As retail stores and online retailers get ready for the holiday rush that begins in earnest on Black Friday, they are faced with a conundrum that few had anticipated. Instead of spending their money on gifts and goods this year, many American consumers are headed more toward travel and experiences. After the pandemic forced everyone into their homes for years, people are coming out of their cocoons with their sights set on travel and fun. But no matter what consumers are spending their money on this holiday season, there is a sense of unease for shoppers and businesses alike, with the looming elephant in the room on everyone’s mind: a possible recession.

Drop Before You Shop (With Budget Worries)

The holiday season feels different this year. With all that consumers have been through in the last several years, and a recession on the horizon, there is a sense of worry. Supply chains are still in shambles, and the perfect holiday gift may be elusive this year. People are tightening their budgets because of the skyrocketing price of groceries, gas, and other necessities, which does not leave as much discretionary spending for the holidays.

Because of this unrest with the economic stress and decimated supply chain, businesses like Target and Amazon are holding early-bird sales, in the hopes of getting people out in the stores to spend their money.

“People are planning to spend less during the actual Black Friday, Cyber Monday and holiday season because of inflation,” said Andrea Woroch, a budgeting expert. “Even though people don’t want to spend more, the more sales you have, the more you get people out to shop, the more they’re going to end up spending.”

Experts just might be onto something. With the wonky supply chain, getting the perfect gift is paramount for consumers, and the time is now. “What consumers right now fear more than anything is not getting their hands on that perfect gift, so they’re going to buy it right now whether it’s on sale or not. They are afraid if they wait it may not be available,” Howard Dvorkin said. “Because of their limited supply, retailers will probably maintain the same pricing without discounts to move the merchandise.”

Flying Days are Here Again

As bleak as the outlook is for retailers around the country, the airline industry seems to be flying the friendly skies again. The industry that was most decimated during the pandemic has been rebounding, with  Delta Air Lines, Mastercard and Airbnb all experiencing a move in the positive direction.

“As of September, airline ticket sales were up more than 56% from a year ago, and rose 10.9% versus the same month in 2019, according to Mastercard Spending Pulse, which measures in-store and online retail sales. Lodging sales shot up more than 38% from a year ago, and were up 42% versus September 2019.” Considering that September is typically not a month that is known for travel, people surprisingly continued to move about the country even after Labor Day.

The prices are rising along with the demand, but peoples’ interest in traveling is even more intense after being unable to do so freely. “After having been deprived of that for a couple of years when there were restrictions on the ability to move around, people are really embracing it and going out,” The CEO of Hawaiian Airlines Peter Ingram said in an interview last month.

“Travel remains extremely resilient,” said Anna Zhou, an economist at Bank of America Institute. Even after Labor Day, when travel normally slows down, “it’s just not the case this year, especially for international travel,” she said.

Now that people can move more freely, they are truly putting their money where their mouth is. “The trend towards spending on experiences continues,” Mastercard CEO Michael Miebach said on a quarterly earnings call late last month. “We saw notable strength in airline, lodging and restaurant spend with a shift away from categories like home furnishings and appliances.”

Experts also predict that more people will be able to visit family this year, after staying away in the past few years for obvious reasons. “Sweaters are nice, but what people really want over the holiday season is the warm embrace of loved ones, and they’re taking to the roads and skies to make that happen this holiday season,” said Mike Daher, vice chair of transportation at Deloitte’s 2022 Holiday Retail Survey.

Recession Looming?

While the travel industry is rebounding and moving forward, regular spending on items big and small has been curtailed. Amazon’s bottom line was suffering and did not meet the expectation for growth in October, as consumer spending usually moves into holiday mode. Additionally, shipping giant FedEx missed expectations in its September report, with CEO Raj Subramaniam saying he anticipates a “worldwide recession.”

The whole country seems to be waiting with bated breath for a possible recession, and economists are not able to say with certainty whether or not that is coming.

Tim Quinlan, senior economist at Wells Fargo, expects the holiday season will be the “last hurrah” for consumers. When adjusted for inflation, the anticipation is that of a 2% annual gain in holiday retail sales this year. Compare that with an estimated 8.1% last year and 10.4% annual gain in 2020.  This dismal forecast bears witness to the fact that many consumers will be trying to hang on to some money for a rainy day, rather than spend it lavishly on the holidays.

“Consumers are going to spend as much as they did last season, but they are limiting the people they’re spending on. They only have a certain amount of money, so they have to tighten that list of who they’re buying presents for,” said Howard Dvorkin, chairman of “Because of the increased pricing, their dollars won’t go as far as they did last year.”

The energy in the air is certainly different at the beginning of this holiday season, with shoppers cognizant of the burgeoning price of necessities, but also feeling freer to see the people they want and do what they want this year after several years of feeling locked down. As for the elephant in the room, most consumers will probably take it easy on their spending habits this season, just in case the economy gets worse before it gets better.