US holiday spending to disappoint-consumer group

Forbes/Reuters ^ | November 25, 2003 | Andrea Hopkins

[Starwind]

US holiday spending to disappoint-consumer group

Reuters, 11.25.03, 12:35 PM ET

By Andrea Hopkins

WASHINGTON, Nov 25 (Reuters) - The U.S. holiday shopping season may not live up to economists' robust expectations, a survey out on Tuesday suggested, with more Americans saying they would cut spending from last year's already weak levels.

A surprisingly pessimistic survey from the Consumer Federation of America and the Credit Union National Association said consumers are cautious because of lingering concern about the economy and worries about household debt.

Most private-sector economists have predicted strong U.S. holiday spending, fuelled by leftover cash from summer tax cuts and renewed confidence in the economic recovery.

But 34 percent of consumers surveyed said they would spend less during the holidays than they did in 2002, a big jump from the 21 percent who said so last year. The survey of 1,017 adults was conducted from Nov. 13 to Nov. 16.

Only 15 percent planned to shell out more -- down from 16 percent a year ago -- while the percentage of people who said they would spend about the same amount fell to 50 percent from 61 percent a year ago.

"This is a surprising result," said Bill Hampel, chief economist at the Credit Union National Association, noting that until he got the survey results a week ago he, too, had been expecting a surge in holiday spending.

"But this survey tells us that consumers are still more nervous about the economy than we might have expected. Their confidence in the recovering economy is lagging the actual growth in the economy."

The 2002 holiday shopping season gave retailers little enough to cheer about with the sector logging its smallest holiday sales growth in more than 30 years.

Hampel said since the survey is not adjusted for the amount of money consumers expect to spend, holiday sales could still rise this year. But he warned high expectations for a booming retail season are overly optimistic.

"I don't expect holiday spending to shrink this year, but I do expect us to have much weaker holiday spending than some analysts are expecting," he said.

Household spending has risen by about 3 percent a year in the last four years despite the 2001 recession and slow economic recovery, he said.

Consumer Federation executive director Stephen Brobeck said continued concerns about meeting debt payments seemed a key factor behind the restrained spending plans.

Asked what they would do with a $5,000 windfall, 46 percent of those surveyed said they would use most of it to pay down debt, up from 40 percent last year. Only 15 percent said they would spend it, while 37 would add the money to savings or investments.

Copyright 2003, Reuters News Service

[Starwind]

...
Hampel said since the survey is not adjusted for the amount of money consumers expect to spend, holiday sales could still rise this year. But he warned high expectations for a booming retail season are overly optimistic.

"I don't expect holiday spending to shrink this year, but I do expect us to have much weaker holiday spending than some analysts are expecting," he said.

[...snip...]

Asked what they would do with a $5,000 windfall, 46 percent of those surveyed said they would use most of it to pay down debt, up from 40 percent last year.

[Starwind]

Grinch alert...

[RebelBanker]

As Reuters desperately tries yet again to talk down the U.S. economy. If the economic news is good, that is good for President Bush, so Reuters does not allow any good economic news to cross its wires.

Pinheads.

[templar]

"But this survey tells us that consumers are still more nervous about the economy than we might have expected. Their confidence in the recovering economy is lagging the actual growth in the economy."

People have an annoying tendency to believe what they are seeing over what they are being told.

[SeeRushToldU_So]

I hope my wife spends less, normally she wipes me out this time of year.

[Wright is right!]

Whaddaya wanna bet that some media entity commissioned the "survey" and told the org. just how they wanted it to come out. This one's an out-lyer from all the other surveys.

Michael

[GraniteStateConservative]

What this doesn't take into consideration is that those with higher incomes will spend far more than they did last year. The total numbers of customers may not be that great, but the total sales will be boosted. The money investors have made makes it easy to spend.

[WhyisaTexasgirlinPA]

Keep dreamin' pal!

[LS]

Can't prove it by my Wal-Mart or our local shopping centers, which are quite busy.

[Batrachian]

Every year we hear about how holiday spending is, was, or will be disappointing, and every year I can barely get into the malls because of the crowds.

I'm tired of hearing this BS.

[LS]

Star, I will give you this. I've paid down my personal total debt by about 20% in the last year, heading toward zero debt (including mortgage). All extra cash I've gotten, except for a little put into Wal-mart, has gone back into debt reduction, although I did bump up my matched retirement accounts a little bit.

It's certainly possible a lot of people do so because they are "afraid" of the direction of the economy; but it's also possible there are a lot of people like me who just want to be totally debt free . . . before we go on new spending sprees!

[PhiKapMom]

Going to try and do my usual to spur the economy at Christmas as I do every year! Was out buying Christmas lights and some other Christmas items -- getting an early start at helping out the economy. I don't agree with this article if what I have been seeing is any indication. When people are shopping the Christmas decoration section, this is going to be a good Christmas for merchants IMHO! If it is a bad economy, the Christmas decoration section does not have a lot of people in it.

[elli1]

I was in Sam's today & shoppers were wheeling out air hockey & foosball tables left n' right. The WMT Supercenter parking lot next door was packed.

[AppyPappy]

That's because we get rid of Christmas, the biggest spending season of the year, and replaced it with "Holiday" which doesn't mean anything.

[hobson]

Where is the MOE? I don't trust a poll that doesn't disclose the MOE. period.

[IronJack]

Not content with the usual drumbeat of gloom and economic despair, the media have unveiled a new tactic for the upcoming season: anticipatory disappointment. No matter that the indicators are up, Up, UP! Reuters has decided that shoppers MAY not spend as much this year.

Beat the rush and throw yourself off a bridge today!

[imawit]

all we gotta do is wait till the retail stats for this weekend come out next week. That's a much better poll.

ps: missed you early this mornin. Thought you were a casualty from the flames when the reports didn't show up first thing.

[Starwind]

all we gotta do is wait till the retail stats for this weekend come out next week. That's a much better poll.

Redbook stats (9,000 chain stores) are down 2.9% for Nov compared with Oct.

ps: missed you early this mornin. Thought you were a casualty from the flames when the reports didn't show up first thing.

I download the econ reports into my computer for my own purposes, usually getting that out of the way before refocusing on projects. So I'm usually in no hurry, it just happens to be first up. It was only a few months ago that I thought I'd post links to them for FR readers as well (Quixotically thinking they'd benefit from seeing how the data track), but hung off the Reuters tabular news reports (which tabular reports are unspun) - but which report Reuters skipped this AM :-/

...so I did other stuff.

...but its nice to be missed :-)

[shamusotoole]

I was doing my duty at Costco. On a week day prior to the Thanksgiving weekend, the parking lot was full. The evidence of my eyes says Reuters is wrong.