Sluggish employment: U.S. holiday season consumer spending growth may hit its lowest since the pandemic.

The United States is showing more signs of a consumer-led economic slowdown. According to Deloitte’s latest forecast report, US holiday season sales from this November to next January are expected to grow only 2.9% to 3.4%, significantly lower than last year's 4.2% increase and marking the slowest growth rate since the pandemic. This means total sales will increase from last year’s $1.57 trillion to between $1.61 and $1.62 trillion. Since consumer spending accounts for about 68% of US GDP, the slowdown in holiday sales is an important warning signal ahead of Black Friday and the Christmas shopping season. At the same time, the US labor market is also sending warning signals. On Tuesday, the US Department of Labor made a historic downward revision to its annual employment data as of March this year, suggesting the business cycle may have peaked in the spring of 2024. These developments all point in one direction: consumers, the engine of the US economy, are losing spending momentum. Total Sales Rise, But It Doesn’t Mean... Although growth is slowing, Deloitte still predicts total sales will see a modest increase. Brian McCarthy, a Deloitte partner, noted that persistent inflation has driven up the prices of goods, which will be reflected in overall holiday spending. He added: “If consumers take tariffs and other inflationary costs into account, they may once again make purchases earlier than usual.” This “early buying” behavior may support sales data in the short term but does not represent a fundamental increase in consumer demand. In reality, multiple factors are squeezing consumers’ budgets. Shoppers must contend with high borrowing costs, depleted savings, maxed-out credit card debt, and ongoing inflationary pressure. Widespread macroeconomic uncertainty has also dampened consumer confidence. A recent PwC survey forecast shows that Gen Z shoppers will have the steepest drop in holiday season spending among all age groups. Uncertainty is also reflected at the corporate level, as consumer companies including Best Buy, Target, Walmart, Macy’s, and Mattel all issued mixed earnings guidance heading into the back-to-school season this fall. Large Downward Revision of Employment Data Sparks Recession Fears A key source of macroeconomic uncertainty is the true state of the labor market. The US Bureau of Labor Statistics (BLS) admitted that its previously published figures on new job positions were significantly off; after revisions, the number of jobs dropped by a record 911,000. This historic downward revision prompted a warning from Bloomberg Chief Economist Anna Wong. She pointed out that these adjustments strongly suggest the US economy “very likely entered a recession at the end of last year.” She analyzed that after the Fed’s aggressive rate cuts at the end of 2024, the economy and labor market briefly rebounded, but in the first quarter of this year, as the Fed paused further rate cuts, the labor market may slide back into a slump in the first half of 2025. Anna Wong’s conclusion: “We believe the economy is either still in recession, or at the very beginning of a new business cycle.” Risk warning and disclaimer The market has risks, investment needs caution. This article does not constitute personal investment advice and does not take into account individual users’ specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific situation. Investing based on this is at your own risk.