— This is the script of CNBC’s financial news report for China’s CCTV on December 8, 2022.
According to CNBC All-America Economic Survey, American shoppers tend to be very cautious this holiday shopping season.
The history data shows that, when the pandemic hits in 2020, the intended spending drops to 886 dollars. With stimulus, cash, and savings, the number exceeds 1000 in 2021. During that time, President Biden proposed a $1.9 trillion Coronavirus relief package, including stimulus checks for most Americans. Compared to last year, the number is down about 10% to $907 this year.
In addition, the survey also showed that only 11 percent said they would spend more than last year, while 41 percent said they would spend less than last year, which marks the most cautious holiday season since 2013.
When it comes to the reasons behind it, inflation remains the key. Compared with 9% last year, 15% of respondents voted for this option this year. Doug McMillon, CEO of Walmart, also mentioned the pressure of inflation on consumers in an interview with CNBC.
Doug McMillon, Walmart CEO
“We’ve got some customers who are more budget conscious that have been under inflation pressure now for months. They’re being selective on general merchandise being really thoughtful about what they do with electronics and toys.”
The good news is that the percentage of employees being paid less is decreasing. Data from the U.S. Department of Labor showed that U.S. average hourly earnings for private-sector workers rose 0.6% in November, recording the highest monthly wage growth since January. On an annual basis, nominal wages rose 5.1% from the same period in 2021. This potentially helps to offset some of the downbeat spending intentions.
No matter what the state of one’s personal finances may be, many Americans believe that the U.S. economy is in poor shape. 44% think the economy will get worse in the next 12 months and 65% believe we are in or will soon be in recession.
In addition, the chief executives of two major U.S. banks, Wells Fargo and Bank of America, also expect a recession in 2023.
Brian Moynihan, CEO of Bank of America’s, said that after two years of pandemic-fueled, double-digit growth in Bank of America card volume, the rate of growth is slowing. While retail payments surged 11% so far this year to nearly $4 trillion, that increase obscures a slowdown that began in recent weeks: November spending rose just 5%. Wells Fargo shared the similar story. Wells Fargo CEO Charlie Scharf cited shrinking growth in credit-card spending and said, “There is a slowdown happening, there’s no question about it.”
We could tell from these bank leaders’ sharing that the Federal Reserve’s campaign to subdue inflation by raising borrowing costs is beginning to affect consumer behavior. As a result of pandemic stimulus checks, wage increases, and low unemployment, American consumers have supported the economy, but that appears to be changing in the near future. As we approach 2023, this could also impact corporate profits.
