Why Americans Are Spending Less This Christmas
via MoneyNing:
The results are in: the latest Gallup poll shows that more Americans prefer saving money to spending it. This is no news to retailers, as many major chains have been experiencing unusually low sales for the holiday season. Sales through Thanksgiving and Black Friday were surprisingly lackluster — a warning sign that, for various reasons, shoppers aren’t feeling as spend-happy as they have before.
While reasons for spending less this Christmas are likely as unique as the individual, here are a few of the main motivators behind this spending trend.
High rates of unemployment
In the last several years, national unemployment rates have been above 7%, higher than the “healthy” 5-6% range we’ve experienced in the past.
The loss of a job, or the inability to find one, has many families scrambling to pay their bills, and has significantly reduced discretionary spending.
On a hopeful note, the unemployment rate is trending to drop to 7.2%, the lowest in five years. This is largely thanks to an increase in jobs. Employers have added roughly 200,000 new jobs each of the last four months, a good sign that the unemployment rate may continue to drop, allowing the economy to experience a boom. On the other hand, if spending continues to remain cautious, it could hurt the economy.
Doubts about the economy
The recent government shutdown left many people worried about the future of our economy. Some who are dependent on government welfare programs, such as SNAP or WIC, are already expecting to see cuts to their benefits — and may see even more if the government chooses to reform the system. This concern, of course, has affected their spending.
Then there was the controversial and tumultuous launch of the Affordable Care Act. One of its unforeseen side effects was that many insurance providers were forced to eliminate some plans and policies, directly impacting thousands of insured workers. (Thankfully, a provision is being made to allow current policies to remain in effect for a year’s time.)
In addition, insurance costs for some people are expected to increase. Those affected will likely be more cautious with their spending this holiday season.
A shrinking from consumerism
Those who’ve seen the effects that excessive credit and and speculation had on the housing market, as well as the economy in general, are shrinking away from debt. This is especially true of both Millenials and Generation Y, who are learning from the mistakes of the previous generations’ debt problems.
It also appears that people are just tired of the materialism and consumerism that’s so prevalent in our culture. Many big-name retailers caused protests and boycotts this year because of their even earlier Thanksgiving Day sales, which cut into what many consider family time.
A desire to reach savings goals
It makes sense that if you keep on spending and not saving, you won’t be able to accomplish your financial goals, whether they’re as simple as starting an emergency fund, or as significant as buying a house. People are catching on to this and, as the Gallop poll indicates, are choosing to save. Saving really is the key to financial freedom.
While this trend may disappoint retailers, who have been extending deep price cuts into December in hopes of boosting their sales, it won’t disappoint those who are able to regain control of their finances.
Have you cut back this Christmas? Why or why not?
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Why Americans Are Spending Less This Christmas
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