Spending Surges Giving Dips: Americans displayed a penchant for spending during the recent shopping extravaganzas of Black Friday and Cyber Monday, setting records with billions of dollars flowing into the retail sector. However, a contrasting trend emerged on Giving Tuesday, a day dedicated to charitable contributions.
While the total amount donated reached $3.1 billion, marking a modest 0.6% increase from 2022, the number of participating Americans dropped by 10% to approximately 34 million, according to data from GivingTuesday Data Commons shared.
GivingTuesday, established in 2012 by the 92nd Street Y in New York City and the United Nations Foundation, aims to foster a culture of giving and inspire generosity on the first Tuesday after Thanksgiving. Despite its positive mission, the decline in participation has raised concerns and aligns with broader trends seen in philanthropy.
National Retail Federation: Over 60% of Americans, or 200 million individuals, shopped online or in-person from Thanksgiving to Cyber Monday, known as “Cyber Week.” Adobe Analytics reported record online spending of $9.8 billion on Black Friday and $12.4 billion on Cyber Monday, up 7.5% and 9.6% from 2022.
The decline in Giving Tuesday’s participation reflects a larger trend impacting charitable organizations. A report by Giving USA from June revealed that Americans are contributing the lowest percentage of their disposable income since 1995. In 2022, Americans donated 1.7% of their disposable income, a decrease of 3.4% from 2021, totaling $499.3 billion. Adjusted for inflation, this represents a substantial decline of 10.5%.
Also Read: Cyber Monday Cash Splash: Online Spending Hits Record $12 Billion Amid Bargain Bonanza
Economic challenges, including the Federal Reserve’s rapid interest rate hikes and inflation at 3.2% over the last 12 months, contribute to the uncertainty. The effects of the ongoing pandemic and layoffs in certain sectors may also dampen the spirit of generosity among Americans.
Neil Saunders, managing director of GlobalData Retail, highlighted the nuances of the spending trends, pointing out that a significant portion of Black Friday and Cyber Monday purchases were made on credit, particularly through Buy Now, Pay Later schemes. Cyber Monday saw a 43% increase in such purchases from the previous year.
Saunders suggested that the context around the spending trends paints a picture of consumers who may not be entirely financially robust and could be facing struggles. Despite these economic challenges, the United States remains one of the most generous countries, according to the Charities Aid Foundation’s 2023 World Giving Index, indicating that 76% of Americans help strangers, 61% donate money to charitable causes, and 38% volunteer.
In the face of economic uncertainty, the balance between consumer spending and charitable giving becomes a focal point, prompting reflections on whether this trend is a momentary blip or indicative of a more prolonged shift in the American mindset.
Our Reader’s Queries
What causes spending to increase?
Consumer spending is primarily influenced by income and employment. Individuals with stable wages are more likely to make discretionary purchases, which in turn drives demand. Additional factors that impact consumer spending include prices, interest rates, and overall consumer confidence. By considering these factors, businesses can better understand and anticipate consumer behavior.
What is the consumer spending trend in 2023?
Consumer spending has increased, albeit at a slower pace than in the past. In June 2023, growth was 5% year over year, compared to 9% in June 2022. However, the reason for the slowdown is not due to a decrease in purchases, but rather a decrease in the amount paid for those purchases.
Why is consumer spending down?
Next year, the combination of slower wage growth and the resumption of student loan repayments for millions of Americans could lead to a decrease in spending. This, coupled with concerns that the economy may slide into recession in early 2024, could result in households being hesitant to spend and instead choosing to save.
What is the consumer sentiment in 2023?
In December 2023, the Consumer Sentiment Index in the United States rose to 69.7, marking an improvement from the previous month. This index is standardized to a value of 100 in December 1964 and is determined through a monthly survey of consumers residing in the continental United States.