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Last Christmas…OR the First COVID Christmas

Last Christmas…OR the First COVID Christmas

December 21, 2021
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Last Christmas George Michael might have given his heart, but US consumers bought and gave a whole bunch of stuff. In the chart below, provided to us by Adobe Digital Assets and US Global Investors, you can see that online sales for both the Black Friday and Cyber Monday shopping holidays have been trending up steadily over the last several years.


Surprisingly to many people, this even includes calendar year 2020, when the COVID-19 coronavirus pandemic had significantly impacted the economy and created job losses, that we were still in the early days of recovering from.

The Cares Act provided direct stimulus payments to individuals and families, and enhanced unemployment benefits that kept many people afloat. As a matter fact, the national savings rate spiked to the highest level we had ever seen, giving people the resources to continue to spend at record levels throughout last year’s holiday season.


So, with the economy continuing to recover and more jobs available than there are workers to fill them, why did the holiday retail sales numbers dip slightly this year? That is a great question, and a very important one, as consumer spending accounts for more than 2/3 of US economic activity.


The anecdotal evidence points towards Americans not waiting until the holiday season to start their Christmas shopping. US shoppers were flush with cash from a second and third round of direct stimulus payments, and enhanced unemployment benefits that did not stop until June or September, depending on the state in which you lived. It appears that many people started their Christmas shopping as early as August or September.


It would also seem that many retailers obliged them by starting significant discounts earlier than usual. Overall, Americans spent 12% more money shopping online during the month of November ‘21 than they did the previous year. And when looking at total retail sales over the last 90 days, many retailers are still reporting a record-breaking, albeit extended shopping season.


As you can see in the chart below, there was an initial and substantial slowdown in consumer spending as the pandemic hit. However, the combination of fiscal stimulus from the US government and monetary stimulus from the Federal Reserve Bank quickly gave people the confidence to spend again. Based on trendline consumption over the last five years, you can see that not only did we recover, but exceeded the pre-Covid trend.

The big question going forward is whether people, without additional stimulus checks or help from the US government, and faced with substantially higher cost of goods and services due to inflation continue to spend at this level?


Nearly 20 years ago, shortly after the Dot.Com/9-11 economic downturn, I heard economist Dr. David Kelly speak at a conference and he admired the resilience and tenacity of the US consumer stating, “I marvel that US consumers not only continue to spend money in the face of economic uncertainty, but that they actually believe they need more stuff!”.


We will continue to monitor these trends as they have the ability to impact the economy and the markets in the future. We wanted to share this interesting data with you, to help you be informed as we all continue “Moving Life Forward”.


The views stated are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.