COVID doesn’t shut down spending over holidays in Delaware

By Logan B. Anderson
Posted 1/6/22

While new cases of COVID-19 surged during the holiday season, so did consumer spending.

Retailers, both online and in brick-and-mortar shops, saw a boost in shopping from Nov. 1 through Christmas Eve.

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COVID doesn’t shut down spending over holidays in Delaware

Posted

While new cases of COVID-19 surged during the holiday season, so did consumer spending.
Retailers, both online and in brick-and-mortar shops, saw a boost in shopping from Nov. 1 through Christmas Eve.

Notably, online sales grew 11% compared to the same period in 2020, according to Mastercard’s SpendingPulse report. The credit card company measures in-store and online retail sales across all forms of payment each year and publishes its results.

“Shoppers were eager to secure their gifts ahead of the retail rush, with conversations surrounding supply chain and labor supply issues sending consumers online and to stores in droves,” said Steve Sadove, senior adviser for Mastercard and former CEO and chairman of Saks Inc. “Consumers splurged throughout the season, with apparel and department stores experiencing strong growth, as shoppers sought to put their best-dressed foot forward.”

Mastercard’s figures show that total retail sales, excluding automobiles, grew 8.5% from 2020 and 10.7% compared to 2019.

Local figures won’t be available until next month, but James Butkiewicz, professor of economics at the University of Delaware, said data like SpendingPulse “indicate(s) very strong holiday sales, including at brick-and-mortar outlets.”

Mastercard’s tracking also showed that consumers shopped early, continuing a key trend from 2020. Thanksgiving weekend remained a shopping tradition, with Black Friday being the top spending day of the 2021 holiday season. Compared to 2020, consumers drove shopping up 14.1% that day. Online shopping saw consistent growth at 4.9% the day after Thanksgiving, and in-store sales rebounded 16.5%.

Additionally, the SpendingPulse report noted that the jewelry sector experienced one of the strongest rises of the 2021 season.

On Wednesday, the National Retail Federation released its consumer tracking report for November, showing similar increases. November sales — excluding automobile dealers, gasoline stations and restaurants — were up 14.8% year over year, and NRF believes that holiday sales during the two months were on track to grow as much as 11.5% over 2020.

NRF’s chief economist, Jack Kleinhenz, said that, though the COVID-19 pandemic is worrisome, it’s unlikely to lead to shutdowns or slowdowns in the immediate future.

“Even with the experience of the past two years, there is no model that can predict how the economy responds to a pandemic,” Mr. Kleinhenz said. “What we have learned is that each successive variant has slowed down the economy but that the degree of slowdown has been less.”

Looking ahead, supply chain issues and inflation seem to be on top of economists’ minds.
“Indications are that conditions are improving, but problems will continue throughout the year,” Mr. Butkiewicz said. “One item I have ordered has a monthslong backlog, and I expect to wait for several more months to receive it. Problems such as a shortage of workers such as truck drivers will not be resolved quickly, so supply chain issues will continue through 2022, likely improving throughout the year.”

NRF officials worry that inflation will become a “self-fulfilling prophecy.”

“Especially as workers (see) higher prices for everyday products like groceries, they may demand higher wages that force employers to increase prices,” Mr. Kleinhenz said.

Inflation as measured by the federal personal consumption index was up 5.7% in November, the highest in nearly 40 years, and a Federal Reserve Bank of New York survey shows that consumers expect inflation to grow 6% over the next year. But the same consumers expect only 4% inflation over the next three years, as price increases slow, NRF leaders said.
Mr. Butkiewicz is hoping that the pandemic will become more controlled and that life can return to something close to what it was before March 2020.

“Economic forecasts are being reduced due to restrictions and shutdowns due to the omicron variant. The early evidence is that the spike in infections will be followed by an equally rapid drop. If the drop occurs and no new variant emerges, the pandemic may be far less serious by spring.

“If life returns to something approaching normal, I expect a strong rebound for the summer and fall months and possibly through the end of the year,” he said.