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• The average American expects to spend over $2,000 on holiday costs this season, one survey found.
• Some respondents predicted they would be paying off the debts they accrue into May next year.
• Personal finance guru Dave Ramsey advised saving before the holidays and setting a strict budget.

The most wonderful time of the year often comes with a hefty price tag — and many people expect to be paying for it into next summer.

People's debt balloons "because they don't plan for Christmas, like it sneaks up on them, like they move it or something," personal finance guru Dave Ramsey told "Fox & Friends" last week.

Ramsey's comments were in response to a survey showing that the average American will spend over $2,000 on holiday-related expenses this season, including travel, gifts, food, and clothes.

The survey of 2,000 people was conducted in early November by Talker Research and commissioned by Achieve. A fifth of respondents said they likely wouldn't recover financially until May 2025 or later.

The personal finance guru and host of "The Ramsey Show" described the $2,000 figure as "mindblowing," adding that it was a large sum to spend "all in the name of happiness comes from stuff — and it doesn't."

People can stay out of money trouble by socking away funds each month in preparation for the winter splurge, Ramsey said. They can also avoid overspending by drawing up a budget for gifts and other costs and sticking to it, he added.

"The problem with Christmas is not that we enjoy buying gifts for someone else — that's a wonderful thing," the radio personality said.

"The problem is we impulse our butts off, and we double up what we spend," he continued, pointing the finger at retailers who are "great at putting stuff in front of us that we hadn't planned to buy."

The typical US adult expects to spend $1,012 on gifts alone this holiday season, up from an estimated $975 last year, according to a Gallup survey of at least 1,000 people conducted in November.

Pinched by prices

Household budgets could be squeezed this holiday season. Inflation surged to a 40-year high of over 9% in the summer of 2022 as the cost of food, fuel, housing, and other essentials jumped, and remained above the Federal Reserve's target rate of 2% in November.

The central bank rushed to curb price growth by hiking interest rates from nearly zero to north of 5% within 18 months, sending people's monthly payments for their credit cards, car loans, and other debts skyward. Fed officials have cut rates to roughly 4% since September, but recently indicated they only expect to make two further cuts next year.

The upshot is Americans are likely to face a combination of elevated inflation and steeper rates for a while yet, setting the stage for a costly Christmas.

• Execs at Walmart, Target, and more retailers have given similar descriptions of US consumer health.
• BI combed through earnings-call transcripts to round up the words they used to talk about shoppers.
• Despite the challenges, Americans continue to spend — even if it's at the last minute.

Pressured. Cautious. Stretched.

If those words describe how you're feeling amid holiday spending, you're far from alone.

Money is tight for many Americans these days, and executives at Walmart, Target, Dollar General, Dollar Tree, and more have used similar language to describe the state of US consumer health this holiday season.

"I want to be sensitive to those that have lower income levels and acknowledge that this inflationary cycle has been really detrimental and created a lot of pressure for them and their families," Walmart CEO Doug McMillon said Tuesday at the Morgan Stanley Global Consumer & Retail Conference.

"People at the other end of the continuum," he added, "they may be cherry-picking categories depending on what they're looking for."

In Target's quarterly earnings call in November, CEO Brian Cornell described the toll high prices were taking on American households.

"Consumers tell us their budgets remain stretched and they're shopping carefully as they work to overcome the cumulative impact of multiple years of price inflation," he said.

"They're becoming increasingly resourceful in their shopping behaviors, waiting to buy until the last moment of need, focusing on deals and then stocking up when they find them," Cornell added.

Dollar Tree's interim CEO, Michael Creedon, said low-, middle-, and high-income shoppers were showing signs of budget pressure.

"They started eating more at home and cutting going out. Now they're reducing some parties," he said during the company's quarterly earnings call on Wednesday.

On Thursday, Dollar General's CEO painted a similar picture as the discount store gained share among middle- and higher-income households.

"The consumer is seeking value, trying to make ends meet," he said.

Of course, retailers have been using words like "pressured," "stretched," and "cautious" to talk about their customers for several years now.

Data from AlphaSense indicates the terms are mentioned near the word "consumer" dozens of times in transcripts from major retailers this year.

Despite persistent challenges, shoppers continue to spend strong.

"We see a consumer who is seeking value in sales events and one who is also willing to spend on high-price-point products when they need to or when there is new compelling technology," Best Buy CEO Corie Barry said during a third-quarter earnings call.

Nowhere is that more apparent than this year's holiday sales season, which is off to a roaring start that could help compensate for the five fewer selling days between Thanksgiving and Christmas.

While retailers may have to compete a little harder to win sales this year than before, and investors may have to accept somewhat narrower profits, US shoppers are playing through the pain — even if that means more deal-hunting, last-minute shopping trips or buy-now, pay-later plans.

• Dollar Tree "pressured" shoppers are looking for more ways to save money while celebrating.
• Interim CEO Michael Creedon said people are cutting back on parties and delaying purchases.
• The remarks follow recent Target comments that shoppers are waiting until "the last moment of need."

