While recent retail spending data was marginally disappointing, recent Bank of America aggregate credit and debit card data showed a strong back-to-school shopping season which in the past has had a strong correlation with year-end consumer spend.

As Bank of America's Michelle Meyer notes, discretionary spending is up on the year, stoked by tax cuts and a strong labor market and adds that the holiday shopping season looks to be one of the strongest in years. According to the National Retail Federation's (NRF) annual holiday shopping survey, consumers reported they plan on spending just over $1000 this year up 4.1% from last year. Similarly.

The chart below shows what respondents to BofA's survey said they plan on purchasing, and also shows the difference in responses between the NRF's own survey on spending plans. The one big difference: gift cards.

In order to better understand shopping behavior around the holiday season this year, the bank asked over 3000 consumers this month various questions on their expectations for holiday shopping activity. Here is what it found:

  • Holiday staples remain popular: Clothing, toys/video games and electronics look to remain the top items consumers look to buy, consistent with what consumers would like to receive. Older generations prefer to give gift cards-likely out of convenience for both the gift giver and receiver.
  • Early bird shopping: Roughly over 20% of consumers reported starting holiday shopping before November, stretching out the holiday shopping season. But the bulk of the shopping will be realized in November and December-roughly 89% of respondents reported having yet to finish their shopping list.
  • Holiday deals are important: We find that consumers are keen on taking advantage of Black Friday/Cyber Monday sales with roughly 67% reporting they expect to complete at least some of their holiday shopping during the sale period (Chart 4). In particular, Millennials and Gen X will be looking for deals.
  • Treat yourself: The holiday season isn't just about spending on others. We find consumers are planning to spend on themselves with older generations more likely to take advantage of deals.

Looking at the holiday spending calendar, BofA founds that as of November 19th, the majority of respondents (61%) reported that they have yet to start any holiday shopping this year, while only 11% have finished their shopping. Moreover, many consumers plan to do a significant share of their holiday shopping during Black Friday and Cyber Monday. That bank also found some differences amongst generations. Mainly, more Traditionalists (16%) have finished all of their shopping than any other generation. This makes sense given the greater share of traditionalists reporting plans to buy gift cards, which are unlikely to go on

Breaking out spend categories by generations, Meyer found that clothing remains the most popular gift to give across generations. Interestingly, older generations are more likely to buy gift cards than younger generations. Older consumers may find gift cards more practical to give to friends and extended family as it allows the recipient to select their own gifts, reducing the hassle of returns and exchanges.

Conversely, younger generations are more likely to buy actual gift items. In particular, toys/video games and electronics rank at the top of the list for Millennials and Generation X.

Of those respondents who reported a start date for their holiday shopping season, the majority indicated that at least some of their spending would be completed on Black Friday or Cyber Monday. According to the NRF, consumers are most focused on discounts when considering where to shop this holiday season, suggesting deals will be a big driver of spending patterns this year.

However, not all consumers plan to take advantage of Black Friday and Cyber Monday sales as 1 in 3 respondents stated that they won't be shopping on those days. The spread of holiday deals throughout the shopping season might have deemphasized the importance of these shopping days. With Black Friday sales beginning as early as this week for some retailers, shoppers need not wait for these days to find the same deals.

The BofA economists found that Millennials are more likely than any other generation to shop on these discount days with more than three-quarters of respondents reporting they would shop on Black Friday or Cyber Monday.  Conversely, Traditionalists are the least likely to do any of their shopping on either of these days. Nearly 48% of respondents said they would not shop on these days. The difference amongst generations could be due to the fact that younger generations are more likely to search for deals online and willing to fight the crowds, while older generations are less tech-savvy and prefer to shop when stores are less busy.