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Financial Tips

It’s the Most Wonderful Time of the Year (For the Economy)

For many Americans, the end of the year is a time for parties, family gatherings, festive meals and, of course, shopping. And all that celebrating makes the fourth quarter the most important time of the year for the U.S. economy.

Looking at the past three decades of monthly retail spending data, when not adjusted for seasonality, December of each year is easy to spot.


When this pattern breaks, something has gone awry. In the midst of the Great Recession, people cut back on nonessential holiday spending, and end-of-the-year purchases took a significant hit, as you see when you compare spending before 2010 on the chart below to spending in 2020.


In 2020, despite the economic crisis caused by the pandemic, December spending increased from the year before. Many Americans had extra cash to spend thanks to government stimulus payments, and holiday spending was a large part of how they chose to use it, contributing to the economic recovery.

This seasonal trend is robust enough that it’s visible in our economy beyond just end-of-the-year retail shopping and food.

The last quarter of the year nearly always produces more than each of the first three when it comes to gross domestic product. Americans’ ability to spend their way through the darkest months of the year is a key component in the health of the economy.

As Black Friday results roll in and the last few weeks of 2023 approach, economists will be keenly attuned to what consumers are doing. Michelle Meyer, a chief economist at Mastercard, said this was likely to be “a promotion-driven holiday season,” in which shoppers will patiently wait for the best deals.


But Meyer is still expecting consumers to be “quite active” this year, increasing their holiday spending over last year. In an effort to curb inflation, the Federal Reserve has been raising interest rates over the past 20 months, and experts have been on the lookout for a recession. But for now, there’s hope for an economically festive holiday season.


c.2023 The New York Times Company

This New York Times article was legally licensed through AdvisorStream.

Tim Bartholomew is an Investment Representative with Greene Investment Services located at the Bank of Greene County. Please call 518-943-2600 ext. 2153 with your comments or questions. Investment and insurance products and services are offered through Osaic Institutions, Inc., Member FINRA /SIPC. Greene Investment Services, located at the Bank of Greene County, is a trade name of the Bank of Greene County. Osaic Institutions and the Bank of Greene County are not affiliated. Products and services made available through Osaic Institutions are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.

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