NEW YORK (MainStreet) — Early indications on the holiday shopping season showed Americans more than eager to spend serious cash this year on gifts, food and drink and decorations.
The National Retail Federation said in October that consumers would spend an average $804.42 on the holidays, up from $767.297 last year.
Gift-giving would make up the bulk of that spending, at $459.87 for gifts for family and another $106.23 for friends and co-workers. Americans would spend an estimated $104.74 on food, $53.68 on decorations and $29.18 on greeting cards.
"Even with expectations for increased spending this year, smart shopping strategies will be very important to those celebrating the holidays," says Pam Goodfellow, a senior analyst at Prosper Insights & Analytics, which co-sponsored the holiday shopping study with the NRF. "Overall, consumers feel better about where they stand compared to a year ago, and as such could find themselves stretching their dollars to give their loved ones a holiday season to remember. Retailers, however, should still expect to see high demand for sales, coupons and other promotions as shoppers focus on 'what's in it for them.'”
Still, 41.4% said the economy would affect their holiday spending, and 75.6% of people giving answer said that meant they would spend less overall. That's a total 31% who said they planned to spend less on the holidays this year.
According to the Consumer Federation of America and Credit Union National Association, many consumers plan to spend less than in 2013 for the holidays — confirming the NRF. The study released Tuesday (a month and a half after the NRF's) says that only 10% of U.S. adults will spend more than they did in 2013, while 33% say they plan on spending less (although the CFA/CUNA analysts say "consumers almost always spend more than they say they will" in any holiday season.
That's despite the fact Americans say they are doing better economically than they were last year, which might normally suggest higher spending.
This isn't to say Americans will cut holiday spending dramatically. It's just that pie-in-the-sky spending sentiments might need to be muted. "Top-line results from an economic perspective are encouraging, and holiday spending almost certainly will increase this year," says Mike Schenk, CUNA senior economist. "However, elements of our survey underscore the fact many consumers continue to reflect significant concerns about their personal finances — most especially in the realm of weak income gains. Because of this we expect the increase in holiday spending this season to be modest."
Not surprisingly, the downside spending sentiment is class-driven, with Americans on the lower-income scale reporting a lower percentage in terms of holiday spending budgets. Thirty-four percent of households with incomes under $25,000 say their financial situation has worsened this year, compared with 13% of Americans earning $100,000 or more.
"The rising economic tide has not raised all boats equally," says Stephen Brobeck, CFA's executive director. "Far fewer households with incomes above $100,000 than those with incomes below $25,000 have fared worse over the past year."
— By Brian O'Connell for MainStreet