Holiday spending dwarfed all others, likely leading to more debt
Perhaps not surprisingly, the amount of money spent during the holiday shopping season is much larger than for all other major holidays combined. But with the economy improving and consumers feeling better about their finances, some are concerned about how much was spent, and whether that could lead to more debt.
Data from the National Retail Federation shows that the 2011 holiday shopping season saw consumer spending surge to $471.5 billion, up 4.1 percent from 2010. No other holiday even comes close to touching that total, with a mere $16.3 billion being spent for gifts on Mother’s Day, the next-biggest period last year. Altogether, spending for Valentine’s Day, Mother’s Day, Father’s Day and St. Patrick’s Day adds up to just $47.24 billion, a little more than 10 percent of the winter holiday shopping season’s total.
There are a lot of reasons consumers spend more during the holiday shopping season, not the least of which are the deals now being offered by major retailers for events such as Black Friday and its online counterpart, Cyber Monday. Black Friday sales totals spiked 26 percent from 2010’s figure, rising to $816 million. Meanwhile, consumers spent more than $1.25 billion on Cyber Monday, up 22 percent from the year before.
As a result of all that spending, it shouldn’t come as a surprise that most consumers couldn’t afford to do it all in cash. Surveys found that as much as 24 percent of shoppers expected to carry some of the balance accrued during the holiday shopping season over into the new year, meaning they’d have more debt to deal with. That’s up from just 19 percent the year before.
During and immediately after the recent recession, many consumers scaled back their credit card spending significantly. Often, other financial concerns were just too pressing to be able to start putting more money on their cards. But recent economic indicators show that borrowing is on the rise again, and the past holiday season was no different. Of course, experts say that consumers tend to spend more on their cards during the holiday season every year, for obvious reasons. As a consequence, some believe that this may not constitute a shift in borrowers’ attitudes toward handling credit card debt.
However, other experts believe that as the economy continues to improve, borrowing will slowly begin to return to pre-recession levels.