In spite of some evidence that consumers say they plan to spend less this holiday season, the reality seems to be that consumers are actually spending more. At least that’s the story according to Citi.
The latest survey released by Citi indicates that more Americans plan to increase their holiday spending this year. In fact, Citi says that Americans will spend, on average $968 this holiday season. That’s $60 more than they spent just two years ago. The survey indicates that 63 percent of Americans plan to spend more money, or the same amount, on their holiday shopping as last year. Only 35 percent of Americans say they are cutting back on what they spend.
Some even plan to spend more than $1,000 this holiday season — about 29 percent.
Consumerism Up = Confidence in the Economy
Industry leaders and others are, understandably, happy about this latest development. If holiday spending is up, it is seen as a sign that more people are confident in the economic recovery. When consumers are worried about what the future holds for the economy, they tend to hoard their cash and spend less. However, when they feel as though things are going better, they are more willing to open their wallets.
The Citi survey says that this year marks the fewest number of Americans saying they plan to spend less since the advent of the recent recession and economic crisis. With fewer consumers cutting back during the holidays, it could be an indication that the economy is on the mend.
Part of what might help the economy improve, of course, is the increased spending. In this way, consumer confidence contributes to economic recovery. Americans feel better about the economy, so they are willing to spend more, and since the economy relies on consumer spending, the extra spending boost the economy. It’s encouraging to the people in charge, but it doesn’t really solve the problems of the regular folks who use their newfound confidence and relief to get into debt as they spend during the holidays.
Are You in Danger of Debt this Holiday Season?
One of the realities of the continual increases in what people spend during the holidays is that more Americans find themselves in debt during the holiday season if they don’t have plans to stay out of debt during this time of year.
During times of economic difficulty, it’s easier to cut back on spending, and consumers are more afraid of debt. However, as the economy improves (or as consumers feel it is improving), they are more likely to believe that they can take on debt again. They are confident that they can pay it off in a timely manner.
If you really can pay off your credit cards at the end of the holiday season, using them to make purchases isn’t a bad idea. You can earn reward points, and incorporate credit cards into your frugal lifestyle. However, you still have to be careful. Don’t get in over your head, or your finances will be devastated by the high interest charges.
What will you do this holiday season? Are you spending more money or less money? Why?
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