Shoppers say humbug to holiday spending
Posted November 7, 2008 1:40 p.m. EST
Updated November 7, 2008 7:07 p.m. EST
Raleigh, N.C. — More than three-fourths of Americans plan to cut back on holiday spending because of the struggling economy, according to a new poll.
Consumer Reports interviewed 1,001 people nationwide Oct. 16-19 and found 76 percent planned to spend less on gifts, travel and charitable donations this year. The survey has a margin of error of plus or minus 3 percentage points.
Eighty-four percent of respondents said they would be cutting back on personal gifts, and 40 percent said they would spend less on friends and family. Pets will come out the best this year, with 23 percent of people cutting back on treats for them, according to the poll.
"I'll probably be spending less – less on my children, less on myself," said Carol Hook, who was shopping Friday at Crabtree Valley Mall. "(The children will) think Santa Claus is having a rough time."
"We're going to limit, maybe a little bit, what we're buying for the kids and not go quite as crazy as we have before," shopper Laura Marino said.
Three in five people plan to draw up a budget for their holiday spending, according to the poll. Last year, about two in five budgeted their gift-buying.
"We'll probably go down by about a third, and we'll just be more conscious of what we do buy," shopper Jennifer Bryant said, adding that she is clipping coupons and keeping an eye out for specials.
Although "Black Friday" – the day after Thanksgiving that retailers count on to turn their year profitable – is three weeks away, more than half of those surveyed said they didn't expect to finish their holiday shopping until mid-December. Almost a quarter said they would still be scouting for bargains on Christmas Eve.
North Carolina State University economist Mike Walden said shoppers should see better deals this year as retailers work hard to get people into the stores. But retailers also are cutting back on their inventories to cope with the slow economy, he said.
"If you know what you want, get there soon to get it," Walden said.
Stephanie Harris, the manager of Charlotte's Jewelry and Gifts in North Hills, said she doesn't agree with the gloomy forecast.
"Last year was fabulous, and we had a fabulous summer," Harris said. "We're trying to do more incentives to help our shoppers and to help our sales."
The store is offering credits for customers who spend at least $100, she said. Learning Express, a toy store at North Hills, offers free gift-wrapping and other services to entice customers.
"Our volume has already increased the past few weeks, drastically," store manager Micaela Bailey said. "Kids need to get presents at Christmas."
Deborah Ramsey, the owner of The Garden Supply Company in Cary, said her business survived last year's historic drought and will outlast the current historic recession.
"Everybody else has heard the same news we have," Ramsey said. "We do believe it's a self-fulfilling prophecy that, if you think you're going to do well and you plan to do well, you will.
"If you can maintain that attitude, you can ride out anything."
She has diversified her business, with landscaping in warm months and holiday trinkets for the off-season. She said she also watches inventory and employee hours.
The nation's unemployment rate hit a 14-year high of 6.5 percent in October, officials announced Friday, and Walden said he expects the economy to continue to deteriorate. North Carolina's unemployment rate is 7 percent.
"I think it will get uglier as the year goes on and we move into next year," he said. "We may have hit rock bottom in the stock market – the stock market always moves ahead of the broader economy – but I think the real economy ... has a way to go down yet."
Unemployment could peak at about 8 percent, he said, noting most economists expect the U.S. economy to shrink by 3 to 4 percent during the recession. In 2001, the economy shrank by 0.5 percent, he said.
President-elect Barack Obama faces a monumental task of leading a recovery effort, he said, adding he doesn't foresee "a magic turnaround" in the economy."
"Individually, people should be frugal (and) very cautious about spending," he said. "Of course, that hurts the broader economy because we want people to spend." Consumer spending accounts for about two-thirds of the U.S. economy.
Also weighing down holiday spending is the hangover from last year. About 12 million people still are paying off debt racked up on 2007 holiday gifts, according to the poll.