(A hill) – If the tree looks bigger this year, it could be because there is a smaller pile of presents under it.
Retail analysts expect Americans to spend about the same amount on holiday gifts this year as they did last year. However, due to inflation, this money will buy fewer gifts. Seven gifts less, to be exact.
Those gifts will cost an average of $507 and represent about a third of the $1,455 the average consumer plans to spend this year-end holiday season. The table also takes into account decorations, furniture, dinner and movies.
Other holiday spending forecasts and surveys have produced less Grinch-like conclusions, but no one in the consumer industry has been waiting for Christmas for ages.
A November Gallup poll found that the average holiday shopper preparation spend $867 on gifts this year compared to $886 last year. Gallup found that holiday budgets are tightening as Christmas approaches, a reflection of continued inflation and declining consumer savings.
All in all, Santa will be pulling a lighter sack up the chimney this year.
“There’s a huge proportion of people who say they’re worse off financially, but they’re still going to make it for their families,” said Lupine Skelly, manager of the Consumer Industry Center at Deloitte Services LP.
Holiday shopping forecasters start early in the season to keep up with holiday shoppers. A September survey by Bankrate, a consumer finance company, found that half of consumers are planning a vacation start shopping before Halloween. Internet giant Amazon responded to expected demand with a special “Prime Day” in October. Other retailers followed suit.
“If your heating costs are higher and you’re paying more for gas, why not start getting gifts in October and give more?” Skelly said.
The traditional Christmas shopping season begins after Thanksgiving. People earlier begin to spread purchases over a larger number of earnings and look for discounts. They are also worried about the supply chain, the consumer pipeline, which has broken down during the long period of the COVID-19 pandemic, even as warehouses have been largely overwhelmed.
However, consumers are most concerned about inflation. Rising consumer prices “are the elephant in the room,” said Ted Rossman, senior industry analyst at Bankrate. Inflation hit 9 percent last summer, the highest rate in generations. It has since fallen to 7 percent, but consumer prices are still rising faster than wages.
“People are spending more,” Rossman said. “They don’t necessarily get more.”
Wells Fargo forecasts a 6 percent increase in holiday sales in November and December, a number that “speaks more to prices than to increased holiday spending,” the financial services company said in a report. called 2022 Holiday Sales: Last Hurray.
The name reflects the firm’s gloomy forecast for 2023.
“Essentially, this is the last fairly big holiday season before we expect the economy to slip into recession next year,” said Shannon Seery, an economist at Wells Fargo.
According to a Wells Fargo report, the past two years have seen a large increase in vacation spending, driven by federal stimulus payments and a healthy economy.
On the other hand, “people still feel pretty decent job security,” Seery said. “I think the fact that they’re not worried about their jobs yet is why they’re continuing to spend money.”
The key word in her analysis is “yet.” Wells Fargo predicts a recession in the second half of 2023.
“Everybody in my field is talking about a recession, talking about a recession, and the actual consumer and households are not worried yet,” Seery said.
“Eventually you’re going to start seeing some layoffs. And that’s when it starts to bite the consumer.”
Most Christmas shoppers factor inflation, if not recession, into their budget. Surveys by Deloitte, Forbes and others have shown that consumers plan to look for gifts at a lower price, share them with fewer people, and even shop at resale stores.
Holiday planners are also buying fewer decorations.
“If you remember, people were sick at home during the pandemic,” Skelly said. “They decorated like crazy and bought furniture. So it’s an area that’s easy to cut back on.”
But if the holiday spirit seems a little muted this year, maybe inflation isn’t entirely to blame. The annual Christmas splurge has faded as a retail phenomenon in recent years.
Bloomberg columnist Justin Fox analyzed the census numbers and found that Americans spend less than the annual retail budget at Christmas now than 20 or 30 years ago. December’s share of all retail spending fell to 11.4 percent in 2021, the lowest in 30 years.
“The theory seems to be that people buy more throughout the year,” Rossman said. “They don’t do that often during the holidays.”
Economists worry about the fundamental inefficiency of the Christmas gift: in most cases, the giver can only guess whether the gift is something the recipient wants or will ever use.
This year, due to lack of money, buyers are not messing around. A Deloitte survey found that consumers plan to spend an average of $252 on gift cards this year, up from $235 last year. With a gift card, the recipient chooses a gift. In every other major retail category, shoppers expect lower costs.
A couple from Miami told The Wall Street Journal what they taught their children select “oa really nice gift» per piece rather than buying multiple gifts from a list or by guesswork. Parents take their children to shopping malls and ask them to name exactly what they want.
Many families will go into debt to finance Christmas presents. Bankrate’s holiday survey found that about half of shoppers plan to charge at least some of their credit card purchases, with some respondents admitting it will take them more than a month to pay them off.
“The silver lining is that a lot of people have saved more in the last couple of years,” Rossman said.
People are saving less now than they did a year or two ago, as a result of rising inflation. The national savings rate fell to 2.3 percent in October from 14 percent in October 2020.
Meanwhile, credit card debt is mounting, and the annual holiday binge is sure to push it higher.
“Unfortunately,” Rossman said, “I feel like the January debt hangover could be a big one.”
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