Holidays
'Tis the season for spending forecasts
What do jewelry, limos say about holiday prospects?
CBS MarketWatch
Sept. 13, 2002
NEW YORK (CBS.MW) -
It's beginning to look a lot like Christmas,
at least when it comes to the release of holiday spending predictions. But whether
this Yule season will be a green one or fall into the red is a matter of opposite
interpretations.
Deloitte Research's chief economist said last week
that he expects a jump in consumer spending during the upcoming holiday season,
with perhaps a 6 percent pick up in outlays.
But a poll from the nonprofit
Consolidated Credit Counseling Services suggests a good number of Americans will cut back on holiday
purchases this year.
Deloitte's Carl Steidtmann based his prediction
on his company's Leading Index of Consumer Spending, which measures four indicators
to gauge the cash available to consumers - initial unemployment claims, real wage
gains, taxes and real home values.
"Consumers are coming into a great deal of cash,
based on various economic factors, and historically when consumers find themselves
with this much additional cash, they spend it," Steidtmann said.
"After two mediocre holiday selling periods in a
row, retailers and their suppliers will be going into the Holiday Season of 2002
riding on a tidal wave of consumer cash."
The index predicts a rise in spending from 2.5 percent
in the first half of 2002 to a more robust 5.5 to 6 percent by year-end, he said.
But the consumers that Fort Lauderdale-based Consolidated
Counseling interviewed aren't in any mood to open their wallets. Fifty-five percent
say they'll spend less this year on gifts, and of those half say they'll spend up
to 20 percent less and just over a quarter say the cutback will be in the 20-to-40-percent
range.
The Consolidated sampling is tilted toward those
who aren't likely to be opening their wallets this year, since 350 of the 850 Americans
surveyed were clients of the service. But the company says the results do indicate
a less-than-enthusiastic shopping season.
"It seems reasonable that the American people are
planning to be more financially conservative this holiday season in light of the
economy and unemployment rates," said Howard Dvorkin, president of Consolidated.
Fifteen percent of those surveyed said they're spending
less because they're
earning less, while more than 70 percent said they're spending
less because they are already carrying too much debt -- and 57 percent said they
are still paying off debt from the last holiday season.
Little, and big, luxuries
Americans aren't being so stingy as
the credit counselors think, at least according to a pair of unofficial high-end-spending
indicators. Both jewelry and private limousine sales are on the rise.
Sales at jewelry stores, which declined in the immediate
aftermath of Sept. 11, rose slightly in the first quarter and rose 4.3 percent in
the second quarter, said Pam Danziger, president of Unity Marketing.
"Clearly, consumers are satisfying a pent up demand for jewelry that should yield strong industry growth in 2002," Danziger said.
Half of all U.S. households bought jewelry in the
past year, with nearly 40 percent of households buying fine jewelry -- defined as
jewelry made from precious or semiprecious stones, 14K gold and above, sterling
silver or platinum.
"Fine jewelry in particular is a passion for the
high income households which spend over two times the national average on fine jewelry,"
Danziger said.
Sales of limos, another luxury item that had been
driven down since Sept. 11, may be rebounding in some parts. The comeback is being
led by interest from individuals and corporations looking for more control over
their personal safety and mobility, according to George Lee, vice president of DaBryan
Coach Builders Inc.
Although overall limo sales are off by about 75
percent from last year, DaBryan has seen a resurgence of interest in the last 60
days from corporations and well-heeled individuals.
It isn't just the need for a safe haven that is
fueling
sales. DaBryan said frustration with airport delays is pushing short-hop
flights off some exec's itineraries in favor of road trips.
DaBryan's limos more than rival first-class airline
cabins. Common amenities include power ports for portable electronic devices, desks
for on-the-go work sessions, GPS navigational systems that increase driver efficiency
and even seats that convert into a bed.
Taking smaller bites
If you are in the mood to pinch pennies,
you can check out Citysearch's "Best Bargains" in 16 U.S. cities -- ranging from
Chicago's free Lincoln Park Zoo to San Francisco's cheap eats at Pakwan or Golden
Era.
Even dating in the Big Apple during tight economic
times can be done on a budget, Citysearch editors say, recommending taking a date
to the Upright Citizens Brigade Theatre or the Brooklyn Bridge for one of New York's
most inexpensive and enjoyable excursions.
"Users have enjoyed our guides to the nation's best
'Cheap Eats,' so this year we've expanded our coverage to include other popular
categories such as 'Free Attractions' and 'Inexpensive Dates' to help our users
enjoy what their cities have to offer while still being cost conscious," said Briggs
Ferguson, president of Citysearch.
