Holiday Spending: Tariffs May Nudge Prices, but Not Shoppers

Group 1: Consumer Behavior - Consumers are increasingly relying on card installments and Buy Now, Pay Later (BNPL) options to manage higher costs during the holiday shopping season [1][10] - Nearly 22 million U.S. consumers utilized both private-label and general-purpose credit cards for installment payments, reflecting a 5.3% compound annual growth rate [7] - BNPL adoption has been crucial for sustaining sales volumes, with 90% of surveyed merchants indicating it helped maintain sales despite price increases [10] Group 2: Retailer Confidence and Pricing Strategies - 80% of companies across various industries express high confidence in adapting to tariff-related supply-chain disruptions, with goods-sector firms showing even higher confidence at 85.2% [3][4] - Despite confidence, 9 in 10 goods firms and over 70% of services firms raised prices in the past year, yet many experienced margin compression [5] - Retailers are expected to implement modest, selective price adjustments to preserve consumer volume while protecting margins during the crucial December quarter [6] Group 3: Economic Adaptation - Retailers have diversified suppliers and adjusted pricing strategies to navigate tariff impacts, while consumers are managing price pressures through structured borrowing tools [12] - The overall sentiment indicates that while tariffs may increase costs, they do not deter consumer spending intentions [12]