Consumer economic worries aren’t holding back record spending spree ahead of ’23 winter holidays

In spite of their collective concerns over inflation and the economy, U.S. consumers spent at record levels over the traditional Thanksgiving weekend launch of the holiday shopping season with over 200 million shoppers making purchases both in-person and online.

The numbers blew by early projections from the National Retail Federation which had predicted 182 million consumers would engage in shopping activities from Thanksgiving Day through Cyber Monday.

“The five-day period between Thanksgiving and Cyber Monday represents some of the busiest shopping days of the year and reflects the continued resilience of consumers and strength of the economy,” said NRF President and CEO Matthew Shay in a Tuesday report. “Shoppers exceeded our expectations with a robust turnout. Retailers large and small were prepared to deliver safe, convenient and affordable shopping experiences with the products and services consumers needed, and at great prices.”

According to a post-weekend breakdown from Adobe Analytics, online shoppers spent a record $38 billion over the five-day period, an increase of nearly 8% over the same period last year. While the top online spending day was Cyber Monday, which saw $12.4 billion in purchases, the most ever for that day, Black Friday set its own record with $9.8 billion. During the peak transaction hour from 10 p.m. to 11 p.m. EST on Monday, online shoppers were spending $15.7 million every minute, per Adobe’s tracking.

The record spending was driven in part by record-high discounts, which ranged from peak electronics markdowns of 31%, computer deals of 24% off and apparel discounts that peaked at 23%. Discount levels over the five-day period mostly outstripped last year’s markdowns but some areas, like toys, saw some deal softening over 2022’s Cyber Week.

“The 2023 holiday shopping season began with a lot of uncertainty, as consumers shifted their spending to services, while dealing with rising costs across different facets of their lives,” said Vivek Pandya, lead analyst, Adobe Digital Insights in a press statement. “The record online spending across Cyber Week however, shows the impact that discounts can have on consumer demand, especially with quality products that drove a lot of impulse shopping.”

While the record Cyber Week spending volumes reflect a high level of consumer enthusiasm heading into the winter holiday season, their collective confidence in the economy has been mostly in decline in recent months and measuring well below pre-pandemic rates.

A Tuesday report from Wells Fargo economists notes consumer confidence ticked up in November, after three months of declines, but still came in at the second lowest reading of the year. Confidence data and spending levels have been starkly divergent for much of the year, according to the report, and the pre-holiday spending spree continues to reflect that gap.

“Despite consumers saying they are concerned about the economy, they have continued to spend as if it’s going out of style,” Wells Fargo economist wrote in their report. “In prior cycles, sentiment indicators and hard economic data haven’t necessarily moved one for one, but have tracked more closely.

“Even in the current macroeconomic environment, where inflation is starting to recede and give consumers more purchasing power back, this gap has persisted.”

The National Retail Federation reports shoppers spent an average of $321.41 on holiday-related items over the Thanksgiving weekend. Top spending categories over the five days were clothing and accessories; toys; gift cards; books and other media; and personal care.

“Over the course of the weekend, consumers were able to find great deals on holiday gifts and other items they wanted,” Prosper Executive Vice President of Strategy Phil Rist said in the NRF report. “This year is the first time personal care and beauty items were among the top five most popular gifts purchased over Thanksgiving weekend, with nearly one-quarter of shoppers purchasing these items.”

While the Cyber Week shopping data likely bodes well for retailers for the remainder of the winter holiday season, Wells Fargo economists note it may be a last gasp ahead of a spending slowdown early next year.

“Lower gasoline prices and slower goods inflation may be giving households the support they need to sustain a decent holiday sales season, but further labor market moderation may weigh on consumers’ capacity to spend early next year,” they wrote in Tuesday’s report.