Preparing for Christmas

by Dual Income No Kids on December 5, 2009 · 0 comments

Christmas might be my favorite time of the year. In addition to the obvious reasons – presents, time off work, quality time with family and friends – the most appealing aspect of the holiday is the general lightness of the season. It seems like a lot of people are in good moods, and with my birthday just a couple weeks after Christmas, that good mood carries into the new year.

But the holiday season certainly has its share of stresses. My wife’s family will be in Texas, while my family still lives in Indiana. While my extended family lethargically makes plans for the holidays (they’ll get back to me next week), the price of plane tickets seemingly increases every day. In addition, there are presents to buy for everyone, decorations to purchase and display and a gigantic tuition check to issue at the beginning of the new year. It all adds up quite quickly, and it can be a bit overwhelming to say the least.
For those who lack travel requirements but still purchase Christmas presents, the price tag on the holidays can still be significant. According to the National Retail Federation, consumers are expected to spend on average $682 on presents this holiday season. While that may seem like a pretty high number, it is actually down 3.2% from last year, at levels close to where holiday spending was at the beginning of the decade.

Over the last 10 years, holiday spending had increased 4.4% annually. In 1999, consumers spend around $343.6 Billion on holiday gifts, and in 2008 they spend around $470.4 Billion, an increase of nearly $150 billion in just 10 years.

The expected decline in spending isn’t exactly welcome news to economists and administration officials who were clearly hoping that the minor growth momentum that the U.S. economy had managed to build (minus the unemployment figures) would carry through the holiday season and set our economy up for a strong 2010.

While the holiday season is still young, Black Friday spending may provide an interesting insight into how the rest of the month of December might turn out. The NRF reported an increase in the number of Black Friday shoppers – to 195 million shoppers, up from 172 million last year – but a decrease in the total sales figures.

Total spending topped $41.2 Billion, with an average of $343.31 spent per person, down from $372.57 spent by consumers last year. But more shoppers may be shifting the time at which they spend their money to what’s now being referred to as “Cyber Monday” – a day that saw an increase in traffic of 8%.

I think the most interesting piece of information to come out of those figures is the fact that more people are shopping and yet spending less money. This would seem to indicate that people are being smarter about what they buy, and are more willing to shop around for deals and sales. And those deals were certainly out there for those willing to put in the work to find them.
I’ve been hearing a lot lately about how our economy is on the rebound, but is there a better rough indicator out there for how our economy is doing than how we’re spending our money? The more comfortable you are from a personal finance perspective, the more comfortable you may be with spending your money, particularly during the holidays. A shaky sales estimate for this holiday season shows me that maybe we’re not quite back yet. Things may not be as bad as they were at this time last year, but that doesn’t necessarily mean that the economy is as stable as some would like us to believe.

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