If your holiday gathering seems to have fewer guests this year, you're not alone.

Dollar Tree interim CEO Michael Creedon said a shift is taking place, and not just among the "pressured" lower-income shoppers who represent the company's core customer base.

"When you look at a year ago, they were cutting out big purchases — TVs, things like that," he said during the company's quarterly earnings call Wednesday. "If you look at the early part of this year, they started eating more at home and cutting going out."

"Now they're reducing some parties, and we see that — or the party is not as big, they don't invite as many people as they did — so we're seeing that throughout," he added.

The company is also seeing the shift among middle- and upper- income households who have sought out dollar stores for the combination of convenience and price.

It's one of a few new shopping patterns emerging as US shoppers try to make the most of their ever-tightening budgets.

Creedon also said shoppers are holding off on purchases until right before they plan to use them.

The trend has made for some unusual year-over-year sales comparisons for particular days and weeks, but he said quarterly totals are holding up well so far.

"We saw it with Thanksgiving," he said. "I always take the foil pans, which are such a key component of Thanksgiving for us. The last week was just incredible."

Creedon said the company's outlook for the holiday quarter accounts for shoppers "buying for need and then buying closer to the need," as compared with a higher share of non-essential purchases made more steadily throughout the period.

The remarks follow recent comments from Target CEO Brian Cornell that shoppers are "waiting to buy until the last moment of need, focusing on deals, and then stocking up when they find them."

Cornell said these "resourceful" shoppers still spend, but they're getting more choosy about waiting for discounts, special occasions, or a change in the weather.

• Target's third-quarter results came up short, with sales growth of 0.3% from last year.
• The company described a shift in consumer spending from "resilient" to "resourceful."
• Its CEO said they're waiting "until the last moment of need, focusing on deals, and then stocking up."

Target has described US households as "resilient" in recent quarters. Now the retailer is rolling out a new descriptor for shoppers this fall: "resourceful."

Looking to stretch their budgets just a little further each month, US consumers are getting more strategic about finding deals and loading up their carts when the opportunity arises, the company said.

"They're becoming increasingly resourceful in their shopping behaviors, waiting to buy until the last moment of need, focusing on deals, and then stocking up when they find them," CEO Brian Cornell said during Target's third-quarter earnings call on Wednesday.

Target's quarterly results came up well short of Wall Street's expectations, with sales growth of 0.3% from last year on a store-comparable-sales decline of 1.9%. Shares of Target were down by more than 20% at 2 p.m. in New York.

Target's chief commercial officer, Rick Gomez, provided details about how this new consumer pattern had played out for the company.

"Our Target Circle Week this quarter was one of our biggest yet," he said. "However, we saw a more pronounced sales dip both the week before and the week after the event, showing just how planful consumers are in seeking out promotions."

Gomez added that these shoppers used promotions to stock up on "everyday essential" categories.

He said unseasonably warm temperatures also meant shoppers delayed their purchases of cold-weather apparel until they actually needed it. When the mercury finally dropped, the category's sales jumped by 6 percentage points.

Target stumbles as Walmart hits its stride

Target's results arrived against the backdrop of Walmart's strong earnings, reported a day earlier. The retail giant beat revenue expectations and offered a positive outlook for the rest of the year.

Walmart shares are up by 3% since Monday's close.

"Target continues to lose customers in categories like household goods to Walmart and other more value-oriented players," Neil Saunders, a GlobalData retail analyst, said in a note. "It remains a kind of top-up destination rather than a place where people come to get meal solutions or do a larger shop. This is a lost opportunity to drive foot traffic, especially in the current consumer environment."

The shift toward essentials and promotions puts more weight on less-profitable lines of business for Target, compared with categories like housewares and other big-ticket items. It's not clear whether the trend will reverse.

"The company's higher mix of discretionary products and somewhat premium price positioning — at least in the mindset of some consumers — remain headwinds relative to better performance discounters like Walmart," David Silverman, a senior director at Fitch Ratings, said in a note.

And while cash-strapped customers may be holding off on splashy purchases like a new TV, they're stopping by the beauty aisles and holiday pop-ups for a little something special to add to their cart of groceries.

"As we look at the discretionary business, what we see is the consumer is willing to shop as long as it's new, it's on-trend, and at an affordable price," Gomez, the retailer's chief commercial officer, said.

Still, analysts on the call questioned whether Target was counting too much on an eventual uptick in general merchandise spending and neglecting to adapt to the market's focus on value.

"Would you be willing to trade some of the upside in those areas for even more consistency from quarter to quarter?" the UBS analyst Michael Lasser asked.

"Despite some of the macro headwinds we've seen — really for eight or nine quarters in discretionary categories — we continue to see a consumer who's shopping for those seasonal moments," Cornell responded, adding, "Those are Target moments, and we're going to make sure we lean in and win."