A new survey suggests that high gas and energy prices, along with overall economic sluggishness, will dampen holiday spending this season, but consumers may also turn out to be the winners, as stores slash prices early.
Almost 1 in 5 shoppers plans to spend much less than last year, according to results released Monday by the Consumer Federation of America and the Credit Union National Association. The top reason given for a decrease in spending was the high cost of gasoline and home heating. This year, 38 percent of respondents cited energy costs, compared with 32 percent last year.
Consumers also appear to be concerned about the price of gifts, with about one third saying prices will cause them to spend less. Attitudes toward holiday costs varied by income level, with 34 percent of those earning between $25,000 and $50,000 a year saying they were worried about paying off post-holiday credit card balances. Only about one quarter of all respondents shared that concern.
Still, consumer psychologist Kit Yarrow says all income groups will experience some of the pinch. "We have high-income consumers that are a little nervous about spending money because of volatility in the stock market. The middle class are freaked out about the value of their homes, and then the lower-income consumer is strongly affected by gas and energy costs," she says.
Retailers are already anticipating a mild slowdown: According to the research firm eMarketer, the industry consensus is that holiday sales will grow around 4.5 percent over last year, the lowest rate in five years. The National Retail Federation estimates 4 percent growth. Over the past decade, holiday retail sales have risen by 4.8 percent on average.
As a result, many shoppers are already seeing sales and discounts, even before Black Friday, the traditional big shopping day after Thanksgiving.
"Retailers are really pulling out all the stops," Yarrow notes. She says stores are using promotions, sales, parties, and charity events in an effort to get shoppers to spend in their stores. She adds, "They are kind of like desperate lovers courting the consumer."