Holiday Spending Plans Plummet, Signaling Dismal Retail Season

Nov. 19, 2008 — -- Americans plan to cut back drastically on holiday spending this year, a dismal prospect for retailers in their most critical season.

Fifty-one percent in this ABC News poll say they'll spend less this year than last on holiday gifts, matching the sharpest consumer retreat in polls dating back 23 years -- last seen ahead of the dreadful Christmas retail performance just after the 1990-91 recession.

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More, 68 percent, say they'll wait for sales before buying holiday items, even if that means missing out on things they really want -- 26 points higher than in a 1990 poll. And Americans on average say they'll spend $716 on holiday gifts, the least in polls since 1989 and more than 40 percent below its level three years ago.

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The sharp decline in spending plans underscores consumer insecurity in the teeth of the global financial crisis and subsequent recessionary trends. ABC's ongoing Consumer Comfort Index fell this week to its lowest on record in 22 years of weekly polls: Only 7 percent of adults say the national economy is good, just 21 percent call it a good time to spend money and 44 percent rate their own finances positively.

Prospects are no better in cyberspace. Online shopping -- previously, a bright spot -- looks set to level off. While 37 percent say they'll buy gifts over the Internet, that's essentially unchanged from last year. Few Internet shoppers, just two in 10, say they'll do all or most of their holiday spending online, also essentially unchanged. And online shoppers are as likely as their offline counterparts to say they'll spend less this season.

The month-and-a-half ahead is an essential period for retailers, some of whom rack up half their annual sales in the holiday period. But this poll indicates no letup from what's already a raft of grim retail news. In just the past week, the Commerce Department reported a 2.8 percent month-to-month decline in retail sales in October, the largest drop in 55 years of surveys; the International Council of Shopping Centers reported a 0.9 percent decline in same-store retail chain sales from a year earlier, the worst in 35 years; Circuit City filed for bankruptcy; Best Buy reported a 7.6 percent drop in October sales; Macy's reported a $44 million third-quarter loss; and the National Automobile Dealers Association projected a 12 percent drop in new car and truck sales.