Experian-Gallup Survey Shows Consumers Expect to Spend Less this Holiday Season
November 02 2005
With many consumers concerned about higher prices of goods, especially oil and gas, overall spending during the holidays this year could well be lower than it was last year. According to the latest Experian-Gallup Personal Credit Index(SM) survey, 32 percent of consumers expect to spend less this year, while just 12 percent expect to spend more and 56 percent expect to spend about the same. More results for the Personal
Credit Index(SM) can be found at www.PersonalCreditIndex.com.
"Consumers cite financial factors, especially the price of energy, but also general price increases and lower income as the major reasons why they will spend less," said Ed Ojdana, group president of Experian Interactive(SM). "About half of all consumers expect to spend $500 or less, while the other half expect to spend more than $500. About a third of consumers, 34 percent, expect to spend at least $1,000."
In light of financial difficulties, the vast majority of consumers expect to limit their spending to the amount of money they have on hand. Only 12 percent say their holiday spending will increase their credit card debt.
About one in five households, 22 percent, will have extra money available this holiday season in the form of a holiday bonus from their employer. Most will use at least part of it to cover holiday expenses, while others will use some of it to help pay off current debt or make a special purchase. About half will save or invest at least part of the bonus.
The most popular places to buy gifts continue to be department and discount stores, with more than three-quarters of consumers expecting to shop there. However, almost four in 10 consumers, 38 percent, will also be shopping online this year. Only 12 percent of seniors (consumers over age 65) will shop online, compared with 52 percent of consumers in the 30 to 49-age range and 36 percent of consumers under age 30.
About a quarter of consumers will be traveling during the holidays, mostly to visit families. Younger consumers are much more likely than older consumers to travel — 35 percent of those under 30, compared with 18 percent of consumers 65 and older.
Among consumers celebrating Christmas, 54 percent say they will use a manufactured tree, while 31 percent will use a real one. About one in 10 consumers having a real tree expect to get it for free, perhaps by cutting one down themselves. Among consumers buying a real tree this year, the average price they expect to pay is about $46. Among consumers using a manufactured tree, the vast majority, 84 percent, will not be buying a new one this year. Those who will buy a new one expect to spend an average of about $88.
More than half of consumers celebrating Christmas, 52 percent, also will have outside lights for the holidays. This is down slightly from the 58 percent who said they had lights last year. Half of consumers who are not having lights again this year say it's because of increased electricity costs, while the other half cite other reasons.
The latest measure of the Experian-Gallup Personal Credit Index shows a slight decline from last month, now registering at 74, compared with 78 in October. The decline can be equally attributed to how consumers feel about their present and future credit situations. For the past three months, the Personal Credit Index has varied in the 74 to 78 point range, down significantly from the 98 score it reached in August, but about the same level it was last July.
"As we approach the holiday season, the low Personal Credit Index result for this month suggests virtually no improvement in consumer confidence from an overall credit perspective and this translates into a fairly dismal outlook for holiday sales," said Dennis Jacobe, chief economist for The Gallup Organization. "Consumers should look for and take advantage of early holiday sales this year if they want a good selection because retailers are going to be careful about how they stock their stores given the sales outlook."
More information about the Experian-Gallup Personal Credit Index can be found on the official Web site at www.PersonalCreditIndex.com.