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Understanding the Holiday Consumer Spending Cycle

consumer spending money for holiday gifts

The holidays are a month behind us, but that doesn’t mean we aren’t still feeling their effects from a spending standpoint. While we may be finished with gift-buying, there are still ripples affecting wallets and bank accounts. Because of this, we feel it’s important to shed some light on the cycle of consumer spending that takes place throughout the winter.

Understanding this cycle is vital for not just consumers, but businesses, as it allows them to make informed spending decisions during and after the holidays. Let’s take a look at the big phases of this cycle.

Peak Holiday Spending Season

This is hands down the busiest shopping period of the year. Customers show up in droves to purchase gifts for their loved ones and take advantage of major sales.

  • Black Friday and Cyber Monday: We all know the drill. People celebrate Thanksgiving, take a nap, and brave the early morning crowds to take advantage of arguably the best deals of the year on televisions, kitchen appliances, clothes, and much more. Though the crowds have gotten a little less rowdy thanks to the prominence of online shopping deals, the high number of transactions remains the same.
  • Last-Minute Shopping: With the holidays slowly creeping up on people, they’re more likely to make impulsive purchases they would otherwise refrain from.
  • Emotional Spending Triggers: The festive atmosphere, social expectations, and emotional connections with people and places—also known as the holiday spirit—often drive people to make purchases and donations they didn’t plan on.

While buying gifts for loved ones brings joy, it’s important to avoid getting carried away. Overspending is a slippery slope. If you do happen to spend more than you planned, we’re always happy to help you rectify the situation with a personal loan.

The Aftermath of Consumer Spending (January)

This is the phase we’re in now, so pay extra attention. In the month or so following the holidays, there’s a dramatic shift in the way money is handled. US consumer spending patterns shift as returns, exchanges, and financial resolutions are made.

  • Returns and Exchanges: Sometimes, gifts simply don’t meet expectations. That, or they are duplicates. Whatever the reason, the timeframe following the holidays is rife with returns and exchanges.
  • Clearance Sales and Gift Card Redemptions: All that holiday inventory that went unpurchased during the gift-buying rush needs to be cleared out to make way for new items. To achieve this, many businesses introduce clearance sales with enticing pricetags. In addition, many purchases are made with gift cards that shoppers received from their loved ones. 
  • Financial Planning for the Year Ahead: Many people—likely you included—recognize that they just spent a large amount of money compared to other months, and want to take steps to counteract that spending. Besides, a new year has just begun. What better time to focus on planning and saving?

Factors Influencing Holiday Consumer Spending

There are several factors that contribute to how and when people spend their hard-earned money during the holidays. Let’s take a look at them to gain a better understanding of consumer spending.

  • Economic Conditions and Inflation: The economy is in a constant state of fluctuation. The effects of this impact businesses and individuals alike. Spending power and budgeting decisions often depend on the state of the economy. In times of recession, there’s generally less US consumer spending, and vice versa.
  • Social media and Influencer Marketing: The big social media platforms like TikTok—which recently went through its own period of uncertainty—play a significant role in driving buyer preferences and purchasing decisions. Influencers have a lot of, well, influence!
  • Online Shopping and Convenience: E-commerce now dominates holiday shopping, as we mentioned above, and why wouldn’t it? It offers the ability to do all your shopping without getting up from the sofa.

Bounce Back with Bay Country

Even the most frugal shoppers can need a little bit of help after the stress and financial whirlwind of the holiday season—after all, the average American spends over $900 when it’s all said and done. When you factor in not just gifts, but travel expenses, nights out on the town, decorations, and other holiday knick-knacks, the costs have added up. You need some way to bounce back from it all, and that’s okay.

At Bay Country Financial, we’re all too familiar with this holiday spending cycle and the need for a pick-me-up in its wake. Through a secured personal loan, that shock to your finances will feel like no more than a small spark—one that you can recover from easily. With amenable terms, fast approvals, and other borrower-friendly options, you’ll be back on your feet and ready to take on 2025. 

Never Let Your Holiday Spending Cripple You

Understanding the holiday consumer spending cycle is imperative for responsible spending. Though the actual holidays are behind us, we’re still feeling the effects they had on our finances. While this is normal, it’s still important to understand that planning and staying the course are necessary to ensure recovery from that time of increased spending. By recognizing the trends during peak season and the following January—and planning accordingly—you can take advantage of deals and avoid unwanted debt.

Keep all of these things in mind when planning your 2025 expenses, and revisit them later in the year when the big spending season begins to ramp up once again. And as always, get in touch if you need a helping hand in managing those expenses. We’re always happy to help, regardless of credit score!