Apodaca: This year’s high prices drive consumers to tighten holiday purse strings

It’s beginning to look a lot like Christmas. A very expensive Christmas.

We haven’t even enjoyed our Thanksgiving turkeys yet, which, by the way, will also cost more because of bird flu, but this time of year we’re always looking ahead to Christmas. It’s the Super Bowl of consumer spending — a key indicator and important component of our overall economic health.

And like the Super Bowl, we get predictions galore on how it’s going to go.

In recent days I have read as many of the surveys and forecasts about this holiday season as I could find. Trust me, there are a lot, and this year they are all over the place. Some predict spending will be up, some down, others flat. One company’s pronouncement is notable for its sadly transparent sneakiness; I’ll come back to that. But underlying all the expectations, even the cheerier ones, are some definitively bah-humbug elements.

Take Gallup’s estimate of holiday spending patterns, for instance. It predicts that overall spending this season will be essentially the same as last year. Not bad, unless you ignore the caveat that the divide between the haves and have-nots appears to be widening.
In other words, people in lower income brackets will likely spend less than the year before, while more affluent consumers will spend more.

In its news release, Gallup also noted that the forecast “comes as inflation has crept back up to 3%, wage growth has dipped and economic uncertainty stemming from the government shutdown could be mounting.”

Or consider NerdWallet’s annual survey, in which it found that Americans will spend a collective $242 billion on gifts and another $311 billion on holiday travel this season. While that would be more than last year, the increase could be attributed, at least in part, to higher prices due to tariffs, it said.

More troubling still, the survey found that nearly one-third of respondents are still carrying debt from the last holiday season.

Even the closely watched annual holiday forecast by the National Retail Federation, which predicts that retail sales in November and December will rise by 3.7% to 4.2% and will top $1 trillion for the first time, had some cautionary notes.

Those include less robust seasonal hiring trends and delays in federal spending, leading to a loss in private-sector income. Consumers will be on a sharp lookout for discounts, which could put retailers in a bind as they try to absorb anticipated tariff costs. Compounding that is a weaker dollar, which also makes imported goods more expensive.

Some forecasts don’t even expect holiday sales to increase over last year. PwC’s holiday survey, for example, found that consumers’ seasonal spending will decline by 5%, with respondents citing higher prices, tariffs, and the overall increased cost of living as factors. Indeed, pessimism about the future seemed to be a constant among all the surveys and forecasts.

One of the bleaker perspectives was Deloitte’s holiday retail survey, which found that 77% of respondents expected higher prices on holiday goods, and 57% expected the economy to weaken in the next six months. It was the most negative outlook since the firm began tracking economic sentiment in 1997, it said.

I could go on but the point is clear. Zoom out, and the picture looks OK, but zoom in and the flaws come into focus.
Or don’t bother to closely examine the picture at all, as one major retailer appears to hope for with its suspiciously optimistic report about Thanksgiving — a report that would be funny if it wasn’t so grim.

Every year Walmart publicizes its Thanksgiving meal basket, which it says includes the makings for a 10-person feast. Walmart announced the price of this year’s basket is down 25% from the 2024 offering. Sure sounds like great news, but how could this be when turkey prices and the cost of many other holiday staples are increasing?

According to reporting by multiple media outlets, what Walmart failed to point out is that the 2025 basket is significantly smaller— with fewer items and, in some cases, reduced portions — which presents us with an almost Dickensian-level of dark absurdity. I’m picturing Oliver Twist pleading, “Please sir, I want some more.”

So what about our local economy?

Deloitte, in its survey, found that Los Angeles area shoppers were even more pessimistic than the nation as a whole this year, with three-quarters of the region’s survey respondents expecting higher prices on holiday goods, and 62% expecting the economy to weaken in the year ahead, nearly twice as many as a year earlier.

As for Orange County, generally speaking our economy tracks with trends seen in the nation as a whole. But our economy has also shown resilience in times past. Broader economic troubles and trends frequently land a little softer here, although our high housing costs are a continuing challenge. How any of that will translate into holiday sales and beyond remains to be seen.

Whatever the final numbers tell us about this holiday season, it’s impossible not to experience sticker shock on a regular basis these days. That shock registers whether it’s on a trip to the market for “a few things” that ends up in the triple digits or when checking out a Christmas wish-list item. I even read that prices of artificial Christmas trees will be an eye-popping 10% to 20% higher this year.

Like the Walmart basket, Santa’s sleigh might be somewhat lighter this year.