Five years since the Great Recession officially ended, shoppers are feeling twice as generous when it comes to their holiday spending.
Americans plan to spend an average of $861 on holiday gifts this year, up 8% from 2013 and double their meager $417 budget in 2009, according to the American Research Group. (Meanwhile, a Gallup survey found that Americans will spend an average of $720 on gifts this year, slightly higher than their $704 estimate last year.)
This is no doubt a good sign for retailers — especially given those ho-hum Black Friday sales reports — but just because consumers plan on shelling out bigger bucks this year doesn’t necessarily mean they can afford it.
Holiday budgets may have swelled but wages certainly haven’t.
Over the last 30 years, median hourly wages for Americans rose just 6.1% (0.2% annually on average) and the lowest-paid workers (the bottom 10%) actually saw their earnings decline by 5.3%, according to the Economic Policy Institute.
As such, household earnings have barely kept pace with the rising cost of fixed expenses — the roofs over our heads, the cars in our driveways, and the food on our tables.
On top of that, less than half of Americans said they would be able to come up with cash for a $1,000 emergency expense in a recent survey by the Consumer Federation of America.
And yet, we’re hitting the malls anyway. Should we be worried?
“If we continue to live over our means, we’re just going to have to repeat the lessons we learned during the recession,” says Tiffany Aliche, founder of "The Budgetnista," personal finance educator and author. "Not only are we not saving but we’re spending what we can’t afford.”
Larger families arguably have an even more difficult time stretching their dollars around the holidays. When Aliche lost her job as a schoolteacher during the recession, she and her family implemented a new holiday tradition: each Thanksgiving, she and her four sisters put their names into a hat and agreed to purchase a holiday gift for only one person. For their parents, they pooled their cash and bought a group gift.
“It’s fun but you have to get everybody on board,” she says. “It’s much easier for everybody to put in $50 than me purchasing a $250 gift by myself.”
We’d love to hear how you’re planning your spending over the holidays. Take part in this brief survey below:
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