Consumers to Spend Less on Holiday Gifts, Surveys Say

Consumer spending during the upcoming holiday season will be flat compared with 2000, according to an annual survey released Wednesday by the Deloitte & Touche consulting firm. The survey suggests that retail sales growth during this make-or-break holiday season will fall to levels last seen during 1990, when the economy was in a recession.

The gloomy sales outlook is driven by growing consumer concern about the economy and repercussions from the terrorist attacks, according to the nationwide survey of 20,000 consumers completed early in November by BIGresearch for Deloitte & Touche. The survey suggests that 66% of Americans remain confident that the economy will rebound in 2002. Last year, 77% of respondents said they expected the economy to remain strong during the coming year.

Southern Californians are slightly more pessimistic than their counterparts, according to the survey. Just 62% of Southern Californians anticipate an economic rebound in 2002. Last year, 80% expected the economy to grow at a healthy rate in the following year.

That lack of confidence is evident in cautious holiday purchasing plans voiced by consumers, said Tony Cherbak, a Costa Mesa-based partner with Deloitte & Touche. Although 14% of Southern Californians surveyed said they will increase holiday spending, 48% said household spending will remain flat, and 38% indicated they would cut back.

Retailers are banking on strong holiday sales to counter a relatively weak year so far, but “cautious holiday spending, coupled with reduced store inventories and the lowest level of consumer confidence since 1994, doesn’t bode well for a big holiday season this year,” Cherbak said.

A survey released late in October by the National Retail Federation suggests that the average household will spend $940 on gifts, decorations, greeting cards and related holiday items. The federation could not provide a comparison for the 2000 holiday season.

Myvesta.org, a Rockville, Md. organization that helps consumers resolve financial problems, on Wednesday released a national survey that suggests average household spending during the holiday season will tumble to $773, down from $1,220 in 2000.