PRINCETON, NJ -- The average amount of money Americans predict they will spend on Christmas gifts this season is now $743, up from last month's estimate and a healthy increase over Americans' Christmas spending forecast at this time a year ago.
The latest data are from a USA Today/Â鶹´«Ã½AV poll conducted Dec. 11-13.
"The rebound in Americans' 2009 Christmas spending intentions is happening in an environment in which consumers' reported daily spending still trails last year's levels by a significant amount."
Based on the latest Christmas spending estimate, Â鶹´«Ã½AV forecasts that holiday sales this year have the potential to show a modest increase of 1% -- marking a shift from last year, when Christmas spending was down 3.4% from the previous year. Â鶹´«Ã½AV's Christmas spending model is based on a comparison of annual changes in consumers' Christmas spending intentions since 1999 and actual yearly changes in holiday spending for the same years.
Importantly, while Americans' current holiday spending intentions exceed the $639 recorded in December 2008, they fall well short of the levels seen in each of the previous four years. As such, spending continues to reflect a recessionary rather than economic growth mentality. Only a month ago, -- indicating just how fragile the consumer mentality remains this season.
Additionally, Christmas spending represents only a portion of total consumer spending. The rebound in Americans' 2009 Christmas spending intentions is happening in an environment in which . To some degree, Americans may be shifting their discretionary spending dollars into Christmas shopping, rather than increasing their total spending. Also, the increase between November and December in planned holiday spending may point to a late surge in Christmas shopping, particularly heading into the crucial final shopping weekend before Christmas.
Nearly 3 in 10 Will Spend $1,000 or More
Comparing Â鶹´«Ã½AV's final Christmas spending forecasts for 2008 and 2009 -- based on surveys conducted in the first half of December for both years -- the biggest shift in consumer intentions by spending category is a seven percentage-point increase, from 22% to 29%, in those planning to spend $1,000 or more. (However, this still falls below the 33% spending $1,000 or more in 2007.) Slight declines this year are seen in lower spending categories.
In line with these spending trends, Â鶹´«Ã½AV's latest survey also finds that the increased spending this year compared with 2008 is primarily occurring among upper- and middle-income Americans. The spending intentions of lower-income Americans (those earning less than $30,000 per year) are holding steady at the dampened level seen in each of the past two years.
Â鶹´«Ã½AV can estimate what the actual percentage change in holiday spending will be in 2009 by comparing its final spending forecast for prior years to the actual percentage changes in holiday spending that have been calculated by the National Retail Federation for those same years. The Â鶹´«Ã½AV data used in this model extend back to 1999. The results of the model this year point to a 1% increase in 2009 holiday sales compared to 2008, based on the latest $743 average spending figure. This would be a welcome rebound from last year's real decline in year-over-year holiday sales of 3.4% as reported by the National Retail Federation, although still weak compared to the average 4.1% increase seen between 1999 and 2007.
One cautionary note in the new poll comes from Americans' own assessments of whether their 2009 Christmas budget is greater or smaller than last year's. Forty-two percent now say they will spend less than what they did last Christmas, similar to the 45% saying this a year ago, but about double the norm on this measure seen earlier in the decade.
Bottom Line
The $743 Americans now predict they will spend on gifts this season is a substantial increase over the $639 they reported a year ago, and also higher than what they predicted in November of this year. Based on Â鶹´«Ã½AV's model, this should translate into a significant swing in actual holiday retail sales. Instead of the 3.4% decline holiday retailers saw in 2008, they can likely expect a slight improvement in sales this year, on the order of 1%. However, given the volatility Â鶹´«Ã½AV has seen on this measure since October, such an improvement clearly depends on consumers' maintaining their renewed spending momentum right through the after-Christmas sales.
Survey Methods
Results are based on telephone interviews with 1,025 national adults, aged 18 and older, conducted Dec. 11-13, 2009. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
