This Holiday Season Will Be Illuminating

The holiday season is upon us, and rarely have there been such mixed signals about the health of the consumer economy as we enter this all-important shopping season, with a fair share of Americans doing well but a larger share saying they are struggling. To put some numbers on it, the latest polling data from the University of Michigan (UoM) Surveys of Consumers has 30% of respondents saying they are financially better off than a year ago (vs. 41% last December) and 50% saying they are worse off than a year ago (vs. 32% last December) while 20% say their current financial condition is unchanged.¹ This widening gap between the "better offs" and "worse offs" has effectively created two distinct consumer economies with respect to spending patterns and has complicated the task of evaluating current spending trends. The performance of the consumer economy this holiday season will help clarify whether the downbeat sentiment around the economy is justified or exaggerated.