For months, we’ve been fretting about an impending consumer spending pullback, whether because of inflation, possible recession, or a tightening labor market. But we haven’t seen wallets snap shut yet. In October, retail sales monthly increases were the strongest since February (up 1.3%). October sales were higher than this time last year, even after adjusting for inflation per U.S. government data. Economic surveys, from Deloitte to the Conference Board, have consumers saying they will spend less this holiday season. No hard evidence of a pullback has come in yet.
Americans are still drawing on significant savings built up in the pandemic. The Wall Street Journal estimates that the $1.7 trillion in savings Americans squirreled away can keep spending levels up for the next nine to 12 months. Inflation and revenge spending has consumers drawing down on those savings. But just how much and when the cash cushion depletes are the source of much speculation. Savings rates are slowing, and credit card balances are creeping back up, but people are still buying cars.
One place consumers are saying they are pulling back and we are seeing softness is in the nonprofit sector. Morning Consult surveyed consumers about their financial goals, from saving to budgeting and investing. From June 2021 to June 2022, the share of adults reporting progress toward donating to charity declined more than any other financial goal, with a 13% drop. Last year, despite the cash pile consumers were sitting on, giving in the U.S. did not keep up with inflation. Gifts increased just 4%, according to a recent report on global philanthropy by Citi.
Up to 30% of all charitable donations are given between the month of Thanksgiving and Christmas, according to the Giving USA Foundation. The event known as Giving Tuesday, or the Tuesday following Cyber Monday, was created in 2012 to further inspire charity in this season. A hefty $2.7 billion was donated in 24 hours in the U.S. on Giving Tuesday in 2021. Giving Tuesday as an organization has charted a drop in the number of donors from a year earlier in the second quarter, with a WSJ analysis estimating about 13% less donors this Q2 compared to last.
For events like Giving Tuesday, small donations from a large group of people drive impact -- and getting a $25 donation from tens of thousands of people takes marketing excellence. Charities don’t fare well when markets drop. Adding in inflation and rising labor costs may put charities in a tough spot this Tuesday. Any wins from the tireless efforts of marketing managers doing our most important work should be celebrated this week. Nonprofit marketers may be facing stronger headwinds than retail marketers this holiday season.
This article sure aged quickly. Giving Tuesday 2022 broke all previous records, including a 15% increase year over year. Demonstrates just how difficult predicting outcomes can be for marketers in this mix of inflation, COVID, etc. However, it is commonly understood that, historically, people give more when times are tough, even when they themselves have less in their own pocket. Brings out the empathy in us all. That's something to celebrate!