Two the Point — Holiday Resilience: Navigating Consumer Spending Dynamics

As we quickly approach the culmination of a dynamic year, we explore the intricacies of holiday spending and offer a nuanced examination of the current economic landscape. This upward trajectory in consumer expenditure, even amidst the backdrop of heightened interest rates, underscores the resilience of the American consumer.

A key driver behind this resilience lies in the strategic consumer financial decisions. Having secured historically low mortgage rates, households have fortified their balance sheets against the impact of the recent interest rate hikes. Unlike the federal government, consumers have judiciously termed out their significant loans, particularly in the housing market. This prudent maneuver shields them from the immediate effects of rising rates and serves as a buffer in sustaining their spending habits.

Amidst the holiday cheer, concerns about consumers being “tapped out” persist. However, a deeper dive into the data on revolving credit offers a more optimistic perspective.

Key Takeaways:

  • Holiday spending in 2023 exhibits a robust year-over-year growth of over 200 basis points.
  • Consumers, fortified by historically low mortgage rates, remain resilient in the face of rising interest rates. 
  • Strategic financial decisions, such as terming out significant loans, contribute to the sustained strength in consumer spending.
  • Revolving credit, though reaching new highs, is still below the 2012-2019 average, suggesting potential for further expansion.
  • Ongoing vigilance on the labor market is essential to monitor potential risks to the consumer-driven economic firewall.

In this intricate tapestry of economic dynamics, our commitment is to provide detailed insights and vigilant monitoring to guide you through these currents. As always, if you have any questions or would like a personal discussion tailored to your financial objectives, we are here to assist you on your wealth management journey.



WSFS Bank is committed to digital accessibility.