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Christmas Effect on the Economy

Santa’s List of Good and Bad Investments

Christmas effect on the economy is not just about money it’s more about how people behave during this magical time.
As one year comes to an end and another begins, we naturally look back at the statistics and performance of the year that has passed, especially as the holiday season approaches. When Christmas arrives, most people think about celebrations, gifts, and time with family.

But traders think differently. For them, Christmas is not just a holiday—it’s a period that can influence markets, trading behavior, and the broader economy. Seasonal trends, reduced liquidity, and shifts in consumer spending all play a role in shaping market movements during this time.

Let’s dive in.

Christmas Effect on the Economy

The economics of Christmas are significant because it is typically a high-volume selling season for goods suppliers around the world.

Sales increase dramatically as people purchase:

• Gifts

• Decorations

• Supplies to celebrate

Seasonal Shopping Timeline by Region

Key Economic Statistics

 

In the U.S.:

• About 20–25% of retail sales occur during the Christmas season.

U.S. Census Bureau (2004) – Department Store Sales:

• November: $20.8bn

• December: $31.9bn

• Increase: 54%
• Bookstores: 100% increase
• Jewelry stores: 170% increase

Retail Employment:

• Increased from 1.6m to 1.8m workers pre-Christmas

Industries Dependent on Christmas

Completely dependent:

• Christmas cards

• Live Christmas trees

Business Activity on Christmas Day:

• Least active day in Western nations

• Most retail, commercial, and institutional businesses are closed

Film Industry Impact:

• Studios release Christmas films, fantasy movies, high-production dramas

• Goal: Maximize Academy Award nominations

Christmas Effect on the Economy
Positive and Negative

Positive effects:

• Increased supply & demand

• Growth in retail, grocery, travel, shipping & distribution

• Consumer spending

• Boosts the credit card industry

Negative effects:

• Overconsumption

• Consumer debt

Christmas Shopping Numbers

E-Commerce Growth:

• Online holiday sales projected at $1.1 trillion (2024)

Regional Trends:

Key Trends Shaping Christmas 2024–2025

 

• Omnichannel retail

• Sustainability

• Inflation pressure

• Black Friday engagement

Global Economic Impact

• Christmas accounts for 10–15% of annual retail revenue

• U.S. holiday spending: Over $900bn annually

• Millions of jobs supported

Employment & Job Market Impact

• 543,100 seasonal jobs added (2024)

• Expected: Below 500,000 in 2025

• Lowest seasonal hiring since 2009

 GDP & Spending Impact

• Holiday profits: ~$1 trillion (~3% of GDP)

• Expected retail spending: $1.1–1.7 trillion

Small Businesses & Charities

Opportunities:

• 30% of annual revenue

• Customer acquisition

Risks:

• Price pressure

• Large retailer dominance

• Inflation & tariffs

Financial Markets & Trading Effects

• Santa Claus Rally: Stocks often rise at year-end

• Reduced liquidity: Less trading activity, higher volatility

• FX markets remain active

January Effect:

• Stocks rise in January 62% of the time

• Small-cap outperformance historically

Holiday Spending in the United States (2025)

• U.S. holiday spending may exceed $1 trillion for the first time ever

• Growth: ~3–4% per year

• Average American spends ~$890 during the holiday season

• Nearly 160 million people shop on the last Saturday before Christmas

• Thanksgiving–Black Friday weekend: 200+ million shoppers, average spending ~$330

• Consumers continue to spend heavily, even when prices are high

• Holiday season remains a strong economic period

Global Holiday & Online Shopping

• Global online holiday shopping: ~$1.2 trillion

• U.S. accounts for over $280 billion of this

• 70% of online holiday shopping is done via mobile
• Social media shopping represents nearly 20% of total sales
• Online and mobile shopping dominate

• Social platforms play a key role in purchase decisions

Consumer Behavior & Trends

• 85%+ of consumers buy holiday gifts every year

• Over 50% of spending goes to gifts; rest on food, decorations, entertainment

• Shoppers actively seek discounts and deals

• Second-hand and budget-friendly gifts are increasingly popular

• Consumers are cautious but still spend

• Spending habits are smarter and more selective

Global Economic Stimulus

• Christmas boosts global economic activity
• Retailers often see a large part of annual revenue during this period
• U.S. holiday sales reached $886.7 billion in 2021
• Similar trends in other developed economies

Supply Chains: Dynamics and Challenges

• High demand pressures global supply chains

• Manufacturers increase production → higher demand for raw materials, logistics, warehouses

• Vulnerabilities exposed by geopolitical tensions, trade policy changes, pandemics, or conflicts

 

Changes in Consumer Behavior and Spending

Gift-Giving & Promotions:

• Drives purchases across electronics, clothing, and other products

• Black Friday & Cyber Monday encourage buying via discounts and marketing

E-Commerce:

• Convenience and mobile adoption shift shopping to digital platforms

• Retailers use omnichannel solutions and data analytics

Social Media:

• 33% of Gen Z & millennials discover products via social media

• 21% purchase based on influencer recommendations

Sustainability:

• Consumers increasingly prefer ethical and environmentally friendly products

• Brands emphasizing CSR gain an advantage

Negative Effects of Christmas on the Economy 

Financial Strain:

• People go into debt for gifts and celebrations

• UK: 43% plan to use credit cards; Gen Z: 61%

• Over-reliance on credit can risk economic stability

Overconsumption & Waste:

• Unwanted gifts, food, and packaging waste

• Significant environmental impact

Pressure on Businesses:

• Small businesses struggle against large retailers

• Discounts and competition can hurt profits

• 1 in 5 businesses may close if Christmas sales are below average

Post-Holiday Slump:

• Consumers cut spending in early new year

• Sales slowdowns impact business stability

Microeconomic Perspective – Deadweight Loss of Christmas:

• Gift-giving may destroy 10–33% of economic value if gifts don’t match preferences

Christmas Creep:

• Retailers start Christmas sales earlier every year

• Extends pressure on consumers and employees

. Christmas & Holiday Spending in the U.S. (2025)

• November–December: ~20% of annual retail sales

• Consumer spending: ~70% of U.S. GDP

• 2025: First $1 trillion holiday shopping season predicted

• Growth: ~4% from $976 billion in 2024

Popular Gifts:

• 50% prefer gift cards (stable trend)

• Other gifts: clothing, books, personal care items, electronics

• Gift card sales may push revenue into next year

Economic Challenges:

• Inflation: 3%; grocery prices up 2.7%

• Turkey prices down 3.7%

• Consumer confidence low, layoffs highest since 2009

• Tariffs increase costs on imported goods

• Seasonal hiring: 265k–365k jobs (lowest in 15 years)

Consumer Resilience:

• Despite concerns, consumers expected to spend due to tradition

• Credit card delinquencies low (~3%)
  96% of workers employed, supporting spending

• Online spending expected to grow 8%

Santa’s List of Good and Bad Investments

Wrap-Up

Christmas is much more than a holiday, it’s a global economic event that affects retail, employment, supply chains, and financial markets where

• Consumers continue to spend heavily despite inflation or economic challenges

• Online and mobile shopping dominate holiday sales

• Seasonal spending drives business growth but can create volatility

• Small businesses and supply chains face both opportunities and risks

• Traders watch holiday trends for market insights like the Santa Claus Rally and January Effect

Try trading during Christmas time risk-free on a demo account.