WASHINGTON– Despite a strong economy, consumers are saying then intend to spend less this holiday season than they did in 2013—but those numbers are strongly affected by income.
That’s according to the 15th annual holiday spending survey conducted by the Consumer Federation of America (CFA) and CUNA.
In this year’s survey 10% of consumers said they would spend more money, while 33% said they would spend less. In 2013, 13% said they would spend more while 32% said they would spend less.
“The proportion who said they would spend less declined steadily from 55% in 2008 to 32% last year before rising slightly this year, the CFA and CUNA reported. “Consumers almost always spend more than they plan to spend, so year-to-year comparisons are most meaningful.”
The intent to put a little less in the stocking this year comes even though more than a quarter of consumers reported they are earning more money. When asked to compare their current income with their income a year ago, 27% said it was higher while only 21% said it was lower. When asked to compare their financial situation with that of a year ago, 28% said it was better while 24% said it was worse, CUNA and the CFA said.
When asked about their concern meeting monthly payments on all types of debt, the proportion declined from 49% in 2013 to 43% in 2014. When asked whether they have extra funds available to pay an unexpected expense of $1,000, the proportion who said no fell from 49% in 2013 to 47% this year.
“Top-line results from an economic perspective are encouraging and holiday spending almost certainly will increase this year,” said Mike Schenk, CUNA senior economist. “However, elements of our survey underscore the fact many consumers continue to reflect significant concerns about their personal finances- most especially in the realm of weak income gains. Because of this we expect the increase in holiday spending this season to be modest.”
Among the other findings:
* The survey found continuing evidence of the widening gap between high and low-income groups. Over one-third (34%) of those with household incomes under $25,000, compared to only 13% of those with incomes over $100,000, said their financial condition was worse now than a year ago. (Also, one third of the low-income group (33%), but only 13% of the high income group, said their income was lower than a year ago.)
“The rising economic tide has not raised all boats equally,” noted Stephen Brobeck, CFA’s Executive Director, in a statement. “Far fewer households with incomes above $100,000, than those with incomes below $25,000, have fared worse over the past year,” he added.
- Factors that may help explain this difference in perceived financial condition are concern about making monthly debt payments, including mortgages, and also a low level of funds available for emergency expenditures. Over three-fifths (63%) of the low-income group, but only about one-fifth (21%) of the high income group, said they were concerned about meeting these debt payments. In contrast, over four-fifths (83%) of the low income group, but only 13% of the high income group, said they did not have extra funds available to pay for an unexpected expense of $1,000.
- These responses about debt and savings help explain income differences related to how one would use an unexpected windfall of $5,000, according to CUNA/CFA. Over half (51%) of the low income group, but little more than one-quarter (27%) of the high income group, said they would use most of these funds to pay down debt. In contrast, only about one-third (32%) of the low-income group, but over half (56%) of the high income group said they would use most of the funds to add to savings or investments.
- CUNA and the CFA said the responses also help explain differences in intended holiday spending. Nearly twice as many of those with low incomes (37%), than of those with high incomes (19%), said they would spend less money this