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Tuesday, July 23, 2024

Consumers wary this holiday season

High winter heating bills, plus $3-a-gallon gasoline last summer, have shoppers vowing to hold the line on holiday spending, but consumers' best-laid plans usually go awry in the season of giving.

High winter heating bills, plus $3-a-gallon gasoline last summer, have shoppers vowing to hold the line on holiday spending, but consumers’ best-laid plans usually go awry in the season of giving.

Thirty percent of consumers say they plan to spend less and 51 percent about the same as they did last year, with 41 percent citing energy costs as the chief reason for being budget-minded, according to a survey of 1,000 adults by Opinion Research Corp. International.

“Gasoline and home heating costs are clearly weighing heavily on the minds of a significant number of consumers as they enter the holiday shopping season,” said chief economist Bill Hampel of the Credit Union National Association, which commissioned the poll with the Consumer Federation of America.

However, once all the bills are in, Hampel expects 2005 holiday spending to have increased by the same 5 percent the National Retail Federation has forecast over last year’s spending. This is because, he notes, few people want to stint despite record levels of consumer debt.

Such an increase, Hampel said, is in line with past holiday spending trends that usually wind up being more generous than planned. The fact that gasoline prices have fallen further since the survey was taken Nov. 11-13 may buoy holiday spending if those first heating bills don’t arrive, he said.

Hoping to woo shoppers before the first winter heating bills hit, some 60 percent of retailers were advertising holiday sale prices and promotions at least a month before “Black Friday,” the day after Thanksgiving, when retailers traditionally see their balance sheets finally go into the black, the Retail Federation reports.

But in a shift from last year, Retail Federation CEO Tracy Mullin said, the group’s poll soundings show that “debt-conscious consumers will prefer to pay out-of-pocket for gifts this year and are making a conscious decision to reduce their reliance on credit cards.”

Consumer Federation Executive Director Stephen Brobeck agreed that increased concern with making credit-card payments has consumers planning to pay cash.

“But to get the biggest bang for your buck, it’s important to plan ahead and decide what you can afford and what you plan to buy before you hit the stores,” Brobeck said.

With Federal Reserve statistics showing that a third of U.S. households have credit-card balances of $1,000 or more, wealth-planning strategist Susan Hirshman of JPMorgan Asset Management drafted a list of alternative gift ideas.

For starters, she suggests families decide whether to give gifts to the whole family or children only. Adults can have a grab bag from which to draw one name of a grownup with whom to exchange presents when the extended family gathers for their holiday celebration.

That’s what the Malone clan of Memphis, Tenn., has done for years when all five generations gather for their Christmas gathering, with recipients entitled to swap once if they can’t stand their gift.

Another Hirshman suggestion is to volunteer services, whether it’s baby-sitting vouchers or the gift of a clean house or downloading songs onto the iPod of the family technophobe.

Finally, there’s the gift of a charity donation, from altar flowers for the Christmas Eve service to tribute contributions in the family’s name to volunteering time at the family member’s favorite charity.

The Stern family of St. Louis promised that all adult gifts would be charitable gifts, but presents arrived anyway, embarrassing more than a few grownups who abided by the agreement.

Hirshman offered a simple solution to avoid a repeat performance: “Sign over that gift card or hostess basket to a charity of choice, which can use it; then send the giver a thank-you note saying you donated the gift because you knew that’s what the giver would have wanted.”

One surprise finding of the Opinion Research survey is that charitable giving isn’t a reason consumers plan to hold down holiday spending _ even though Indiana University’s Center on Philanthropy reports that Americans’ Hurricane Katrina relief donations are poised to break the $2.8 billion record set by the response to 9/11.

“Contributions to hurricane relief and other disasters this year were least important in consumers’ plans for holiday spending,” said Hampel.

(Contact Mary Deibel at DeibelM(at)