Hey America: Spending More Might Save the Economy
With consumers concerned about the current state of the economy, this season of giving is going to take on a whole new meaning. According to a recent poll by Bankrate.com, 42% of Americans plan to spend less on holiday shopping, and 49% of these are parents. As the poll indicates, most Americans have a negative sentiment toward money matters, feeling the economy could “ruin the holidays.”
In spite of people’s claims that they are will be tightening their holiday budget, their wallets are saying something different. From last weekend’s Black Friday deals, retailers reported strong sales. A record $52.4 billion was spent over Thanksgiving, up from $45 billion the year before.
Maybe spending our hard-earned money at the mall is a solution to some of our economic woes. No matter how we want to look at it, America is a nation built on consumerism, not production. If we are not buying stuff, then we are not going to see our economy get back to the way it once was. The government has already given us stimulus packages in the last few years to encourage spending. It was a good idea, but it was not executed properly. A sudden surge in spending won’t make radical or lasting changes to the economy. Rather, it needs to be something closer to a call to action, a rally, for people to spend more because it is the right thing to do. And the holidays are the perfect time for Americans to ask Americans to adopt a totally different state of mind (spend) than the one we have been in for the past few years (save).
Americans spend more money during the holiday compared to any other time of year, making this a season of joy for many retailers. Reversion to higher spending habits (the likes of which we could expect from non-recession holiday shopping seasons) comes at a critical time in the year. With the congressional Super Committee a super fail, Americans have every reason to be concerned about the pitiful state of economy. Many Americans are jobless, even more underemployed or barely making enough money to maintain their lifestyle.
However, it looks like Americans cannot keep their wallets completely closed. Rather, consumers are thinking more critically about where and how they are spending their money. Since consumers do not have the same amount of recreational funds lying around, they have to be more conscious of what they spend their money to ensure they are getting the best deals possible. This helps to explain the popularity and success of things such as Black Friday and Cyber Monday.
This trend affirms the results of a recent Gallup poll, which shows that estimates of holiday spending has increased since last year with consumers spending an average of $50 more this November – $764, up from $714 at the same last year. And this is more than $100 above what was spent in 2008 and 2009.
Old habits die hard. As much as we wish to become super-saver version of ourselves, at our core, we are still spenders. Buying whatever it is that brings a smile to our face, which is how we got in this debt crisis in the first place. Now that we have learned our lesson about the consequences of spendthrift behavior, we have become smarter consumers. It may not be exactly what the retailers want under the Christmas tree, but that is exactly the gift we should be asking for to help our economy.
Photo Credit: mia.gant