Tags: Gallup | holiday | money | spend

24/7 Wall Street: Frugal Consumers May Be a Drag on Holiday Shopping

By    |   Tuesday, 10 December 2013 07:28 AM

The biggest threat to the holiday season could be a new intent by American consumers to save money, 24/7 Wall Street reported.

The reason is that a new Gallup poll shows that the percentage of Americans who would rather save money than spend it has risen to 62 percent, from 53 percent in 2009 and 48 percent in 2001. Spending less "is likely to be the new normal," Gallup stated.

In contrast, the percentage of Americans who spend rather than save money has decreased to 33 percent, from 44 percent in 2009 and 45 percent in 2001.

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"What the research does not tell is how the modest amount of money spent will be spent," 24/7 Wall Street explained. "If thrift follows caution, the trend might be that Americans will look for value and discounts this year, because splurging has gone out of fashion."

24/7 Wall Street noted that some major retailers appear to be keeping big discounts in place throughout the holiday shopping season this year, such as J.C. Penney's 20 percent discount for shoppers who use the company's credit card.

Gallup said its survey findings "reinforce the psychological effects the financial crisis and the deep recession have had on Americans."

In 2009, U.S. household debt as a percentage of GDP was about 98 percent, Gallup said. During the past five years, that household debt has fallen steeply to 81 percent.

What Americans say about their spending habits and what they actually do in practice may give some level of encouragement to retailers, many of whom still hope holiday retail sales will be at least slightly higher this year over last year.

In the Gallup survey, 40 percent said they are spending less in recent months than they used to, 28 percent said more and 30 percent said the same amount.

The Christian Science Monitor estimated holiday shopping discounts are more pronounced this year because of lukewarm post-Thanksgiving sales results.

The Monitor predicted there will be more "panic sales" by stores and retailers as a result.

"Short-lived flash sales and daily deals are growing trends in retail because they effectively leverage a shopper's fear of missing out on a great deal," The Monitor explained. "These promotions, which make products available at a certain price for only a short period of time, can also be exciting for the 'thrill-seeking' consumer."

Among the shopping changes on display during the current holiday season, according to The Monitor, are that more retailers are trying to price-match Amazon, and more consumers are using their phones to shop.

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The biggest threat to the holiday season could be a new intent by American consumers to save money, 24/7 Wall Street reported.
Gallup,holiday,money,spend
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2013-28-10
Tuesday, 10 December 2013 07:28 AM
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