How much do you plan to spend on gifts this holiday season? If you’re like the average American, a little less than last year. That certainly doesn’t make you a Scrooge — you are probably spending a lot more than you did at the height of the recession — but it certainly does suggest that Americans aren’t exactly popping corks about their economic prospects for 2014.
Getting an accurate read on the American consumer’s state of mind is as much art as science. Government unemployment numbers are notoriously misleading; consumer sentiment indices try to put a number on how people feel, also a risky endeavor.
One interesting alternative to the usual vague data is examining how much consumers say they’ll spend during the holidays. Let’s call it the “Santa Outlook.” No one would hold up such self-reported averages as gospel, but they do suggest a very tangible representation of how consumers feel as they head into the most important time of the year for retailers. And, looking at past results, the Santa Outlook seems surprisingly prescient.
So when the American Research Group reported recently that Americans plan to spend $801 this year, down from $854 last year, economists who think the U.S. economy is out of the woods hopefully noticed. That’s a 6% drop — a number that could kill the year for retailers if that Santa Outlook plays out on a big scale.
The American Research Group’s survey is nothing to be sneezed at. For starters, the group has compiled such Santa Outlooks for 29 years.
“The decline of real average planned spending that started in 2003 point once again to the challenges facing retailers,” warned American Research Group when it announced this year’s spending data.
And this year’s figures basically mirror results found by Credit.com when we asked the same Santa Outlook question framed in a slightly different way. Last year, 57% of consumers said they planned to spend more than $500 on gifts; this year, that dropped to 53%. Significantly, the group who said they planned to spend more than $1,000 dropped by 16%. When rich Santas get pessimistic, retailers get really nervous.
Here’s one possible reason, culled from other results in that same Credit.com survey: a growing aversion to credit card spending. Overall, 26% of Americans said they will use credit cards less to buy gifts this year. Of that group, 15% said they are worse off financially this year. And about 43% of this group holds credit card debt of more than $10,000.
It’s not all bad news. American Research Group’s data reminds readers just how bad the Great Recession was. To put things in perspective, back in 2009, Americans said they planned to spend just $417 on gifts, close to half the amount they’ll spend this year. That’s good news for retailers — so don’t expect to see the kind of last weekend fire sales that could be found four years ago.
But holiday gift-giving optimism is still well below its all-time high of $1,052 set — surprise! — all the way back in 2001. Perhaps you are nostalgic for holidays gone by; those who follow the economy are nostalgic for those quaint, innocent times before both the dot-com and the housing bubbles had burst.
So, how much do you plan to spend on gifts when the final shopping day before Christmas has come and gone? What’s your Santa Outlook?