Consumers Feeling Glum as Holiday Season Opens

The holiday season is getting off to a gloomy start for many consumers, with more than a third saying their financial condition is worse than last year and fewer saying their finances improved.

The results come from the 12th annual nationwide holiday spending survey of consumers conducted by the Consumer Federation of America (CFA) and the Credit Union National Association (CUNA).

In the national survey of 1,011 representative adult Americans conducted November 10-13, a significantly higher percentage (37%) reported that their financial condition was worse this year than a year ago compared to the 30% who responded that way to the same question in last year’s survey.

On the other hand, this year only 19% reported that their condition was better compared to a year ago, while 23% responded that way last year.

Spending less

These findings help explain why 41 percent said they were planning to spend less this year than last year compared to only 8 percent who said they planned to spend more.

The good news, such as it is, is that spending plans are stronger than they were at the worst stage of the recession in 2008, said CUNA Chief Economist Bill Hampel. The bad news is spending plans
are still considerably below where they were before the recession.

The survey revealed a direct link between financial condition and spending. Of those who said they planned to spend more, 33 percent indicated their financial condition was better than a year ago, while only 19 percent said it was worse.

Of those who said they planned to spend less, only 15 percent indicated their financial condition was better while 55 percent said it was worse.

Better to be rich

Comparing responses from different demographic groups reveals interesting, and somewhat troubling, differences.

Most significantly, high-income households are much more likely to
report improvement in their financial situation than are low- and moderate-income households over the past year. Of those households with at least $100,000 in annual incomes, 35 percent said their financial situation was better and only 18 percent said it was worse.

By comparison, of those households with annual incomes below $25,000, 13 percent indicated improvement and 50 percent worsening in the past year. And of those households with annual
incomes of $25,000-$50,000, 24 percent indicated improvement and 39 percent worsening.