Retailers are paying closer attention to factors that influence consumers' debt load, including rising interest rates and the resumption of student loan payments.A person walks past a Christmas lighting display in a window at Bulbs NYC lighting store near Union Square in New York City, Dec. 20, 2022.
But Bhave said the American consumer has defied "doom and gloom" before and could do that once again. Consumers have kept shelling out, fueled by post-Covid revenge spending and a hunger for experiences, such as tickets to Taylor Swift concerts. They most recently surprised Wall Street withAlready, investors and retailers have paid closer attention to credit card payments — and some have cited them as a concern.
Consumers plan to spend $875 on average on gifts, decorations, food and other seasonal purchases this holiday season, according to a survey of roughly 8,100 people conducted in early October by Prosper Insights & Analytics for the National Retail Federation, a large industry trade group. That's $42 more than consumers said they planned to spend in the year-ago period and about the same as the average holiday budget over the past five years.
Yet she said it's unclear if shoppers may make riskier moves during the peak holiday season, such as racking up higher credit card balances than they can afford or borrowing in other ways, such as through buy now, pay later. Those plans, through companies such as Klarna and Affirm, break up payments into installments but can come with fees if not paid on time.
Bhave, the Bank of America economist, said credit card delinquencies, not debt, are a better measure of consumer health. Inflation has lifted total spending, but shoppers have also felt more comfortable spending, with higher wages and stable jobs. Those factors contributed to total credit card debt"It's the labor market, the labor market, the labor market," he said. "That's by far the most important thing when it comes to consumer spending.
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