The upcoming holiday season in the United States is set to highlight a growing divide in consumer spending. According to a recent report by The Wall Street Journal, households earning over $100,000 annually are expected to ramp up their holiday expenditures, while lower-income Americans grapple with tighter budgets due to rising costs of essentials like groceries and childcare.
Chris Peterson, CEO of Newell Brands, the company behind popular products such as Sharpie pens, Graco strollers, and Oster kitchen appliances, shared his observations with The Wall Street Journal. \"We started to notice this trend where there was a real bifurcation in the market between the $50,000-and-below consumer in the U.S. market and the $100,000-and-above consumer,\" Peterson explained.
Data from the Bureau of Labor Statistics reveals that in 2023, the average annual income for an individual worker in the U.S. was $65,470, while the median annual wage stood at $48,060. This income disparity is influencing purchasing behaviors significantly.
Peterson noted a surge in demand for premium products, such as blenders priced at $100 or more, whereas interest in entry-level options under $20 is declining. In response, Newell Brands is shifting its focus away from the cheapest products and investing more in enhancing its high-end offerings to cater to consumers willing to spend more.
Moreover, Mastercard SpendingPulse reported that U.S. consumers increased their spending by 3.8% between November 1 and December 24 compared to the same period last year, excluding auto sales. However, these figures do not account for the critical post-Christmas shopping period, which is essential for retailers.
This trend underscores the broader economic challenges faced by lower-income households, even as higher earners continue to drive growth in the consumer market. As the holiday season approaches, businesses will need to navigate these divergent spending patterns to effectively reach their target audiences.
Reference(s):
Deepening divide in U.S. holiday spending trends driven by high prices
cgtn.com
