Financing Christmas Part 1: Consumer Spending

Exploring how digital trends and regional variations shape Christmas spending and its impact on the global economy.

How does Christmas spending impact the economy?

The Christmas season, marked by a surge in consumer spending, plays a crucial role in the global economy. This period often dictates the financial health of the retail sector and provides valuable insights into consumer confidence and economic trends. As businesses gear up for the festive rush, understanding these spending patterns becomes vital for market analysts and investors.

The digital revolution has profoundly transformed the Christmas shopping landscape. E-commerce advances have revolutionized not only convenience but also consumer expectations and spending habits. This transformation is evident in the exponential growth of online sales, particularly during key events like Black Friday and Cyber Monday. Adobe Analytics highlighted this trend with a record-breaking $9.12 billion in online sales during Black Friday 2022, a significant increase from previous years. Cyber Monday further underscores this shift, consistently outperforming Black Friday in terms of online sales.

Despite the surge in digital shopping, traditional retail sectors such as electronics and clothing maintain a strong presence in holiday spending. The Consumer Technology Association reported a 27% increase in consumer electronics sales during the 2022 holiday season. Similarly, the National Retail Federation noted a 5.9% increase in apparel and accessories sales, indicating the sustained relevance of these sectors.

Shopping mall stock image
Despite the strong competition from online retailers, business is doing quite well.

Concurrently, there's been a notable shift towards experiential spending. Deloitte's 2022 Holiday Retail Survey found that consumers are allocating about 40% of their holiday budget to experiences like travel and entertainment. This trend signifies a shift in consumer priorities, favoring the creation of memories over the acquisition of material possessions.

Moreover, the growing preference for digital platforms reflects a change in consumer values. A 2022 PwC study revealed that over 60% of consumers preferred online shopping, attracted by a wider variety of products and the ease of price comparison. This preference is reshaping the retail industry, prompting traditional brick-and-mortar stores to adapt to a digital-first consumer base. This multifaceted evolution in consumer spending patterns illustrates the dynamic nature of the retail sector in response to technological advancements and changing consumer preferences.

Regional Spending Patterns

The landscape of Christmas spending across the globe presents a diverse and culturally rich tapestry, with each region offering a unique narrative on how it celebrates and spends during the holiday season.

In the United States, the holiday season is a critical period for retailers, with the National Retail Federation (NRF) reporting that holiday sales in 2022 accounted for about 20% of total retail sales for the year, surpassing $800 billion. The season is heralded by Black Friday, a major shopping event in the US. In 2022, over 155 million Americans participated in Black Friday shopping, demonstrating the cultural and economic significance of this period.

Black Friday madness
Black Friday, with prices like that you have to go crazy... not. (Photo: Cris Faga)

Europe, on the other hand, exhibits a more diverse and spread-out spending pattern. The tradition of Christmas markets, particularly prevalent in countries like Germany and the United Kingdom, plays a significant role in local economies. For instance, Germany's Christmas markets brought in approximately €5 billion in 2022, according to the Federation of German Retailers. The UK also saw considerable spending, with the Centre for Retail Research noting that Christmas expenditures amounted to around £78 billion in 2022, characterized by a gradual increase rather than a single-day surge.

Meanwhile, emerging economies are experiencing their own trends in Christmas spending. In countries like India and Brazil, a surge in spending is being driven by a growing middle class and an increase in e-commerce adoption. Brazil reported a 5.5% increase in Christmas spending in 2022 compared to the previous year, as highlighted by the Brazilian Retail and Consumer Society. India saw a significant boost in online sales, with festive season sales in 2022 contributing to a 30% increase in e-commerce sales, according to the Indian Retailers Association.

These regional variations in Christmas spending not only reflect the economic and cultural characteristics of each area but also underscore the global impact of the holiday season on consumer behavior and retail economics.

Christmas Spending As An Economic Indicator

Christmas spending is a critical economic indicator, with the National Retail Federation reporting an 8.3% increase in US holiday retail sales in 2021, amounting to over $789 billion. This surge in spending, amidst challenging economic conditions, mirrors broader economic strength and consumer resilience.

Santa must be a rich man.
Christmas, the money-making machine (Photo: Sean Locke)

Deloitte's 2022 research further underscores this trend, showing a correlation between higher GDP growth rates and increased consumer spending during the holiday season. Consumer sentiment, as measured by the University of Michigan’s index, also plays a pivotal role, directly impacting holiday spending patterns. Major retailers like Amazon and Walmart typically record their highest earnings in this period, highlighting the season's significance in economic analysis and forecasting.


Read the whole series:

  1. Financing Christmas Part 1: Consumer Spending
  2. Financing Christmas Part 2: The Santa Claus Rally
  3. Financing Christmas Part 3: The Christmas Spirit In Action

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