2020 hasn’t exactly been the best year for anyone. The COVID-19 pandemic overturned every aspect of ordinary life for billions of people. In the US, Americans faced an unprecedented economic downturn and the highest unemployment rate since the Great Depression with minimal government help.
To say this year has been challenging is an understatement. With Christmas two and a half weeks away, several surveys found that Americans are so intent to end 2020 with some semblance of holiday cheer that they’re willing to spend more — and take on more debt — to do so.
According to coupon company RetailMeNot, who surveyed 3,412 respondents in two online polls, two out of three Americans say they’ll spend as much or more this year following the year-long coronavirus pandemic.
In another survey from credit bureau Experian, the average US adult plans to spend nearly $775 — a $114 jump over the last Christmas. And many plan on using credit cards to fund their holiday spending.
Overall, American holiday spending is expected to grow by 3.6% to 5.2% from 2019, reaching an estimated $766.7 billion, a separate survey from the National Retail Federation found.
It may be a form of retail therapy, but this spending spike is understandable after an unprecedented year. “After all they’ve been through, we think there’s going to be a psychological factor that they owe it to themselves and their families to have a better-than-normal holiday,” Jack Kleinhenz, the chief economist of the National Retail Federation, said in a press release.
However, how deeply Americans are willing to dig in their wallets remains mostly contingent on the country’s state and how closely the public adheres to guidance from health experts and doctors.
There is a possibility that lockdowns could go into effect once again if cases stay on their current trajectory — which would devastate already struggling retailers during one of the busiest shopping seasons of the year.
“The near-term concern is the long shadow cast on the economy by the surging virus and expiring government support,” Kleinhenz continued. “Every virus indicator across the United States is elevated and accelerated, which could pump the brakes on the momentum we have seen and have consequences for spending.”
But even as the US infection and death rates continue to break grim milestones, some industry experts are hopeful that consumer spending will follow the same levels seen throughout this year. In October, sales climbed 6.4% year over year, according to the NRF, and Americans are still spending more than they did during the 2008 and 2009 holiday seasons.
However, as RetailMeNot shopping and trends expert Sara Skirboll noted, this year will likely become a “tale of two shoppers.”
Skirboll told Yahoo Money that consumers who kept their jobs would probably focus on luxury products like electronics while allowing room in their budgets to purchase gifts for themselves and others.
Data shows that spending among most of these households fell due to lockdowns and public health restrictions. Overall, travel, entertainment, dining, and personal-service spending declined this year. Armed with these extra savings, many are ready to spend more during the holidays.
On the other hand, Americans facing financial hardships or unemployed — including the 20.1 million unemployment recipients — will likely spend their money on essential household items or products to help their children with remote learning. Among this group, most can only afford to purchase gifts for their household and closest friends.
“People are looking to spend money on things they need [and] less on things that they want,” Skirboll noted, “especially if they’re unemployed.”
During the spring and summer, the national personal savings rate ballooned thanks to government support measures like enhanced unemployment payments and direct payments. But with funds from these programs expired or exhausted, Americans’ savings have gradually declined.
Struggling Americans face yet another financial pitfall: the expiration of two other unemployment programs at the end of the month — and no stimulus checks in sight.
Consequently, some may rely on various forms of credit to juggle the costs of basic living expenses and holiday traditions. According to Experian’s report, 45% of respondents whose shopping habits changed due to the pandemic are seeking credit cards.
This data mirrors a separate LendingTree poll, which concluded that 44% of consumers said they’re somewhat likely to open a store credit card this season — a 12% increase over 2019 and 20% from 2018.
Matt Schulz, the chief credit analyst at LendingTree, told Yahoo Money, “So many people get these cards because they may not have any other options, or at least any other good options. If people can get these cards and extend their holiday budget, a little bit, or give them a little more time to pay those bills, they will.”
- Asymkos, Stephanie. “Americans Plan to Spend More during the Holidays to Make up for a Lousy 2020.” Yahoo!, Yahoo!, 9 Dec. 2020, money.yahoo.com/americans-plan-to-spend-more-during-the-holidays-191709897.html.