You'd think holiday shoppers would be singing "Happy Days Are Here Again," with the Great Recession in the rearview mirror, lower unemployment, and more people buying big-ticket items such as homes and automobiles. While the big-picture economic outlook has largely improved, most of us don't plan to break the bank this season.
If anything, there's concern over repeating mistakes of the past, such as overspending and drowning in debt. According to the Consumer Reports 2014 Holiday Poll, there's little doubt that the brighter economy is a key factor driving the decision of many to up their holiday spending this season, even if only modestly. Twenty-three percent attributed their largesse to the fact that they're feeling more generous now than they did in 2013, 16 percent said they're more optimistic, 14 percent got a raise, promotion, or better-paying job, and 12 percent have a job after being unemployed last year.
According to the Consumer Reports 2014 Holiday Poll, the first of a series of nationally representative online surveys designed to measure consumer sentiment and shopping behavior, 62 percent of Americans say they're looking forward to the end-of-year holidays. About one-quarter are really looking forward to the season. But as usual, there are always a few Scrooges: One in 10 of those surveyed said they're not at all energized about this festive time of year.
When it comes to spending, most respondents, 56 percent, expect to shell out the same amount on gifts as they did last year. Fourteen percent expect to spend more, while 30 percent say they're cutting back. That's a similar breakdown to what we've seen in recent years. But the percentage of shoppers cutting back on holiday expenses is half what it was during the dark days of the recession in 2008.
Respondents told us they expect to spend about $437 over the holidays this year. Over a quarter of people (28 percent) are expecting to spend $250 to $499 on presents this season; 19 percent are setting aside $500 to $799 for purchases, the same percentage that are counting their pennies and limiting expenditures to $100 to $249. Eighteen percent plan to splurge and spend $1,000 or more.
Perhaps because times have been so tough for so long, more than half of those surveyed say they're making a budget this season to maintain fiscal discipline. But creating a budget and sticking to it are two separate things. Last year, 38 percent of those who set a budget exceeded it, according to the survey.
Before you do your gift shopping, check our Holiday Gift Ideas page, which has all the advice you need to get through the holiday season.
Because online shopping accounts for so much of what we buy these days, Americans are becoming increasingly reliant on credit cards and debit cards. In fact, more than four of 10 respondents who used credit cards during last year's holiday season lauded them as the easiest vehicle for online payments. Credit-card debt, of course, is a serious concern, especially during the holidays.
Last year, 52 percent of respondents charged at least some purchases, but most were quite responsible at quickly paying off the balance. Sixty-one percent paid their holiday shopping bills completely by the next billing cycle, and by the end of February, three-quarters had done so. But as of this month, 7 percent of those surveyed were still financing their 2013 holiday purchases.
This season, consumers will once again use a combination of cash and plastic for their holiday purchases. Sixty-two plan to include cash in the mix, 45 percent a major credit card such as Visa or American Express, 45 percent a debit card, and 11 percent a store or retailer charge card.
Among those who won't be charging purchases this holiday season, 40 percent cited a fear of racking up debt, 31 percent cited a desire to better control spending, 11 percent were concerned about data breaches and hackers gaining access to their personal financial information, 5 percent said they had already maxed out their credit cards, and 4 percent don't want to be reminded about how much they spend. Surprisingly, 34 percent of respondents said they don't even possess a credit card.