Shoppers in College Park and across the DMV may need to stretch their holiday dollars further this year as retailers scale back discounts and federal workers continue to feel the effects of layoffs and the recent government shutdown.
University of Maryland marketing professor Jie Zhang predicted the Christmas season will be “muted.”
“Many consumers … have experienced economic hardship and uncertainty,” Zhang told College Park Here & Now. “This will be a holiday season where consumers have tight budgets. They are less likely to spend big time.”
Although the National Retail Federation reported a record number of shoppers nationwide over Black Friday and Cyber Monday, Zhang said consumer sentiment is the lowest it has been since 1951.
“It is very gloomy and this certainly will affect how people will go about holiday shopping,” she said. “Not only in their willingness to spend but their uncertainty really would dent their holiday spending.”
Zhang noted that some retailers have attempted to offset tariffs on clothing, toys, holiday décor and electronics. But many are still passing some of those costs on to consumers in the form of higher prices.
Retailers are also trying to operate more leanly, placing smaller orders and facing delays receiving imported goods.
“Some retailers may not even be able to receive their inventories on time for holiday sales,” Zhang said. “This is like a double whammy.”
The expected result: fewer large, last-minute holiday sales, reduced staffing, leaner stock and higher prices.
Many federal workers — including more than 15,000 laid off in Maryland earlier this year, according to the state Department of Labor — are still struggling. Prior to layoffs, an estimated 1,100 federal employees lived in College Park.
“So many consumers have experienced hardship,” Zhang said. “Many of them are living from paycheck to paycheck. They’re worried about how to pay for their health insurance, their mortgage, how to put food on the table. So many consumers have scaled back their spending.”
Still, she predicted a very modest increase in holiday spending this year. The NRF has estimated a 3.7% to 4.2% increase, but those figures are not adjusted for inflation — currently hovering around 3%. After adjustment, she said, real growth may be closer to 0.7% to 1.2%.
Zhang said the lingering effects of layoffs and the shutdown are the most likely reasons shoppers will curb spending in areas like College Park.
“The massive layoff of federal workers certainly caused a lot of disruption to the local economy,” she said, cutting into profits at restaurants and stores.
“Overall, unfortunately this is going to be a challenging holiday season for local businesses.”
There is a silver lining: high-income consumers are expected to spend more, and many who are able are donating generously to food banks and local charities.
“And Zhang added, “Better days are coming. … I don’t think people will have less joy and happiness. We just don’t have to spend so much time focusing on how much we spend on gifts to give and receive.”