Recession-Like Attitudes but Christmas Cheer Spending: CNBC Survey
In an extraordinary display of Christmas-time contrast, the CNBC All-America Economic Surveyfinds that Americans plan robust holiday spending increases this year despite recession-like attitudes about the economy.
The survey of 800 Americans across the country shows that the average American plans to spend $751 on gifts this year, up 22 percent from last year’s spending plans. The number would represent a healthy 4.6 percent gain over actual holiday spending in 2010 as measured by the National Retail Federation.
While the wealthy are responsible for driving the number higher, the survey finds that every single income group, including those with salaries $30,000 or lower, intend to dig deeper into their wallets this year to spread Yuletide cheer.
Far from suggesting that the nation has turned the economic corner, the survey shows the national mood remains as downbeat as it has since the financial crisis began in 2008.
For example, just 27 percent of survey respondents think the economy will get better in the next year, down 10 percentage points from a year ago, and 61 percent say the current state of the economy is poor, among the worst readings in the five-year history of the survey.
The downbeat data on the economy doesn’t stop there:
- Homeowners look for their houses to decline in value by a half percentage point in the next 12 months, unchanged from the outlook in the June survey.
- Fifty-three percent of Americans believe now is a bad time to invest in the stock market, a survey record.
- Americans see their wages falling by one perent on average over the next year, a deterioration from the 0.7 percent decline in the June survey.
- The outlook for inflation has improved, with Americans forecasting prices to rise just 2.8 percent in the next year, down from 4.5 percent in June.
It’s hard to square these negative economic attitudes with reasonably robust Christmas spending plans.
The jobs outlook has improved in recent months and other economic data have mostly been better than expected.
Indeed, while other consumer sentiment indicators have just barely ticked up from low levels, consumer spending data have been positive and retailers have reported a good start to the critical Christmas selling season.
“Americans are weary from years of bad economic news and are skeptical that things will improve any time soon,” says Jay Campbell, vice president at Hart Research Associates, who conducts the survey along with Bill McInturff. “Perhaps because they are looking to create a bright spot, and coupled with expectations for a more reasonable level of inflation next year, consumers across the spectrum have decided to make this a merrier holiday.”
While the gains in holiday spending plans cut across income groups, the wealthiest say they will increase their outlays the most. Spending plans by Americans with income greater than $75,000 are 46 percent higher than they were this time last year, compared with a 22 percent gain for all Americans.
And those expecting their wages to rise plan to boost their spending 56 percent. In a sign of how critical home prices are to the outlook, Americans who believe their home prices will increase in the 12 months plan the highest holiday spending of any group, $1,381.
In other findings from the survey:
Shopping online has become the second most chosen method for Americans to spend most of their holiday dollars, displacing department stores.
The most popular destination remains big box stores, like Wal-Mart and Best Buy , where 42 percent of shoppers plan to do most of their spending. However, that's down six points from a year ago.