Consumers say they are stressed about money. But consumers are also spending money – in some cases in record numbers.

According to data from the U.S. Census Bureau, retail sales during the 2024 holiday season grew an unexpectedly high 4% over 2023 numbers to a record $994.1 billion. That was higher than the forecasts by the National Retail Federation (NRF), an industry trade group. And sales for the full year grew 3.6% over 2023 to a record $5.28 trillion, the NRF said.

So what gives?

There's a disconnect between the perception of cash-strapped consumers and the reality that holiday spending and travel were up, said Katie Thomas. Thomas leads the Kearney Consumer Institute, an internal think tank at global strategy and management consulting firm, Kearney.

Are consumers stressed about finances?

The Institute just released its latest quarterly Consumer Stress Index, which provides a view of consumer sentiment through questions it asks 2,000 U.S. consumers in a variety of income and demographic sectors.

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The survey provides insights into how consumers are feeling.

"Am I stressed about my own personal situation versus am I going to say I'm concerned about the economy?" Thomas said.

Thomas said going into the last quarterly survey after the November elections – where consumers said the economy and inflation were number one factors determining their voting – and seeing that the malls were packed and consumers were shopping online in high numbers, made her want to get a gauge of how consumers were truly feeling and acting.

Thomas wanted to figure out "are we as stressed out about money as we say we are?"

Thomas acknowledged that there is typically about "one-quarter to one-third of people who are definitely feeling the pressure and feeling the heat" of monetary stress.

But according to survey results, consumers' feelings about their personal financial security are improving. In quarter four of 2023, 70% of respondents said their income was keeping up with their cost of living. In the fourth quarter of 2024, 72% said the same.

Consumers, including Thomas, have noticed prices have gone up. A $60 trip to the grocery store is now probably $80, she said.

"That's real and I notice it, but it doesn't mean I can't afford it or that I bought a little bit less," she said. "So it's sort of that say-do gap."

How do consumers feel about food and housing costs?

Here's some other survey results on consumer sentiment:

• Food affordability: Seventy-six percent of consumers in the survey said "being able to afford food is generally not a concern or occasionally concerning (versus worried about it regularly). That compares with 78% of consumers who answered that way a year ago.
• Housing costs: 71% of respondents answered affirmatively to the question of "housing/rent pricing changes haven't really impacted me, or they've increased but I still feel comfortable." That compares to 72% a year ago.
• Job security: 28% of respondents said "if I were to lose my job, it would be hard/take a very long time to find a job." This uptick in job security concerns, from 24% a year prior, is a metric to watch, the study said, but it did decline from 31% in the third quarter of 2024 survey.
• Consumers can adapt: More than 80% of consumers said they could make changes in their life to lower their cost of living.

Consumers' perceptions of 'fair' pricing are outdated

Consumers' gut reactions to questions about prices such as "How much should a dozen eggs cost, what's the expected price for a box of brand-name cereal and "how much does the average family pay for housing" are stuck in the past, the survey said.

"While prices on items from food to housing to dining out increased more than 20% from 2019 through 2024, wages largely kept up, and in most categories, consumers spent about the same percentage of their income in 2024 as they had in 2019," Thomas wrote in her survey results.

"So while consumers may feel sticker shock at grocery prices, they're not spending a disproportionate amount of their paycheck at the grocery store," she said. Additionally, 61% said they have generally purchased the same products and services over the past six months, despite noticing increases.

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Groceries are not a good indicator of consumer spending

While grocery prices have traditionally been a key indicator of consumer financial health, they are an outdated barometer, Thomas said. Consumers have more options from both brands and retailers for groceries and many consumers, including high-income groups, are choosing to "get the best bang for their buck on everyday goods," including shopping at chains like Aldi, Walmart and Dollar Store, she said. Consumers do not see this as "trading down," Thomas said, but saving money so they can use their discretionary income on their "wants" like vacations.

Last fall, Walmart said in its earnings call that affluent families who make more than $100,000 were their highest gains of new shoppers.

Consumers are also worried about trade and price increases from tariffs. There was a seven point increase in people worried about those two issues, said Thomas.

Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [email protected] or follow her on X, Facebook or Instagram @blinfisher. Sign up for our free The Daily Money newsletter, which will include consumer news on Fridays, here.