Americans to Cut Holiday Spending -- Really
New survey shows U.S., crimped by energy prices, will shorten shopping lists.
Nov. 20, 2007— -- Rising costs of gasoline and home heating are putting pressure on consumers to curb their spending this holiday season, according to data from a new national survey.
Thirty-eight percent -- up 6 percent from last year -- of those responding to the annual survey conducted by the Consumer Federation of America and the Credit Union National Association said the cost of gasoline and home heating would cause them to somewhat or greatly decrease their holiday spending.
"By a wide margin, the strongest negative influence on holiday spending plans this year is the high cost of gasoline and home heating," said Bill Hampel, chief economist at CUNA.
Rising gasoline and energy costs, along with a family's current finances and general household expenses, were most frequently cited as reasons for reducing planned holiday spending.
"U.S. households feel financially strapped and are looking for ways to cut spending," said Hampel.
When asked about the effect of gas prices on consumer spending, Hampel suggested consumer psychology is to blame. "Of all the prices that we pay, it's the one that most consumers drive past with huge signs every day, and so they see changes in gas prices. And therefore that's more evident than, say, the price of milk in a grocery store," he said.
Some 35 percent of survey respondents said they intend to spend less this holiday season -- the highest percentage in the eight years that CFA and CUNA have surveyed holiday spending. The figure is up from 32 percent last year and is composed mostly of households with incomes between $25,000 and $50,000. Forty-two percent of respondents in this lower-middle income group said they plan to reduce holiday spending.
"Frankly," said Hampel, "given all of the other headwinds the consumer is facing this year. … I'm actually a little surprised that the results were not weaker than they are."
Using the results of the survey, Hampel estimates that holiday-related spending in the fourth quarter this year will rise by only 4 percent -- a weaker increase than in previous years, and "perhaps what we'll see this year is more consumers actually living up to their plans of spending less this year than they did the previous year," said Hampel.
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