Consumer spending is a bit higher than anticipated, according to forecasts made for September, and this is good news for businesses ahead of the festive season.
Increased consumer spending can increase sales across various sectors, boosting overall revenues. This is placing the economy on a better trajectory for the peak season, which the logistics industry is already preparing for.
Reuters reports that consumer spending rose by 0.5% in September, after an upwardly revised 0.3% gain in August. Consumer spending accounts for more than two-thirds of US economic activity.
3 Key business factors for December
Due to the rise in consumer spending, there are a few things businesses can prepare for this peak season.
Inventory management
With more sales across various sectors in the last two months of 2024, businesses may need to adjust their inventory levels.
This is vital to meet the heightened demand and ensure that products don’t run out of stock.
Price strategies
More customers mean businesses might have the flexibility to adjust pricing strategies. This is an ideal opportunity to improve profit margins.
Supply chain considerations
As customer spending is elevated, more strain is placed on supply chains. This means more efficient logistics and supplier coordination is needed to maintain smooth operations.
What drives consumer spending?
Two factors play a role here: resilient labor markets and the rise in household net worth.
Economists are worried that this growth appears to be concentrated among middle—and upper-income households. These households have greater financial flexibility and can more readily adjust their consumption patterns.
On the other hand, easing inflation provides some relief for lower-income families, but the benefits are unevenly distributed.
A McKinsey & Company survey recently found that high-income consumers were more optimistic about the economy in the third quarter than middle- and low-income consumers.
Age is also the main driver, with Gen Zers and millennials across income groups reporting higher optimism rates than Gen Xers and baby boomers.
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About the author
Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.
