If the Grinch is going to steal Christmas from retailers, pin the blame on the restart of student loan payments.
Already, the resumption of payments on Oct. 1 appears to be weighing heavily on the minds of consumers with outstanding student debt.
About 40% of people with student loans expect to cut spending, according to a new survey of 1,500 consumers conducted by Wedbush analyst Tom Nikic. Of this cohort, Wedbush's work showed average student loan debt balances ranging from $0 to $50,000.
Read more: Worried about when student loan repayments resume? These programs could help
The categories that were most often cited as areas for spending pullbacks were restaurants, apparel, and electronics.
Some of the most at-risk retailers from any spending slowdown are discretionary names such as Williams-Sonoma (WSM), Wayfair (W), and Best Buy (BBY) Nikic said.
The restart of payments — after a crushing blow in June to President Biden's plan to forgive up to $20,000 in debt for millions of borrowers — has put the crippling amount of student debt on the books of many households back into the spotlight.
The total amount of student debt in the US tallies a bloated $1.8 trillion, per the most recent data from the Federal Reserve. Student loan debt levels have tripled since 2008.
An estimated 43 million people in the US have some amount of outstanding student loan debt, so a wide swath of the population could be poised to rein in consumption into year-end.
Data from the Federal Reserve estimates that the typical student loan payment ranges from $200 to $299 a month. US consumers could now end up making an incremental $120 billion of student loan payments annually, estimates Nikic.
Nikic's research computes that if consumers need to spend an incremental $120 billion annually on student loan payments, it could wipe off 2.5% of the total $5 trillion in discretionary spending done annually.
That's brutal news for retailers still contending with high merchandise inflation, rampant theft, and a shift to demand for services.
"With consumers now needing to divert some of their monthly income towards student loan payments, there is risk that this could 'crowd out' other spending items," Nikic explained. "Furthermore, this comes at a time when U.S. consumers are increasingly feeling pressures from a variety of sources, including waning pandemic savings, rising gas prices, record-high credit card debt, and a continued normalization of spending on services vs. goods. Thus, these factors could combine to weigh on a variety of companies, including retailers of discretionary goods."
In fact, discretionary retailers may be seeing the first round of effects that Nikic discussed.
Macy's (M) said its second quarter credit card sales tanked 36% from the prior year to $150 million. Department store rival Nordstrom (JWN) voiced that it's seeing a similar trend.
Interest on student loans began accruing once again on Sept. 1 after several COVID-related pauses.
Read more: Can you pay student loans with a credit card?
The rise in credit card payment delinquencies and weak credit sales prompted BofA to slash its profit estimates on both Macy's and Nordstrom last week.
In turn, investors continue to approach shares of discretionary retailers cautiously into the start of the holiday shopping season.
The Consumer Discretionary Select Sector SPDR Fund (XLY) has shed 7% in the past three months, worse than the 4.5% decline in the S&P 500. Shares of Macy's and Nordstrom are down 32% and 30%, respectively, over the same stretch. Kohl's (KSS) is off by 23% while Target (TGT) has declined by 22%.
Another new survey out this week from Morgan Stanley's Jeffrey Adelson found that only 24% of student borrowers can make their full monthly payment without reducing spending. That is down from 29% just three months ago.
About 50% of student debt borrowers intend to begin paying their loans this month, meaning consumers' cash flows are getting "tighter," Adelson pointed out.
"Consumers are having an incrementally harder time making ends meet over the past several months," Adelson said.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].