What are Americans Spending Money On? Telling Signs for the Holiday Season

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What kinds of items are people buyingThe Business News Daily headline alone is enough to provide a shot of holiday cheer to retailers and other business owners: Shutdown Won't Shut Down 2013 Holiday Spending. Yes, it says, despite all the goings-on in Washington recently, Americans say they’re still planning to spend on gifts in the coming weeks, according to a Gallup poll conducted in early October. In fact, the poll indicates that Americans think they’ll spend an average of nearly $800 ($786, to be exact), up from $770 last year and $764 in 2011. BND points out that, although retailers would hope for a bigger increase, it’s still good news, especially for the economy overall.

And yet, experts still hope that despite uncertainties, the holiday season will prompt consumers to open their wallets. Data since October (as in the upcoming November Gallup poll) may well prove to be more positive. And although we’ve come a long way in the last several years, Gallup advises retailers that “cautious optimism” is the way to go again this year.

So, how about the National Retail Federation? What are its predictions for holiday sales this year? NRF says it is projecting 2013 holiday sales to rise 3.9 percent to $602.1 billion. Some additional interesting facts and figures from NRF:

    • On average, holiday sales have increased 3.3 percent for the last 10 years.

 

    • Last year, holiday sales represented 19.3 percent of total retail industry sales. (For some retailers, the holidays can account for 20-40 percent of annual sales.)

 

    • NRF estimates that this year retailers will hire between 720,000 and 780,000 seasonal employees. This compares with 720,500 hired last holiday season.

 

    • Shop.org projects online holiday sales to increase between 13 and 15 percent to as much as $82 billion during November and December this year.

 

    • As many as 40 percent of consumers have been doing holiday shopping since before Halloween. Typically, people start buying things like decorations and greeting cards early.

 

    • Return fraud continues to be an issue for retailers, which has prompted many to change their return policies. Retailers estimate that they lost nearly $3 billion in return fraud during last year’s holiday season alone!



Obviously, many different factors have an impact on consumer confidence and their willingness or ability to spend during the holidays. Salon.com reports that since the recession, middle class Americans are investing mostly in big-ticket items such as housing and cars. And because they’re spending more on things like houses, they’re spending less on everything else. Many say they’re still spending very conservatively, buying only what they need.

While this may not cause a lot of retailers (e.g., those selling clothing and other general merchandise) to feel optimistic, Salon says the focus on housing-related spending is great news for companies such as Lowe’s and Home Depot. In fact, both reported blow-out second quarters.

To put this all in context, the Los Angeles Times recently took a look at how spending habits have changed since 1973. Not surprisingly, what they found: More housing, less saving. Statistics say that the average person spends 81.2 percent of his or her post-tax income on food, housing and other expenses, compared with 85 percent in 1973. But experts aren’t sure where Americans are spending the rest of their after-tax dollars. They say it’s definitely not in savings, investments or retirement accounts. In fact, the rate of savings rates is just 4.6 percent today; in 1973, it was 13 percent.
Image courtesy of Feelart / FreeDigitalPhotos.net


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