Hammered by the downturn, half of Americans plan to spend less on holiday gifts this year – less bad than last year but still among the worst retail outlooks in a quarter-century.
With 50 percent in this ABC News poll saying they intend to cut back, spending plans have been this poor in just two Christmas shopping seasons since 1985 – the dreadful post-recession retail performance in 1991, and last year as the economy spiraled down in the latest recession.
Barely one in 15 adults, moreover, now plans to spend more on gifts, matching the record low last year and down from one in four in the late 1980s. And a mere 2 percent plan to spend "a lot" more – while far more, 29 percent, say they'll spend a lot less.
In another, equally unsettling gauge, Americans who plan to buy holiday gifts expect on average to spend just over $650, down from more than $700 last year and a new low in ABC News polls since 1999.
There are, for all this, two less-gloomy signs. Plans to cut holiday spending, while still high, have moderated from a year ago in a few groups: Among women, among the highest-income Americans and among seniors. To the extent that these groups are able to drive spending, retailers may do less poorly than they would otherwise.
CHALLENGES – While actual spending depends on prices and products, these results indicate real challenges for retailers in what can be their make-or-break month – a reason they're taking aggressive measures including extended hours, discounts and incentives. Black Friday, today, marks the traditional start of the holiday shopping season. (The term's source is unclear, but some say it's a reference to retailers turning a profit, in accounting terms going "in the black.")
While some economic indicators have improved, plans to cut back comport with 10.2 percent unemployment – the highest since 1983 – and the damage it's produced. Three in 10 Americans report a job loss in their household in the past year; among the rest, nearly half are worried about it happening in the months ahead. That makes it an uncomfortable time to spend.
Consumer confidence has averaged lower in 2009 than in any year since ABC News began tracking it weekly in late 1985; it's been this low heading into Black Friday just three times before – in 1991, 1992 and 2008. And in one component of the ABC consumer index, 74 percent call this a bad time to spend money – down from its high of 82 percent in October 2008, but still 11 points above the average, and again one of the worst on record in a Black Friday week.
GROUPS – Income's the biggest differentiator in spending plans; in households with less than $50,000 in annual earnings, 57 percent plan to cut back on their holiday spending; it eases a bit to 50 percent in $50,000 to $100,000 households. By contrast, in the wealthiest families, with incomes over $100,000 a year, far fewer – 35 percent – plan to cut back.
More robust spending by higher-income Americans, if it comes about, can offset some of the lower spending in less well-off households, one reason overall spending plans constitute a rough gauge, not a precise one. Indeed, people in $100,000+ households plan to spend on average about $1,350 on holiday gifts this year, well more than double the intended amount among all who earn less, about $530.