Consumer confidence appears to be rising as the holiday shopping season gets underway.

A strong stock market, easing inflation and stable employment rates support that confidence, although many consumers remain cautious amid high prices and economic uncertainty. 

The National Retail Federation predicts that there will be a rise in consumer spending this year, estimating an average spend of $902 per person. 

Retailers like the University of Arizona Campus Store are seeing a significant shift in consumer habits as the holiday season approaches. 

“We decided this year to try to run some of our traditional holiday ads a little bit earlier, thinking that maybe consumers would be interested,” said Peter Neff, executive director of  University Bookstores; Campus  Store falls under that umbrella. “And we actually are seeing them buying at a slightly faster pace than they were last year, which I thought was really interesting to see.”

Justin Jarvis, a senior lecturer in economics, said consumers are feeling a sense of increased wealth due to gains in the stock market, increased real estate value and cryptocurrency. 

“People do feel like they have more wealth or more income,” said Jarvis, who teaches at the UA Eller School of Management. “Both the theory predicts and data suggests to us that when these indicators are strong, we tend to see consumer consumption and purchases go up during that time.”

Inflation, while beginning to ease, has also continued to influence spending. 

“Inflation is definitely affecting shoppers because prices are not the same as last year,” said Neff “They are slightly higher, and customers aren’t complaining directly to us about it, but you do hear them talking about it.” 

With inflation shaping customer behavior, promotional items seem to be especially effective this year as customers are buying them quickly. If an item is unique, customers seem to snap those up regardless of the price,  Neff said. 

The Campus Store also has focused items around the UA’s entry into the Big 12 Conference.

 “We’ve also tailored items towards the initial Big 12 season to get customers’ interest,” said Neff. “Like memorabilia or shirts that are unique, like the first time we have played this Big 12 opponent, or a football that has a Big 12 schedule on it for customers to have, which I also think are gift items.”

Jarvis said inflation expectations play as big a role in consumer confidence as the rate of inflation. 

“Inflation can’t just come down, but people have to believe it will stay down,” he explained. “So it’s more about belief about what future inflation is going to be than just the actual current inflation rate.” 

Recent spending patterns also reflect the differences that consumers have in managing their money. Jarvis said there are two types of consumers: the planners and the spenders.

“There are what we call consumption smoothers, who make their purchasing decisions based on what they expect their overall income to be over their lifetime,” Jarvis said. “And then there’s, for lack of a better name, a hand-to-mouth consumer, who spends all of their paychecks, whatever their paycheck is today.” 

Overall spending may rise if “consumption smoothers,” who make up around 50-55 percent of our economy, anticipate a higher disposable income in the future. 

The Campus Store is anticipating a 3-5 percent increase in sales this holiday season.

“I think consumer confidence will improve,” said Neff. “Overall, people seem to be in a good mood this year. Whereas, you know, some years you can tell when customers are doing it because they have to, but don’t really want to. They seem to be in a good mood this year.”

“We’re looking towards more in-store traffic. We are going to actually target ads to the local Tucson community,” he added, noting that last year, once school was out for the winter break, he saw an increase in local residents coming to the store. 

The Campus Store, 1209 E. University Blvd. on the UA campus, is open from 7:30 a.m. to 7 p.m. Mondays-Saturdays and from 11 a.m. to 4 p.m. Sundays. Details at shop.arizona.edu.

Arizona Sonoran News is a news service of the University of Arizona School of Journalism.