PhotoConsumers are expected to get deeper into the holiday mood as we approach Christmas.

Industry research firm IBISWorld (pronounced eye-biss-world) predicts holiday spending will rise 3.7 percent from last year -- to total $69.2 billion. Higher disposable income levels will allow consumers to spend more freely on food, decorations and gifts during the holiday shopping season, from Nov. 1 to Dec. 25.

At the same time, though, 2012 holiday spending will grow at a lower rate than the 4.9 percent rise in 2011 due to the approaching “fiscal cliff.” Many crucial financial decisions await a new deficit-reduction deal, and unstable consumer confidence is making Americans hesitant to overspend. Nonetheless, retailers are forecast to see expanding holiday sales. 

Aggregate Spending ($mil)

2007

2008

2009

2010

2011

2012

Gifts

$ 56,509.0

$ 47,673.1

$ 44,755.2

$ 46,678.7

$ 48,987.2

$ 50,822.1

Gift Cards

$ 6,153.6

$ 5,388.9

$ 5,565.7

$ 5,720.4

$ 5,968.7

$ 6,245.7

Food

$ 5,508.1

$ 5,353.1

$ 5,158.0

$ 5,245.6

$ 5,578.9

$ 5,864.7

Decorations

$ 6,118.3

$ 5,564.9

$ 5,225.8

$ 5,247.4

$ 5,458.2

$ 5,703.9

Christmas Trees

$ 3,606.3

$ 3,223.7

$ 3,246.1

$ 3,382.9

$ 3,540.2

$ 3,639.4

Cards and Postage

$ 3,499.2

$ 3,123.8

$ 3,072.0

$ 3,062.7

$ 3,140.2

$ 3,165.0

Total

$ 75,240.9

$ 64,938.6

$ 61,457.1

$ 63,617.3

$ 66,704.8

$ 69,195.1

How we spend

IBISWorld expects consumers to spend a total of $50.8 billion on gifts in 2012 -- up $1.8 billion from last year. The fastest-growing gift segments will continue to be electronics and jewelry, with electronics forecast to grow 7.2 percent to $7.7 billion, and jewelry projected to rise 6.3 percent to $5.1 billion.

“Tablet computers in particular are expected to be popular gifts, with electronics sales accounting for 15.1 percent of total holiday gift spending,” says IBISWorld industry analyst Olivia Tang. A surge in new products has helped this segment capture much holiday spending, with new releases like Apple’s new iPad and iPad Mini, Amazon’s Kindle Fire HD, Google’s Nexus 7 and Microsoft’s Surface. Even Leapfrog’s LeapPad2 for children is already on parents’ radars due to retailers’ early promotions.

Ultra-luxury items are forecast to perform particularly well this holiday season. High-end jewelry, in particular, is an expensive but sentimental gift that forms a major sector of the quickly growing luxury market.

The lion's share

Clothing will remain the largest gift category at 17.6 percent of total gift expenditures due to its practicality for all recipients, and is anticipated to grow 2.9 percent to $9.0 billion in 2012. Most clothing gift purchases will be high-end brand names due in part to the convenience of shopping at luxury retailers’ online stores.

Although home and garden gifts are forecast to increase only 0.9 percent in 2012, the $5.9 billion estimated spending for the category represents about 11.6 percent of total gift expenditures. The slight increase will be somewhat in line with the housing recovery, which remains sluggish.

Total Sales of Christmas Related Gifts ($mil)

2010

2011

2012

Growth (2011-2012)

Electronics (TVs, computers, gadgets)

$ 6,698.4

$ 7,156.3

$ 7,673.7

7.2%

Jewelry and Accessories

$ 4,504.5

$ 4,824.6

$ 5,129.6

6.3%

Gift Cards

$ 5,720.4

$ 5,968.7

$ 6,245.7

4.6%

Toys, sporting goods, hobbies etc.

$ 3,230.2

$ 3,301.9

$ 3,400.9

3.0%

Clothing

$ 8,427.9

$ 8,716.3

$ 8,967.3

2.9%

Personal Care and Cosmetics

$ 4,915.3

$ 4,994.5

$ 5,131.3

2.7%

Other

$ 7,416.6

$ 8,194.7

$ 8,390.7

2.4%

Home and Garden (incl. appliances)

$ 5,765.5

$ 5,830.3

$ 5,882.8

0.9%

Total

$46,678.7

$48,987.2

$50,822.1

3.7%


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