WASHINGTON — The seventh annual survey commissioned by the Consumer Federation of America (CFA) and CUNA has found that consumers may be making more of their holiday cheer on a somewhat tighter budget this year.
The CFA/CUNA survey found that while energy costs are declining, they remain the most important factor in holiday spending, cited by 32% of respondents who said they would spend less. Still, this figure is down from 41% the year before. It was also cited by 26% of respondents as the cause for increasing their spending. "Consumers are still clearly concerned about energy costs, but they appear less troubled about them than last year," CFA Executive Director Stephen Brobeck observed.
Additionally, consumers expressed more concern over paying down holiday debts this year than in the past. More than twice as many consumers say they will spend less (32%) than more (15%) this holiday season, with about half (52%) saying they will spend approximately the same, the survey found. Compared to last year's numbers, the percentage saying they would spend less edged up from 30%, but the percentage saying they would spend much less than last year jumped from 13% to 18%.
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However, CUNA Chief Economist Bill Hampel qualified, "Our experience with this survey is consumers tend to say they will spend less than they actually do, and our overall survey findings are slightly weaker than last year. This suggests many households will feel financially 'hung over' in a couple of months unless they do something about it now."
Other factors causing consumers to spend less this holiday season included general household expenses (28%), family finances (27%), and the price of gifts.
The CFA/CUNA survey results also led the groups to believe that the least affluent Americans will be under even greater financial stress this holiday season than last. Of those surveyed, 27% with incomes under $25,000 said they intend to spend "much less" than last year, compared to only 18% of all consumers. And 41% of those with incomes $25,000 to $35,000, compared to only 32% of all consumers, said that energy costs are likely to decrease their holiday spending.
"Despite the let-up in gas prices, young and less affluent Americans appear to be under greater financial stress this year than last. In particular, they are much more concerned about paying off debt," according to Brobeck.
Concerns over growing credit card debt due to holiday spending rose from 25% last year to 33% this year. The young (18-24 years) were especially concerned with over half (52%) saying they are very or somewhat concerned, and well over half of these concerned (29% of the whole sample) saying they are very concerned. Correlating with this finding was the fact that only 36% of consumers said they always pay their full credit card balance.
Worry over making monthly payments on all kinds of debt is even higher, at 43%. Again, lower-middle income households ($25,000-$50,000) are especially concerned about meeting these debt payments (54%).
In contrast to last year, more of those surveyed said they would pay down debts (44%) with an unexpected $5,000 windfall than put it in savings (41%). Just 13% said they would go out and blow it.
One telling piece of the survey information was that the only income group much more likely to save than pay down this windfall was the more affluent ($75,000 or more in income)–35% would pay down debt versus 46% put in savings.
The precariousness perch of the less affluent Americans was revealed by a new question regarding how one would pay for an unexpected emergency expense of $5,000. Only 44% of those with income under $35,000 said they would pay for this expense out of their savings; a large number (44%) would ask a friend or family member for a gift or loan. Among young adults (18-24 years), 72% said they would seek a gift or loan from a family member.
The CFA/CUNA survey was conducted by Opinion Research International on Nov. 9-12 and included more than 1,000 representative adult Americans. The survey's margin of error is plus or minus 3 percentage points. –[email protected]
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