Trimming holiday spending, getting ready for markdowns

Photo by Rebecca Campbell, Unsplash

Grinch-like inflation remains high, and American consumers are planning to trim their holiday-season spending and giving. “Households, retailers and charities nationwide, feeling the pinch of inflation, are bracing for a humbug holiday season,” report Rachel Wolfe and Jon Hilsenrath of The Wall Street Journal.

With that blue news, Americans should know it’s possible that the economy can shift gears and individuals may change their plans. “Economists have found that households don’t always do what they say on survey answers,” Wolfe and Hilsenrath write. “A drop in gasoline and food prices or a bump in the stock market could boost holiday spending. The best news would likely be a measure of relief from inflation.”

Retail inventories are higher than in the past two years, so companies are finding some surplus. The Toy Association, “which represents companies responsible for 96% of all toys sold in the U.S., forecasts a season of price cuts. Apparel prices also are headed down, according to DataWeave Inc., an analytics company that tracks online prices for thousands of retail items,” Wolfe and Hilsenrath report.

If there is an escape from inflation pricing, it will come in the form of markdowns. “After raising prices for months, some firms are betting that markdowns will buck up sales and clear inventory.” Target Corp. executives said last week that consumers have pulled back on spending, sapping sales and profits, and prompting the company to plan discounts to clear out unwanted inventory during the holidays.