Growing pessimism about the economy will keep a lid on holiday spending this year, and more affluent consumers will be among those reining in their November and December budgets.
That’s among the findings of Deloitte LLC’s annual holiday survey, derived from an online study of intentions and attitudes among 5,019 U.S. consumers between Sept. 16 and 26.
Deloitte found that consumers overall would cut their holiday spending to $1,102, 5 percent below the $1,160 they expected to spend last year. Anticipated gift spending was down 15.2 percent, to $395, while home entertainment fell 21.1 percent to $153 and holiday furnishings for the home were off 20 percent, to $88. On average, respondents expected to spend 7.5 percent less on nongift clothing for themselves or their families, or $135, and 2.5 percent more on socializing away from the home, or $250.
Although individuals with household incomes of $100,000 or more expect to boost their overall holiday spending — at $2,142, 3.5 percent above last year’s $2,070 — planned spending in a number of areas is down, including gifts, off 1.7 percent to $812 from $826, and nongift apparel, down 12.2 percent to $202 from $230. Home entertainment is budgeted to drop 6.1 percent, to $262 from $279, and home furnishings for the holiday to fall 40.8 percent to $125 from $211. Nearly the entire increase among this group is derived from a planned 12.4 percent increase in socializing away from the home, to $589 from $524.
Those in households bringing in less than $100,000 plan to reduce overall spending 12.3 percent, to $844 from $962 in 2010. Gift budgets are down 26.5 percent, to $291 from $396, and home entertainment slightly more — 26.9 percent to $125 from $171. On a percentage basis, nongift apparel budgets fared better than they did among the more affluent group, down 7.1 percent to $118 from $127. An average of $166 is being allocated for socializing away from home (down 9.8 percent) and $79 for holiday home furnishings (down 6 percent).
Asked whether they’d spend more, less or about the same for holiday as they did last year, independent of specific dollar amounts, 59 percent said they’d spend more or about the same, down from 62 percent last year, and 42 percent said they’d spend less, up from 38 percent in 2010. (The 2011 total exceeds 100 percent because of rounding.) In 2008, 59 percent said they’d spend less and 41 percent indicated they’d spend more or about the same, the lowest level of the century.
Among those cutting back this year, the top reasons cited were higher food prices (63 percent), higher gas prices (60 percent), concern about the economy (54 percent) and a worse financial situation at home (52 percent).
“Lackluster employment growth, debt crises and stock market fluctuations have battered consumer confidence while inflation left many with lighter wallets this fall,” said Alison Paul, vice chairman and U.S. retail and distribution leader at Deloitte. “Consumers will be conservative this holiday season, but remain resilient and maintain a more positive interest in holiday shopping than we witnessed during the recession.”
The attitudes that led to the thrifty approach to holiday reflect the same forces that drove consumer confidence down to its lowest levels since 2009, as The Conference Board reported on Tuesday.
Job insecurity was evident among both demographic groups. Exactly half of the higher earners and 35 percent of the lower earners said they were “extremely” or “very” secure about their jobs through next year, versus 34 percent and 38 percent, respectively, who felt “somewhat” secure and 16 percent and 27 percent who described themselves as “not at all” or “not very” secure. Twenty percent of the lower earners and 25 percent of the higher earners described their current financial situation as better than a year ago, but 44 percent and 33 percent, respectively, characterized it as worse. Those seeing it as about the same came to 36 percent of the lower and 41 percent of the higher household income groups.
Half of all respondents — 51 percent of the under-$100,000 group and 45 percent of the $100,000-and-up group — said they believe the economy is still in a recession and that there hadn’t been a recovery. Sixteen percent of the lower-income and 18 percent of the higher-income group said they believe the economy is headed back into recession.
Online purchases are expected to account for 32.9 percent of all holiday spending, on average, with the mean figure at 39.6 percent for the higher-income group and at 31.3 percent for those below $100,000.
Respondents aged 25 to 34 had the highest mean figure, at 38.9 percent of purchases, followed by those 35 to 44, at 35.7 percent. The only age group expected to spend less than 30 percent of their holiday dollars online were those 55 and older, who averaged 27.1 percent.