Published Nov 17, 2022 by A.J. Mistretta
The holiday season is upon us, but amid inflation worries and a potential recession on the horizon, will Houstonians spend as much this year on gifts and seasonal purchases?
Sales totals in the City of Houston are up 13.6% so far this year based on sales and use tax data released by the Texas Comptroller’s Office. However, with inflation up 7.6 percent locally, it’s unclear whether consumers are actually buying more goods or simply paying more for the same items or fewer.
The retail trade association ICSC estimates that consumers will spend 6.7% more this holiday season than last year. The ICSC survey found that roughly 75% of respondents plan to begin their holiday shopping earlier this season and 43% said they’re looking for deals and promotions. A different report from the professional services firm PwC found that 74% of shoppers plan to spend the same or more than they did last year. Overall, consumers plan to spend an average of $1,430 on gifts, travel and entertainment this year, close to what they spent in 2021, according to the PwC report. But that’s up 20% over pandemic spending in the 2020 holiday season.
Houston’s retail market is fairly healthy, having recouped all of the jobs the sector lost in 2020 and opening hundreds of new outlets over the last two years. The metro retail market absorbed more than 500,000 square feet of space in Q3 and absorption year-to-date totals 2.8 million square feet, according to the commercial real estate firm Colliers. Limited available space is helping push rental rates up, climbing 2% over the last year.
Discretionary spending like what occurs during the holidays has a lot to do with consumer confidence. Nationally, confidence has slipped in the most recent monthly reports, thanks in part to recession fears. But Houston’s job growth has proven resilient, with 14,800 jobs created in September, the most recent data available. Thirteen of the 18 major industry sectors in metro Houston tracked by the Texas Workforce Commission had fully recouped their pandemic losses as of September.
While how much Houstonians will buy this season remains to be seen, it’s clear they will be paying more for whatever they purchase. Take the Thanksgiving meal, for example. Turkey and trimmings for 10 to 12 of your nearest and dearest will cost 20% more this year than in 2021, according to a survey from the American Farm Bureau Federation.