to rise over 6% this year-end, analysts predict that the year-end consumption market will not be vibrant.

Since World War II, there have been 11 instances when the U.S. year-end consumer price inflation exceeded 6%. According to the U.S. Department of Commerce, when inflation was low, the average increase in year-end consumer spending was 3.4%, but during the 11 year-ends when inflation exceeded 6%, the spending increase was only 1.2%.

Although the U.S. consumer price inflation rate has recently slowed, it still recorded a high level of 7.7% in October. Therefore, this year is likely to be the 12th year when year-end inflation exceeds 6%.

Considering the U.S. inflation rate, the increase in consumer spending exceeded 8% last year, but this year it has remained below 2% through September.

Various surveys have already shown that consumers plan to tighten their belts this year-end.

In a survey conducted by Deloitte in September with 5,000 respondents, participants said they plan to purchase an average of 9 gifts this year-end, a significant decrease from 16 gifts last year. Deloitte predicted that household spending would decrease from $1,463 last year to $1,455 this year.

The Conference Board survey also predicted that individual gift spending would decrease from $648 last year to $613 this year.

Year-end donations are also expected to decline. Although the economic slowdown has increased the number of people in need, the helping hands are expected to decrease, making this winter colder than ever for low-income groups.

The nonprofit organization GivingTuesday reported that donations from donors giving less than $500 sharply declined in the second quarter, causing a steep drop in fundraising. GivingTuesday explained that although the total donation amount increased by 6.2% at the time, it did not keep pace with the inflation rate exceeding 8%.

WSJ analyzed that year-end shopping season consumption might be more active than predicted, citing recent declines in gasoline and grocery prices and a strong stock market as factors that could boost year-end spending.

Companies that had raised product prices in response to rising raw material costs might lower prices and reduce inventory as the year-end approaches.

The Toy Association, representing 96% of U.S. toy companies, expects year-end price discounts, and clothing companies also appear to be preparing for sales discounts. Gap is expected to offer discounts of up to 60%, which were not seen last year.

Large retailer Target announced last week that sales and profits are declining as consumers cut back on spending, and plans to reduce unwanted inventory at year-end through discount sales.

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