So much for a white Christmas. New research from Bankrate.com shows holiday shopping this year might end up being a tight Christmas.
“Only 1 in 7 say they intend to spend more than they did last year, and 38% say they actually intend to spend less this year,” says Greg McBride, senior financial analyst at Bankrate.com in the attached video. “That’s really a reflection of the fact that for so many people, household budgets are still tight. They haven't seen their income go up.”
What’s interesting is that this finding of frugality comes at a time when Bankrate’s Financial Security Index has rebounded to a 5-month high after dipping before, and during the government shutdown ordeal in October.
McBride explains the disparity, between consumers feeling more secure yet intending to spend less, as the result of better jobs security, comfort with debt levels and rising net worth slamming into the reality that is weak or non-existent wage growth.
“Discretionary spending is driven by what you get in the paycheck,” McBride says. “If their paycheck hasn’t changed, the ability to spend this holiday season - and any other time of the year - is really hemmed in.”
What also stands out, McBride says, is that this tight-fisted trend is not only affecting low-wage earners.
“The tendency to spend less rather than more, wasn't just confined to one or two pockets of the population. It was evident in every age and every income group that we looked at.”
But even while spending habits remain on-guard, it would seem at some point they should loosen up, as financial security improves and spreads.
“2013 was really the turning point where we saw middle income households really turn the corner and start to feel better about their finances. Up until this year it was just the highest income households and nobody else. Now we’ve seen the middle of the population turn the page and feel more financially secure.”
That may be too late for Christmas, but Easter and Mother’s Day are just around the corner.
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- Employment & Career
- Personal Budgeting