It’s the Most Wonderful Time of the Year (for the Economy)

This shows inflation-adjusted monthly retail spending for the past three decades. It includes spending on goods — both online and in stores — and on food services like restaurants and catering. It does not include all consumer spending, but it’s a decent proxy for how much Americans are buying.

Economic data is often seasonally adjusted, meaning the numbers are smoothed out so that trends over time are more visible without the noise of seasonal cycles. But here, the data has not been seasonally adjusted, and December of each year is easy to spot.

You can see the pattern even more clearly by looking at each month’s spending as a percentage of the yearly total. Over this period, December’s share of annual retail spending is an average 17 percent higher than it would be if such spending were evenly split across months.

When this pattern breaks, something has gone awry. In the midst of the Great Recession, people cut back on nonessential holiday spending, and end-of-the-year purchases took a significant hit.

In 2020, despite the economic crisis caused by the pandemic, December spending increased from the year prior. Many Americans had extra cash thanks to government stimulus payments, and holiday spending was a large part of how they chose to use it, contributing to the economic recovery.

This seasonal trend is robust enough that it’s visible in our economy beyond just end-of-the-year retail shopping and food.

G.D.P. is a measure of the entire output of our economy. Looking at each quarter’s share of the whole year’s G.D.P., the last quarter of the year nearly always produces more than each of the first three. Americans’ ability to spend their way through the darkest months of the year is a key component in the health of the economy.

As Black Friday and the last few weeks of 2023 approach, economists will be keenly attuned to what consumers are doing. Michelle Meyer, a chief economist at Mastercard, said this was likely to be “a promotion-driven holiday season,” in which shoppers will patiently wait for the best deals.

But Ms. Meyer is still expecting consumers to be “quite active” this year, increasing their holiday spending over last year. In an effort to curb inflation, the Federal Reserve has been raising interest rates over the past 20 months, and experts have been on the lookout for a recession. But for now, there’s hope for an economically festive holiday season.