There’s good reason to think it through; the Great Recession has permanently altered the way Americans think about money. Where taking on debt was once considered a mark of true adulthood, people are shying away from overspending now that they’ve experienced the consequences.
While we’ve recovered from the worst of the economic downturn, it can sometimes seem like Americans are lost in a state of financial indecision when it comes to spending, especially around the holidays. For small business owners and retailers, that can lead to questions on why there is such indecision. Is the recession to blame or are there other factors? Fortunately, there’s research available that can help to answer why spending is different this year than in previous years.
For those who think materialism might be the cause, that’s not entirely correct. It is true that in recent years, whether we like it or not, shopping is usually mentioned along with Christmas. A new Pew Research Center poll found that one-third of Americans dislike the materialism of the holidays, but 86 percent still said they were planning to buy gifts for friends and family. As the shopping season starts earlier and earlier every year (this showed Black Friday running into the Thanksgiving holiday for the new “Gray Thursday”), more and more people might start to feel the stress of watching their budgets. If you’re trying to watch your wallet this year, it might seem like you’re the only one, but you’re not.
Gallup, a research company that conducts polls on a variety of topics, runs a three-month set of surveys on projected holiday spending each year and the results for 2013 are, in some ways, surprising.
Gallup runs its holiday spending polls in October, November, and December of each year. Since starting the poll in 1989, the question Gallup asks consumers has remained the same: “Roughly how much money do you think you personally will spend on Christmas Gifts this year?”
Using the information they receive, Gallup tracks the fluctuations of responses against previous yearly trends. Their reporting also shows how spending estimates may change as the holiday approaches and those gift lists items become real expenses. In Gallup’s reports on the economy, you can see exactly what sort of toll the Great Recession took on the holiday season. Peak spending estimates in 2007 ($909 in October) plunged in the aftermath of the economic crash, and has recovered slowly since then.
In October of this year, Americans estimated that they would spend $796 on Christmas gifts. The trend is similar to last year’s spending but it’s notable as it does show growth despite the government shutdown. The November poll results also showed an average estimate of $704 for spending. This is almost $100 below October’s estimates, and significantly below the November 2012 predictions of $770 for holiday gifts. These measures are often paired with statistics forecasting the growth or decline of retail spending.
While October’s poll estimated a respectable 3.7 percent increase in holiday shopping over 2012, November’s results suggested that retailers would only see a 1.7 percent to 2.4 percent growth. December’s results, posted by Gallup last week, showed a middle ground prediction of $740 in Christmas spending, halfway between their October and November estimates.
What does this all mean? Well, it provides a look into how the current economic situation is affecting one what has long been one of the biggest shopping times of the year. While the government shutdown may not have initially affected Americans’ plans, they were more cautious by November. As Gallup reported, the events of the last few months (including the government shutdown, the debt ceiling, budget debates, the Healthcare.gov website, and the ongoing discussion over the Affordable Care Act) have made American consumers more frugal in their discretionary spending. The final December prediction suggests that consumers are still operating with a recessionary mindset, even as the stock market improves and we continue to see economic growth.
Spending can give a struggling economy a much-needed boost, but it’s tough to part with your money when you’re worried about the next paycheck. Gallup’s results suggest that Americans are thinking a little harder about how their holiday spending will affect them in the long term. It remains to be seen whether they’ll stick to spending cautiously in the long run.