During many past years, the holidays were particularly enjoyable for those who work on Wall Street. They received enormous year-end bonuses and their holiday spending reflected their success. This year, large bonuses have been replaced by significant layoffs. Needless to say, gift buying is going to be down this year among professional traders.
Will the same hold true for investor spending? In spite of the surging equity markets, investors tell Gallup they also do not plan to spend as much this holiday season as they did last year. Such sentiment is consistent with what other consumers are saying. Although this reaction is not unexpected, it is another unpleasant confirmation that this will not only be a very short holiday season, but also a very weak one in terms of investor/consumer spending.
Investors Plan Less Holiday Spending
According to the November Index of Investor Optimism survey -- a joint effort of UBS and The Gallup Organization*, 25% of U.S. investors say that they plan to spend less on Christmas gifts this holiday season than last season. This is more than twice the percentage (10%) planning to spend more this holiday season.
These percentages are similar to those from Gallup's most recent survey of consumer holiday spending plans. In a Nov. 11-14 poll**, 27% of consumers say they plan to spend less this holiday season -- more than twice the number of consumers (12%) who say they plan to spend more on Christmas gifts. These most recent consumer holiday spending intentions are slightly more negative than results from October 2002 (see "Economy May Dampen Holiday Spirit" in Related Items), and substantially more negative than those from the 1999 and 2000 holiday seasons, when just as many consumers said they would increase their spending on Christmas gifts as said they would decrease it.
How Much Will They Spend?
On average, investors in the United States say that they will spend $1,123 on holiday gifts this year. This is about 50% more than the $743 that consumers in general say they will spend -- an average that is itself down more than 10% from the $820 that consumers said they would spend last year.
Key Points
Recent Gallup surveys are not encouraging for retailers as the holiday spending season kicks into high gear this Friday. Consumers say they'll spend about 10% less this year on holiday gifts, and investors seem just as likely as other consumers to spend less.
Still, there is a bright side for the American consumer. Retailers are going to feel a great deal of pressure to clear their shelves during the next few weeks, so careful consumers are going to be able to take advantage of more pre-Christmas sales. However, most retailers have been keeping their inventories lean in anticipation of a poor selling season -- so consumers looking for trendy gifts or a good selection are well advised to shop early, not late, this holiday season.
*Results are based on telephone interviews with 1,001 investors, aged 18 and older, conducted Nov. 1 -17, 2002. For results based on the total sample of investors, one can say with 95% confidence that the margin of sampling error is ±3%.
**Results are based on telephone interviews with 1,001 national adults, aged 18 and older, conducted Nov. 11-14, 2002. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3%.
