Nearly half of consumers plan to spend less on holiday gifts in 2015

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Nearly half of consumers plan to spend less on holiday gifts in 2015


Ready or not, here comes the holiday shopping season. This year, Credit Karma asked consumers how much they were planning to spend on gifts, and found that 46 percent plan to spend less this year than they did last year. Only 16 percent plan on spending more.

Why are consumers planning on spending less?

The National Retail Federation reports that the average holiday shopper spent $802 last holiday season on gifts, food, decorations and more. However, a recent survey of 200 randomly selected Credit Karma members found that over half - 61 percent - plan to spend less than $500 on gifts this year. Here are some reasons spending might decrease this holiday:

  • The economy: The health of the national economy can definitely influence individual behavior. People who have had trouble getting a job or saw their savings suffer in the stock market could be less likely to splurge on gifts this year, and the mere idea of a weak economy could leave some Americans concerned for their financial futures. According to the latest report from the Bureau of Economic Analysis, U.S. economic growth slowed down from 3.9 percent growth in the second quarter to 1.5 percent growth in the third quarter.
  • Stagnant salaries: A recent survey by PwC found that 64 percent of consumers say that their salaries and disposable income levels could affect their holiday spending. Salary considerations also typically affect our overall view of the economy -- the survey also found that people living in households with an income of less than $50,000 a year are less likely to be optimistic about the economy as a whole. And for most Americans, income has stagnated in recent years and showed no improvement this year - a recent Census Bureau report found that the median income in 2014 remained lower than it was in 2007, before the Great Recession.
  • It's just a goal: It's possible people just think they should be spending less. Last year, we found out that a lot of consumers think they're overspending on holiday gifts. So maybe many are just trying to adjust, and maybe it's not a goal that they'll be able to meet. Here at Credit Karma, we encourage our members to budget and monitor their spending, and spending less on holiday gifts might be one result.

Retailers want you to spend.

On the other hand, retailers are predicting consumer spending to go up. Our results contrast with those of the National Retail Federation, for instance, which predicted spending to be 3.7 percent higher in November and December 2015 when compared to those months last year. According to the NRF, holiday spending has typically increased about 2.5 percent every year over the last decade, so their findings are predicting an even bigger increase than usual.

If consumers believe they'll spend less just because they wish they would, retailers may think that strong predictions could entice hesitant shoppers to start spending.

Holiday spending has long been a popular measuring stick for the health of the economy as a whole, and for the retail industry specifically, so there's a lot riding on these next couple months. The NRF expects holiday spending to hit $630.5 billion this season, which would be almost one fifth of the retail industry's total sales for the entire year.

Spending comes with security concerns.

While it may not be the primary factor influencing intentions to spend less this year, we did find that many consumers are concerned about credit card security and identity theft. Over 20 percent of those surveyed reported that they don't feel secure using their credit cards at all, and another 20 percent stated a preference for using their cards in person rather than over the internet.

That news makes plenty of sense in light of the past year or two. With breaches at big retailers like Target and Home Depot still fresh in many people's minds, consumer insecurity could play a larger role in holiday spending than some may anticipate. The NRF expects almost half of all holiday shopping (which they define as both browsing and buying) to be done online, so any doubts around security in online shopping could have an impact on spending totals.

Bottom line

We'll have to wait and see whether holiday spending in 2015 increases or not. For the health of our economy as a whole, the NRF's bullish spending predictions might be our best hope. For your wallet, though, the opposite could be true.

About the author:Mike Goldstein is Copywriter at Credit Karma. Since joining the team in June 2013, he's been delivering the financial know-how on the daily. When away from work, you can find Mike watching hockey, Twittering for hours and frequenting trivia nights.

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