A benchmark measure of U.S. consumer confidence just took its biggest dive in three years but retail industry watchers say this year’s winter holiday shopping season is shaping up to smash previous spending records.

Consumers are increasingly worried about earnings, jobs prospects and the overall business environment, according to September’s consumer confidence index report from The Conference Board. The board’s consumer confidence index fell in September to 98.7 from a 105.6 measure in August.

“Consumer confidence dropped in September to near the bottom of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at The Conference Board. “September’s decline was the largest since August 2021 and all five components of the Index deteriorated. Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further. Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future income.”

According to the Conference Board findings:

• 18.8% of consumers said business conditions were “good,” down from 21.1% in August.

• 20.2% said business conditions were “bad,” up from 17.3%.

• 30.9% of consumers said jobs were “plentiful,” down from 32.7% in August.

• 18.3% of consumers said jobs were “hard to get,” up from 16.8%.

But that waning faith doesn’t seem to be having any impact on expectations about consumer spending in the upcoming winter holiday season.

Record spending

According to a new forecast from Adobe Analytics, U.S. consumers are set to spend a record $240.8 billion in online shopping this holiday season (Nov. 1 to Dec. 31), representing 8.4% growth year over last year. In the 2023 season, shoppers spent $221.8 billion online, up 4.9% from 2022.

Holiday shoppers are also expected to start making seasonal purchases earlier this year and will use their mobile phones rather than desktop computers to transact over 52% of their online buying, a record level per Adobe’s analysis. And retail discounts will be among the primary drivers of consumer decisions when it comes to holiday purchases.

“The holiday shopping season has been reshaped in recent years, where consumers are making purchases earlier, driven by a stream of discounts that has allowed shoppers to manage their budgets in different ways,” Vivek Pandya, Adobe Digital Insights lead analyst, said in the report. “These discounting patterns are driving material changes in shopping behavior, with certain consumers now trading up to goods that were previously higher-priced and propelling growth for U.S. retailers.”

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When does holiday shopping start?

Earlier this month, Bankrate released survey results that found almost half of holiday shoppers, 48%, plan to begin shopping before Halloween.

“While some people scoff that the holiday shopping season seems to start earlier every year, getting off to an early start gives you more time to comparison shop for the best deals and spread out the impact of your purchases,” Ted Rossman, Bankrate senior analyst, said in the survey report.

Bankrate found that 12% of holiday shoppers began making their purchases by Aug. 31; 13% planned to begin in September; 24% in October; 37% in November; and 15% in December.

Adobe says discounting has been a reliable driver of consumer demand and e-commerce growth for retailers during the winter holiday shopping seasons and are projecting major discounts this year — up to 30% off listed prices — as retailers compete for consumer dollars. The effect, however, is more pronounced in 2024, as consumers remain price sensitive and will be looking to take advantage of big promotional events after a period of persistent inflation, according to Adobe.

Adobe also assembled its annual list of expected hot items for 2024 holiday season wish lists:

Top toys:

• Bluey Ultimate Lights and Sounds Playhouse

• Slime kits

• Fisher-Price Little People

• MGA’s Miniverse

• Descendants: The Rise of Red toys

• LEGO sets

Top gaming consoles:

• Sony PlayStation 5

• Xbox Series X

• Nintendo Switch OLED

Top video games:

• Madden NFL 25

• NBA 2k25, Diablo 4

• Call of Duty: Black Ops 6

• Super Mario Party Jamboree

• Valorant

• World of Warcraft: The War Within

Other top sellers this season expected to include:

• iPhone 16

• Google Pixel 9

• Samsung Galaxy S24 Ultra

• Bluetooth headphones

• Film/digital cameras

• Oura Ring

• Kindle/E-readers

• Ninja Creami