Holiday Spending Expected to Slow
By DAVID HO
.c The Associated Press
WASHINGTON (Nov. 27) - Many consumers are scaling back their holiday spending plans in part because of concerns about paying off credit card debt, a survey finds.
While more than half of Americans plan to spend the same amount as last year, 24 percent say they will spend less and 18 percent plan to spend more, according to the survey. The study was released Monday by the Consumer Federation of America and the Credit Union National Association, a trade group for credit unions.
The relatively small difference between those who plan to spend less and those planning to spend more is enough to support predictions that growth in consumer spending will slow, said Bill Hampel, chief economist with CUNA. Those forecasts are for about a 3 percent to 4 percent sales increase at stores this holiday shopping season, compared with 7 percent last year.
``This provides further credence to the fact that the economy is likely to slow down and the consumer, who has been driving the economy for so long, may be about to pull back,'' Hampel said in an interview.
The stock market's volatility and rising fuel prices have added to consumer caution about spending on nonessentials. Earlier this month, the Conference Board, a New York-based business research group, reported that the consumer confidence index fell sharply during October.
While the first weekend of the holiday shopping season brought out more customers than retailers expected, the Friday after Thanksgiving isn't necessarily a good indicator for how much consumers will spend for the entire season.
In the past few years, that Friday has accounted for less than 10 percent of holiday sales, according to the International Council of Shopping Centers. The week after Christmas is becoming more important.
Seeking to understand the decrease in planned spending, the new survey found that about one-third of Americans who plan to use credit cards for some of their holiday purchases are concerned about being able to pay off their balances.
More broadly, nearly half of consumers are worried about meeting all monthly debt payments, excluding mortgages. Those most concerned were blacks (72 percent), people with children (61 percent) and those age 25 to 44 (61 percent).
``If a consumer is really worried about their ability to pay debt payments they should take the opportunity now going into Christmas not to pile more debt on,'' Hampel said.
When asked what they would do if they had an extra $5,000, 40 percent of consumers said they would pay off debt and 40 percent said they would save it, the survey found. Only 15 percent of people said they would spend the unexpected windfall.
The consumer and credit union groups suggest the following tips to reduce credit card worries for the holiday season:
Stick to a budget that sets aside realistic amounts of money for holiday gifts, food and travel.
Work from a list when shopping to avoid impulse purchases that could increase debt, and comparison shop to find better deals.
Consider opening a Christmas club account in January with a bank or credit union, and make regular deposits to help pay for next year's holiday spending.
Most of the telephone survey of 1,008 adults, conducted by the Opinion Research Corp. on Nov.9-12, has an error margin of plus or minus 3 percentage points. The question that asked if consumers were concerned about being able to pay off their credit card bills from this holiday season was asked of 555 people and has an error margin of plus or minus 4 percentage points.
AP-NY-11-27-00 1112EST |
