U.S. personal debt is at $18.59 trillion, an all-time high. Prices are rising, and some experts worry the stock market may be headed for a serious correction, or worse, that the A.I. valuation may be a bubble about to burst.
Time to cut spending and tighten belts? Not according to consumers. Experts predict another record holiday shopping season this year, surpassing the $1 trillion mark for the first time ever.
Appetite for Consumption
Tom Goldsby, the Dee and Jimmy Haslam Chair of Supply Chain and David P. Perrot Supply Chain Management Faculty Fellow at the University of Tennessee, Knoxville, Haslam College of Business, has been hearing more talk of the U.S. being in a K-shaped economy, where some sectors benefit and others suffer. While affordability is being talked up by President Trump and others, those on the bottom of the K aren’t feeling it.
“In the bottom half of the K, people are really challenged right now,” he says. “That’s why we’re seeing debt and credit taking on a more prominent place in our economy.”
However, Goldsby has monitored U.S. consumer holiday season behavior for many years. He has learned not to underestimate the American public’s craving to shop for the holidays.
“They will spend whether they have it or they don’t,” he observes. “I think the appetite remains quite strong, even though the means might be strained in some sectors.”
Supply Lines No Issue
Supply-wise, the country is still dealing with repercussions from the UPS MD-11 cargo plane crash in Kentucky and the subsequent grounding of UPS and FedEx MD-11 fleets, in addition to the government shutdown’s effects on airports. Further, delays are multiplying in moving shipments through customs because of constant tariff changes. Nonetheless, Goldsby doesn’t see a problem with shipping this holiday season, since holiday merchandise has been in stateside warehouses for months.
“The tariffs influenced companies to buy in large volumes well in advance of the need,” Goldsby explains. “It’s referred to as the front-end loading of inventory. They bought as much holiday stock as they could in the spring.”
According to Goldsby, companies generally limit their product orders to 30, 60 or 90 days because forecasting demand is so tricky, and the farther out the projections go, the worse the forecasts are. But importers didn’t want to take the chance that tariffs would cause prices to soar before they could claim their holiday orders.
But Is It What the Customer Wants?
“To avoid tariffs and potential stock shortages, they felt compelled to act several months in advance,” Goldsby says. “We’re talking about flimsy forecasts that were flimsier still because they were trying to guess back in February, March and April what they were going to need for this holiday season.”
The result was that wholesalers and distributors had plenty of holiday goodies to sell to retailers, a seemingly positive outcome. Still, Goldsby raises a potential red flag: How good were those companies’ guesses for the 2025 holiday season back in early spring?
“Everybody has their inventory, but I think the bigger supply chain story is that the bets for this holiday season were made earlier in the year and were bigger than we’ve ever witnessed before,” he says. “What’s on the shelves this holiday season is what companies had to imagine we were going to want to buy. Forecasting demand is difficult because consumer tastes change so rapidly. That means all those early orders to cover the balance of the year were big bets, and we’ll see if they meet the mark.”
Returns May Be A-Leaping
Although returns aren’t projected to set records this year, if the holiday gift selection does miss the mark this year, they still might.. Goldsby believes there may be other reasons returns jump: Uncertain economic times may lend themselves to elevated returns activity.
“I can just picture some of these discussions in households,” Goldsby muses. “‘Why did you go off and buy me that? It’s too much!’ There could be more debate about overly generous gift giving, and there could be more scrutiny after the fact.”
Also, thanks to Amazon’s and other online retailers’ wealth of selections and generous return policies, consumer expectations for their shopping experiences have skyrocketed, especially for their flexibility to return products they are unhappy with. Goldsby has found that, in addition to expecting an unhindered, fulfilling shopping experience, consumers are paying close attention to return policies, even choosing where to buy based on the transparency and ease of return.
“The American consumer is insatiable,” he says. “We expect unlimited assortment, competitive pricing and free shipping. Then, the final part of the shopping journey is supposed to be a no-questions-asked, hassle-free return policy. Returns are just a fact of life for companies, whether or not they are prepared for it.”
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Scott McNutt, senior business writer/publicist, rmcnutt4@utk.edu
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