Santa moving supplies with a forklift

Will inflation, supply shortages dampen the holiday shopping spirit?

November 29, 2021

Ted HansonBy Ted Hanson
Securities Analyst

 

The holiday season is officially upon us. Gift giving is one of the many traditions during the holidays. Purchases made this time of year help drive our economy as consumer spending makes up over two thirds of the U.S. gross domestic product (GDP). Many have already begun their holiday shopping as they take advantage of deals and savings. Let’s take a look at some early indicators of how this holiday season is going.

Spending

Personal spending, which indicates how much money Americans are spending on goods and services, rose 1.3% in October compared to the prior month. Spending on goods rose 2.2% and services rose 0.9% last month, both ahead of expectations. The increase in spending combined with a 0.5% rise in personal income point to stronger demand.  Demand should remain strong through the remainder of the year.

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Supply

It’s no secret that suppliers are struggling to keep up with the increase in demand. Global supply-chain issues continue to weigh on many industries. There’s a long way to go, but some industries hinted at easing supply constraints. For example, U.S. production of vehicles in October rose 18.8% compared to the prior month. In addition, many retail chains reported they were able to stock up inventories for this holiday shopping season. Both are positive signs of companies’ increased investment to meet the high demand.

Overall, demand remains high and supply continues to recover. October was a strong month for the consumer and kicked off the holiday season on a positive note. Consumer data is one of many economic indicators we look at when gauging the U.S. economy’s health. While it is important to understand the role each indicator has on the economy, we continue to look at the big picture and focus on the long term. This proves to be valuable as we work with our clients to achieve their financial goals. Reach out to your advisor today to discuss your portfolio. We are thankful for the opportunity to serve you.

About the Author

Ted Hanson

Ted Hanson is a Portfolio Manager within the Wealth Management Division at Security National Bank. He serves customers by managing client portfolios, analyzing securities and performing daily trading activities. Ted is a graduate of Morningside College with a degree in finance and accounting.