Economic Impact of Holiday Shopping

Grace Memmo
Economics A1
November 21, 2016

The Economic Impact of Holiday Shopping

The holiday season is officially in full swing. Christmas trees are being decorated, holiday albums are playing on repeat, and presents are already being purchased. It’s the biggest time of year for retailers, catapulting every mall and grocery store into a frenzy. During the months of November and December, seasonal employment is at its peak and retail sales are at their highest point than during any other month of the year. The economic impact of the holiday season provides many jobs, increases consumer spending and expectations, and in some cases, is the main reason some stores are still in business.
Throughout the years, the holiday season has become more and more commercialized, thanks to social media and high consumer expectations, which means more money is spent and earned. Starting around the time of Thanksgiving, kids are already making their Christmas lists and parents are preparing their bank accounts for the large sums of money that will be spent to “spread holiday cheer”. Around this time, consumer demand skyrockets as they seek to purchase presents for their loved ones. Clothes, electronics, toys, etc. are extremely demanded from consumers. Suppliers know this and will thus supply a surplus of items to meet their consumers needs. Suppliers and markets will adjust their prices according to the season in order to make the most valuable profit. For example, if someone were to purchase a fake Christmas tree in January it would be significantly cheaper than if they were to purchase one in November or December. Companies know that fake trees will be at their highest demand after Thanksgiving, with the total amount spent on fake trees annually being $685,000,000, so they increase the prices to make the most valuable profit (StatisticBrain). Electronics, Christmas trees, and many other popular, seasonal items become somewhat inelastic at this time of year. Customers are willing to pay almost any price for certain items just to make their child happy or for any other reason.  Because of this, suppliers purposely set the good or service at a higher price to receive more profit. According to the National Retail Federation (NRF), in the year of 2014, holiday shoppers spent an average of $802 on presents, decorations, food, etc. With an exception of the economic crisis in 2008-2009, the trend has been increasing every year for the past decade. Popular stores such as Best Buy, Sears, and grocery stores bring in some of the greatest revenue during this time of year.  

As people stock up on presents and goods, mayhem ensues at malls and stores all over the world. Each fall, retail stores begin to model seasonal employment as they hire more people to work during the holiday season to run their store efficiently.  Furthermore, some stores are only open during the holiday season, thus only providing some people with a job for a few months, leading to them being unemployed once the new year starts. As more and more consumers hit the malls, retailers are expected to hire anywhere between 630,000 and 700,000 during the holiday season to accommodate the shopping mania (NRF). A trade off of working on Black Friday, Christmas, and New Years, or anytime during the holiday season, is that wages increase. Some retailers increase their employees’ wages $1 higher that usual to compensate for the extra hours and increased chaos. The opportunity cost, however, is that anyone who works on holidays has to miss out on spending time with family, or doing their own shopping for that matter. More employees are essential at this time of year considering that 19.7% of annual retail sales are accounted for during the holidays. Overall, the holidays are pivotal to the success of many companies. Thanksgiving, Christmas, and New Years bring in more profit for stores that many people realize. Despite the craziness that goes along with holiday shopping, the holidays are very beneficial to the success of the economy.















Works Cited

"Retailers in for a Very Digital Holiday Season, According to NRF Survey." National Retail Federation. N.p., n.d. Web. 28 Nov. 2016.

Harden, Seth. "Christmas Tree Sales Statistics." Statistic Brain. N.p., 2016. Web. 28 Nov. 2016.

"Retail Employment and Seasonal Hiring." National Retail Federation. N.p., n.d. Web. 28 Nov. 2016.






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