Consumers Expected to Spend More this Holiday Season
NEW YORK (MainStreet) As the economy slowly recovers from the 2008 financial crisis, a new study shows consumers will still spend more money this holiday shopping season than last year.
Deloitte expects holiday sales to grow between 4% and 4.5% this year to a range between $963 and $967 billion.
While these numbers are positive, last year's holiday spending growth was also 4.5%, showing how anemic the economic recovery is, according to Deloitte's senior U.S. economist Daniel Bachman.
Still, stagnant growth in holiday spending and GDP isn't the type of news economists had hoped for five years after the recession.
Plus, the Federal Reserve's decision to continue its bond buyback program at a monthly pace of $85 billion shows how the economy is still in need of training wheels, at least for the next few months.
On the employment front, while the jobless rate is on a slow and steady decline, this comes on the heels of more and more people leaving the workforce. The labor participation rate is at its lowest point since 1978, which doesn't bode well for an economic recovery.
Adding to the economic uncertainty, political gridlock in Washington, D.C. continues to worsen, as fears of a government shutdown loom and yet another debt ceiling debate looms large.
While reaching the debt ceiling would cause interest rates on credit cards and mortgages to increase, political arguments typically don't impact consumer behavior.
"If consumers are employed and have income, they'll spend it," Bachman said. "For the most part, political sideshows in Washington is background noise for consumers."
Regardless of what's going on in the economy, making sure you keep your spending in check this holiday season is of utmost importance.
With a little over a month remaining until the holiday shopping season heats up, now is the time to establish a budget and reassess your spending.
Financing your holiday shopping with credit cards is a recipe for financial disaster, especially if you leave balances on the cards and double-digit interest rates kick in.
Once you set a cash budget, keep track of the retailers' deals in the store circulars and take advantage of price comparison tools both online and on your smartphone to find the best deals.
--Written by Scott Gamm for MainStreet. Gamm is the author of MORE MONEY, PLEASE