Market Trends December 2024

 Holiday Shopping
 A record 183.4 million people are planning to shop in-store and online from Thanksgiving Day through Cyber Monday this year, according to the annual survey released today by the National Retail Federation and Prosper Insights & Analytics. That’s up from the previous record of 182 million in 2023 and 18.1 million people more than five years ago in 2019. 
 
The National Retail Federation has predicted that shoppers will spend between 2.5% and 3.5% more than they did last year during November and December, down from the 3.9% increase during Holiday 2023.
 
Most (88%) consumers plan to visit stores during the five-day period between Thanksgiving and Cyber Monday, which is actually the first Monday in December, according to ICSC's Thanksgiving Weekend Intentions survey. According to ICSC, two-thirds of consumers plan to do all or most of their holiday shopping during those five days, and four in five plan to shop on Black Friday and Cyber Monday.
 
Consumer spending overall is expected to reach nearly $125 billion during the five-day period as 90% of consumers, about 236 million people, plan to shop.
 
Skilled Trades GenZ Survey
DeWalt commissioned a study, Gen Z in the Skilled Trades, to explore Gen Z's (born between 1997 and 2012) commitment to skilled trades and identify which obstacles might stand in the way of establishing a career in the field.
 
Participants, all pre-apprentices in the US, were students ages 14-18 enrolled in either a trade or vocational school or a skilled trades training program at their local high school. However, the survey also found that 52% of high schoolers who wanted to enroll in a skilled trades program were put on waitlists.
 
DeWalt says survey results clearly show that the demand for training in the trades far exceeds the opportunities available and called on the industry to step up and increase opportunities. Of students enrolled in a program, 55% had participated in internships, 47% in mentorship opportunities, and 46% have had real work experience.

Reaching potential candidates in middle school and early high school is critical. More than 80% of students were first introduced to a career in the trades by the time they were 15 years old, with more than a quarter being exposed at age 13 or younger.
 
The majority of students who took the next step and enrolled in skilled trades education feel optimistic about their career choice, with 77% somewhat to extremely optimistic. In addition, 80%  of respondents say their parents view careers in the trades somewhat to extremely positively, and 71% say the same of their friends.
 
Students are also confident about future job opportunities. The majority of respondents (84%)  believe they will be hired immediately following graduation and more than two-thirds have already had conversations with potential employers who expressed an interest in hiring them.

Beyond access to training, key concerns include the cost of trade school (43%), availability of networking opportunities (39%), finding time for class and related class work (35%) and access to equipment and tools for successful training (33%).
 
Gen Z may face some obstacles once they go to work, because their value system differs from that of Boomers and Gen X, the generations they'll encounter in many management positions. The majority of GenZ respondents rated work-life balance (85%) and a having a caring boss (79%) as extremely important, a likely departure from previous generations' expectations.
 
Meeting Gen Z's expectations will be essential for retention. While this generation is committed, one in three students say they will leave the skilled trades entirely if the industry does not meet their expectations, including the 35% who want a clear path to advancement and 37% who say they would leave if their job doesn’t provide a positive work-life balance. 
 
Impact of the Incoming Administration
Tax & Spend Policy: Most economists expect the incoming Trump administration to extend the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA), which was due to expire at the end of 2025. Some additional tax cuts seem likely, particularly because Republicans now control the House, the Senate and the White House. 
 
Continuing existing tax cuts won’t move the consumer spending needle, as this provision merely continues an existing policy that is already baked into consumer behavior.
 
Proposed new tax cuts targeted and focused on exempting tips and overtime pay from income tax and allowing households to take more deductions would put more money into consumers’ pockets and theoretically result in a small boost to retail spending.
 
Trade Policy: President-elect Trump views tariffs as an economic weapon and is likely to impose them and then try and make a deal. Trump has proposed a 10% across-the-board tariff on America's trading partners with a 60% tariff levied on China. However, many economists think that a 20% tariff on China is more likely, with some extra tariffs imposed on auto shipments.
 
Tariffs are actually paid by the companies importing goods not the country exporting them, so the cost of buying products or raw materials overseas would rise sharply, increasing corporate costs and forcing companies to either raise prices, cut quality or take a big financial hit.
 
The US imports $1.3 billion in goods from China, Canada and Mexico, all of which are looking into retaliatory tariffs if the Trump administration proceeds with plans as outlined.
 
Roughly half of Chinese imports are already subject to tariffs, averaging about 10%, according to the Peterson Institute for International Economics.
 
The proposed tariffs could cost consumers $362 to $624 annually per household, according to a new report from the National Retail Federation, which said that the increased costs as a result of the proposed tariffs would be too large for US retailers to absorb and would result in higher prices that will dampen spending.   
 
Boosting tariffs will raise consumer prices. Oxford Economics estimates that raising tariffs on Chinese goods to 60% could boost the US consumer price index by up to 0.7%, while a blanket 10% tariff could add another 0.3%. Bank of America and Nomura predict more dramatic effects, with inflation continuing to hover between 2.5% and 3% through next year instead of nearing the Fed’s 2% target.
 
Monetary Policy: Current forecasts call for the Federal Reserve to cut their target range for the federal funds rate, currently between 4.75% and 5.00%, to 3.00% to 3.25% by the end of 2025. However, the Fed may not want to ease monetary policy by that much if new tax cuts and tariffs cause inflation to climb over the next couple of years, so analysts think that there may be fewer rate cuts than expected. Tighter monetary policy slows demand but doesn’t really combat inflation caused by a supply shock such as tariffs.
 
Implementing mass deportation: The expulsion of the more than 11 million people living in the US without legal status was a key campaign promise President Elect Trump has pledged to quickly implement despite the fact that immediately rounding up and deporting 11 million people would be logistically impossible, even if Trump declares a national emergency, as he’s said he will on Day One, and enlists the aid of the military.
 
Annual deportations under during Trump’s first administration never exceeded 350,000, according to DHS figures. More than 432,000 people were deported in 2013 under President Barack Obama, the highest recorded annual total, which earned him the nickname of  “Deporter-in-Chief.” Trump’s team is already working on crafting executive actions that will withstand the legal challenges that blocked parts of his first term agenda. Trump appointed more than 200 federal judges during his first term so he will most likely face a much friendlier judiciary this time around.
 
The negative impact of mass deportation would be especially severe in California, Texas and Florida, states that are home to nearly half of the nation's undocumented immigrants and where one in twenty residents could be deported. These states play key economic roles for the country and, by losing a significant portion of their workforce, the local economy could face a major setback.
 
The US economy relies heavily on the contribution of immigrants in sectors such as construction, agriculture, and services. The expulsion of millions of workers could create labor shortages, increasing costs for businesses and prices for goods and services. The construction industry, which employs millions of workers nationwide, is among the sectors most exposed to these losses. Approximately 14% of construction workers are undocumented, representing more than one million people nationwide, according to a study by Workers Defense.

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