Despite the slowing economy, consumers will not cut back on holiday spending as much as some expected, according to a survey released yesterday. Compared to recent years, Americans are gaining more control over their finances this holiday season.
About 28 percent of those surveyed by the Consumer Federation of America (CFA) and the Credit Union National Association (CUNA) said they planned to reduce their spending, up from 24 percent who said they would cut back on shopping last year.
Most consumers 57 percent plan to spend just as much as last year, while 13 percent said they will spent more.
The survey comes a week after several economic reports showed the United States is entering its first recession in more than a decade. The economy shrank 0.4 percent in the third quarter as businesses cut more jobs in October than at any other time since May 1980.
Unemployment last month also surged to 5.4 percent, the highest it has been in five years, while consumer confidence slipped to the lowest level since 1993.
“Given significant declines in consumer confidence and the rise in unemployment, some reduction in holiday-spending plans isn’t at all surprising,” said Bill Hampel, chief economist at CUNA, the nation’s largest credit union trade group. “But these results suggest that the contraction in holiday spending may not be as pronounced as we might have expected.”
The survey, which polled 1,019 persons between Oct. 15 and 28, also found that fewer consumers are worried about meeting monthly payments on debts this year. Excluding mortgages, concern about monthly bills dropped to 39 percent from 48 percent last year.
The percentage of consumers worried about paying off credit card debt after the holidays also slipped to 27 percent from 35 percent.
“For the first time in a decade, we have seen a sharp drop in consumer concern about paying off debt,” said Stephen Brobeck, executive director of the CFA.
“Certainly, one important reason is that a growing number of Americans are paying off or managing their consumer debts effectively.”
The survey suggested that declining interest rates, which have reduced obligations and installment debt, have helped ease consumer concern.
Some groups, however, remain worried about making bill payments.
Forty-nine percent of young adults aged 18 to 34, 54 percent of low- and moderate-income households, and 47 percent of families of three or more persons are fretting over their debts.
That is compared to 39 percent for all consumers.
The survey asked consumers how they would spend $5,000 if they received such a windfall unexpectedly.
Forty-two percent of all consumers said they would use the money to pay off debt, 36 percent said they would save the money, and 17 percent indicated they would spend it.