TAMPA, Fla. — Is your holiday shopping list shorter this year, or are you going all out?
While economists predict people will spend some money this holiday season, University of South Florida economics instructor Michael Snipes said we’re not back to pre-pandemic levels.
“Consumer spending is going to be down a little bit this year," he said. "Probably better than 2020 and 2021, just because the economy, in general, is doing better than the previous two years, but we’re not yet back all the way to pre-pandemic levels."
Not to mention, everything seems to cost more.
Inflation is still near a 40-year high, and Carl Gould with 7 Stage Advisors estimates inflation has taken about $4,000 to $7,000 out of the average American family’s budget this year.
“Now is not the time to be running up your credit card debt,” Gould said.
Yet credit card reporting agency TransUnion reported that Americans’ credit card balances hit a record $866-billion in the third quarter of 2022, which is 19% higher than the same time last year. The main culprits? Gen Z and millennials.
“If wages are about the same, and wages are about the same as they were, inflation certainly is still around, the purchasing power is going to go down — you just can simply afford less stuff,” said Snipes.
And with the federal reserve raising interest rates throughout the year, Snipes said what you charge on the credit card this month may end up costing you even more than usual next year.
“If you have any kind of debt, whether it’s credit cards, student loans, mortgage, whatever the case may be, as interest rates go up, that debt becomes more and more expensive,” Snipes said.
If you are leaning on your credit card a little more than usual this month, Gould has some advice.
“The trick is, find where your statement date is, let’s say it’s the 20th, and make your purchases right after that, the 21st and the 22nd,” he said. “Because it won’t hit your account for another about 30 days, and then you’ll have 30 days to pay it off. So, it’s almost like a 60-day interest-free loan.”
But Gould said if you don't think you can pay it off in that time, it’s probably best to dial back on the purchase altogether.
He also suggested that when the primary market gets too expensive, head on over to the secondary market — also known as thrifting!
“There’s this entire market of secondhand stores, secondhand used goods stores lightly loved, lightly used, but they're top name brand,” he said.
Those deals can be found in brick-and-mortar or online.
