Americans Plan to Spend Generously This Christmas

WASHINGTON, D.C. -- Gallup's initial read on Americans' 2019 holiday spending plans, conducted Oct. 1-13, suggests a good season ahead for U.S. retailers. Consumers anticipate spending an average $942 on Christmas gifts this year, up from $885 at the same time in 2018 and the highest October estimate in Gallup trending of this measure.

Along with consumers' record-high average spending estimate, the new poll finds 37% of Americans saying they will spend $1,000 or more on gifts. This is up from 33% last October and is also the highest in Gallup's trend.

Another 21% will spend between $500 and $999; and 27% will spend between $100 and $499, while 3% will spend less than $100. Seven percent of U.S. adults report they won't spend anything on Christmas gifts, which includes those who say they don't celebrate the holiday. Three percent are unsure what they will spend.

Relatively High Proportion Plans to Spend More Than Usual

Separately, the poll asks Americans to say whether the amount they plan to spend on Christmas gifts is more, less or the same as what they spent the previous year.

As is typical, the largest segment of Americans, 65%, say they will spend about the same on gifts this year as they spent a year ago. However, the current poll marks only the second time in nearly 50 Gallup readings since 1990 that a numerically higher percentage of Americans intend to spend more on gifts (18%) rather than less (16%). In fact, the 16% planning to spend less ties the October 2017 record low.

As seen in the graph, outside of those who are spending the same amount, the norm has been for Americans to say their spending will be lower, not higher, compared with the year before. Net spending intentions were significantly negative during the recession before bouncing back to more balanced, but still net-negative, figures in recent years.

Implications

Last year, a pronounced stock market slide seemed to stop consumer spending in its tracks, dampening retail sales for the overall holiday season. Whereas consumers had predicted in October 2018 that they would spend $885 on gifts, that fell to $794 in November, representing one of the biggest within-season drops in consumers' holiday spending estimate that Gallup has measured. As the market decline accelerated in December, consumer spending tightened further as seen in government retail sales statistics. Year-over-year retail spending growth was a robust 6% in October and 5% in November before collapsing to less than 1% in December.

The lesson of 2018 -- one also seen in 2008 as the global financial crisis unfolded -- is that consumers' spending mindset is fragile and can be altered by sudden changes in the economy or even the political environment. The stock market, the U.S.-China trade war and impeachment proceedings in Washington all have the potential of changing the course of consumer spending this year. But for now, holiday spending intentions look promising for retailers.

Apart from last year's extreme case, consumers do tend to get cold feet as the holiday season progresses. In past Gallup tracking of Christmas spending, the initial October spending estimate was significantly higher than the November update in nine out of 12 years. However, the latest estimate is so high that even with some decline in November, spending may still be up over 2018.

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