Income declines expected to dampen holiday spending: report

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While the 1 percenters flip through Neiman-Marcus catalogs, the rest of us can expect to find something from the 99 cent store under the tree.
That’s the takeaway from a recent National Retail Federation report, which predicts that although there will be a 4 percent rise overall in holiday spending compared with 2012 levels, the average shopper actually will spend $20 less.
Several retail analysts voiced agreement with the NRF’s tepid prediction.
“The data suggests we’re in a holding pattern on spending,” said Scott Strumello, an editor and consultant with the Auriemma Consulting Group, which polls consumers on their credit card outlays.
“Over three-quarters (77%) of respondents still do not believe the economy has yet begun to improve,” the Auriemma Group said in its recent CardBeat monthly survey. “Of them, 7% believe the recovery [will] begin within the next year, 30% believe it [will] happen one to two years from now, while 40% feel it will take three or more years.”
“The data . . . would suggest that consumer spending this holiday season is likely to show only moderate growth,” Strumello said.
Lending even more support to the so-so scenario is that the Consumer Confidence Index measured by research group The Conference Board showed that confidence, which was down sharply in October, declined again in November.
“Sentiment regarding the job market had strengthened, while economic conditions had slowed,” said Lynn Franco, director of economic indicators at The Conference Board. “All in all, with such uncertainty prevailing, this could be a challenging holiday season for retailers.”
Ben Woolsey, director of marketing and consumer research for CreditCards.com, lends support to that Bob Cratchit scenario: “I would agree with those assessments, as real income growth, positive economic sentiment and increased holiday spending have largely been the experience and behavior of those in the higher-income groups.”
As for the rest of us, Auriemma found a pretty good, simple reason for our short arms: There’s less money in most people’s pockets.
An income decline was experienced by all groups over the past few years, “but the declines were greatest among lower- and middle-income households. Except for the top income [level], income growth has not yet resumed growth, hence continued consumer caution seems likely in 2013,” Auriemma reported.