(The hill) – If the Christmas tree looks bigger this year, it may be because of the smaller pile of presents underneath.
Retail analysts expect Americans to spend about the same amount on holiday gifts this year as they did last year. But because of inflation, money will buy fewer gifts. Seven fewer presents, to be exact.
The average consumer plans to buy nine gifts during the 2022 holiday season, up from 16 in 2021, according to a closely monitored holiday retail surey from accounting giant Deloitte.
Those gifts cost an average of $507 and make up about one-third of the $1,455 the typical consumer plans to spend during the year-end holiday season, a table that also accounts for decorations, furniture, dinner outings and movies.
Other holiday spending forecasts and polls reached less Grinch-like conclusions, but no one in the consumer industry expects a Christmas for ages.
A Gallup survey in November found the average holiday shopper Preparing to spend $867 on gifts this year, compared to $886 last year. Holiday budgets are tighter as Christmas approaches, Gallup found, reflecting continued inflation and dwindling consumer savings.
An October study from the Conference Board think tank put avgerage gift expenses for $613 this year, up from $648 last year.
All told, Santa will be lugging a lighter sack down the chimney this year.
“You have a huge number of people saying they’re in a worse financial situation, but they’re still going to make this happen for their families,” said Lupine Skelly, a manager at Deloitte Services LP’s Consumer Industry Center.
Holiday shopping forecasters start early in the season to keep pace with holiday shopping. A September survey by consumer finance company Bankrate found that half of holiday consumers planned to do so start shopping for Halloween. Online giant Amazon responded to the expected demand in October with a special ‘Prime Day’. Other retailers followed suit.
“If your heating bills are higher and you pay more for gas, why not start receiving gifts in October and spread it out more?” said Skelly.
The traditional Christmas shopping season begins after Thanksgiving. People are more likely to start spreading purchases over more paychecks and patrol for discounts. They are also concerned about the supply chain, the consumer pipeline that has been down for long stretches of the COVID-19 pandemic, even as warehouses have largely been restocked.
However, most consumers are concerned about inflation. Rising consumer prices “is the elephant in the room,” said Ted Rossman, senior industry analyst at Bankrate. Inflation reached 9 percent last summer, a generation-high level. It has now 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 figure that “says more about prices than about increased holiday spending,” the financial services company said in a report. titled 2022 Holiday sales: the last hurray.
The title reflects the company’s gloomy forecast for 2023.
“Essentially, this is the last pretty big holiday season before our ultimate expectation is that the economy will go into recession next year,” said Shannon Seery, a Wells Fargo economist.
According to the Wells Fargo report, the past two years have seen big increases in holiday spending, a boost driven by federal stimulus payments and a healthy economy.
However, consumer confidence has fallen this year reflecting inflation, rising interest rates and a resulting rise hit the house marketamong other effects.
On a positive note, “people still have pretty decent job security,” Seery said. “I think the fact that they’re not yet worried about their work situation is why they keep spending money.”
The key word in her analysis is ‘yet’. Wells Fargo predicts a recession in the second half of 2023.
“Everyone in my field is talking about recession, about recession, and the actual consumer and household are not worried yet,” Seery said.
“Eventually you’re going to see some layoffs. And then it starts to bite the consumer.”
Most Christmas shoppers account for inflation, if not recession, in their budgets. Surveys from Deloitte, Forbes, and others showed that consumers intended to hunt for cheaper gifts, exchange them with fewer people, and even shop at resale stores.
Holiday planners also buy fewer decorations.
“If you remember people were sick at home during the pandemic,” Skelly said. “They were furnishing and buying furniture like crazy. So that’s an easy area to cut back on.
But if the holiday spirit seems a little muted this year, inflation may not be entirely to blame. The annual Christmas loot has faded as a retail phenomenon in recent years.
Bloomberg columnist Justin Fox analyzed censuses and found that Americans spend less of their annual retail budget at Christmas time now than 20 or 30 years ago. December’s share of all retail spending fell to 11.4 percent in 2021, the lowest rate in at least 30 years.
“The theory seems to be that people buy more throughout the year,” Rossman said. “They don’t do it that often during the holidays.”
Economists worry about the basic inefficiency of the Christmas gift: In most cases, the giver can only guess whether a gift is something the recipient wants or will ever use.
This year, with a lack of money, shoppers are not messing around. The Deloitte survey found that consumers expect to spend an average of $252 on gift cards this year, compared to $235 last year. With a gift voucher, the recipient chooses the gift himself. In every other major retail category, customers expect to spend less.
A Miami couple told The Wall Street Journal that they instructed their children choose “ohne really good present” each, rather than buying several gifts from a list or on a hunch. Parents lead children to malls and ask them to specify exactly what they want.
Many families go into debt to finance Christmas gifts. Bankrate’s holiday survey found that about half of shoppers plan to charge at least some credit card purchases, and some respondents admitted that it will take them more than a month to pay them off. Pay.
“The silver lining is that a lot of people have been saving more in recent years,” Rossman said.
The national savings stock peaked at more than $2 trillion in 2021. However, inflation has pushed it down to about $1.5 trillion, and economists predict that even that huge figure won’t last until 2023.
People save less now than they did a year or two ago, a product 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 revelry is bound to push the bill higher.
“Unfortunately,” said Rossman, “I have a feeling that January’s debt hangover could turn into a big one.”
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