My daughter loves to shop. In fact, her two love languages are shopping and someone is paying for it. Apparently, at least the shopping part is also a language of love for a lot of people. Adobe Analytics reported that between November 1 and 24 US consumers spent a whopping $77.4 billion online, which is an increase of 9.6% over the same time last year. In their report, Adobe Analytics reported that 21 of these 24 shopping days had over $3 billion in sales vs 16 days last year. Based on this early indication of sales Adobe Analytics is predicting an 8.4% increase year over year in this year’s holiday season.

The online spending surged through Thanksgiving weekend starting on Black Friday and ending the evening of Cyber Monday. Online sales on Black Friday broke all records as consumers spent $10.8 billion, an increase of 10% from 2023, and another $13.3 billion on Cyber Monday according to CSA (Chain Store Age).

These are huge increases in spending compared to the typically 2% to 5% year-over-year changes that we have seen in the past several years. We referenced earlier this year that the index of the University of Michigan’s Consumer Sentiment had a strong bounce in the first half of 2024 as respondents indicated more confidence in their finances and the economy. The index reached levels not seen since 2022.

An interesting new trend is consumers are seeking out smaller retailers. An AT&T Business Survey indicated that 74% of respondents believe that small businesses offer better or more unique holiday gift options. Surprisingly, boomers represented the largest demographic at 80% who were intent on shopping at smaller businesses. Gen X were at 77% followed by millennials at 70% and Gen Z at 65%. In the survey, respondents indicated they would still shop at smaller retailers even though the prices could be higher than in big box stores.

GoDaddy also had a similar study and indicated that 78% of respondents were more likely to shop at small retailers compared to last year. Unlike the AT&T survey, the Go Daddy survey indicated that 85% of Gen Z were more likely to shop at smaller retailers followed by millennials at 83%. Both reports support that people are expanding their shopping experience that is not driven by price.

Why do people want to seek out smaller retailers? Responses included better customer service and more unique and handmade products. Also, respondents indicated they want to support the smaller retailers with 71% stating they would shop there despite higher prices.

What Does This Mean to Me?

Consumer holiday spending is strong despite the sentiment index well below readings prior to the pandemic. It is encouraging that consumers are improving their confidence in the economy as indicated by kicking off the holiday retail online season with record sales.

Even with a strong economy, more people working in the history of this country, stable interest, and inflation rates, and multi-decade low unemployment, consumer sentiment remains well below pre-pandemic levels.

As strong as the start of holiday retail sales is, there is still more upside to economic growth and consumer-driven sales for 2025. If the economy continues into 2025 with similar economic dynamics, consumers will continue to improve their household finances by contributing to their retirement plans, paying down debt, and of course spending.

This is not news to institutional investors who have been bullish all year, driving up the major US indices to record levels. The MSCI ACWI ex-US index that targets coverage of approximately 85% of the global economy excluding the US continues to lag. The US free market economy continues to be the best and most productive society for individuals and businesses.

Here are the outstanding YTD returns of the major indices:

• NASDAQ: 31.15%

• S&P 500: 26.52%

• Mid Cap S&P 400: 18.35%

• Small Cap S&P 600: 13.95%

• MSCI ACWI ex US: 10.49%

Below is a chart illustrating the YTD returns of the major indices with NASDAQ leading in top performance.

All of us at Up Capital Management appreciate the opportunity to serve you with this Weekly UPdate and those that are clients of our financial planning and wealth management services. We look forward to another year together poking fun at the major media and analysts, deciphering market cycles, and sharing personal reflections. We hope you have as much fun with this as we do. Happy holidays to you and your family.