Consumers plan to spend more on holiday gift giving this year, as much as a 4% increase, according to an annual survey on the topic sponsored by CUNA and the Consumer Federation of America. The two groups released the survey results in a press event Nov. 21.
Based on survey results collected from 1,012 respondents, CUNA Chief Economist Bill Hampel forecasted a 3.5% to 4% increase in spending over last year, representing the fourth year in a row spending has increased since declining sharply in 2008.
About 12% of respondents said they would spend somewhat or much more than last year, compared to 8% in 2011. Forty-five percent said they would spend about the same as last year, and 38% said they would spend somewhat or much less, a drop from 41% who said they would spend less in 2011.
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While the 43% of respondents who said they felt their financial situation was "about the same" was unchanged from 2011, the survey captured an increase in those who felt their situation was much or somewhat better: 24% compared to 19% in 2011. However, 33% said their situation was somewhat or much worse this year, a decrease from 37% in 2011.
Demographically speaking, more men (14%) reported they would spend more this year compared to women (10%). Hampel deadpanned that statistic could possibly be the result of male optimism, and compensating for a lack of nurturing behavior by men toward their families during the year.
Age also played a big role, with 25% of respondents aged 18 to 34 saying they would spend more, by far the highest percentage in any age group. Hampel noted that while Gen Y is reporting they will spend more, that doesn't mean they have deep pockets.
A new question added to the 2012 survey revealed that half of all respondents do not have $1,000 on reserve to pay for unexpected expenses. CFA Executive Director Stephen Brobeck said that figure is critical because research shows households with rainy-day savings do much better financially than those that don't. Brobeck said significantly more households report having $500 in savings.
Brobeck called the lack of savings "the real world in which most of the U.S. lives." The CFA chief said results from a separate survey his organization will officially release in two weeks shows that low-income earners say they would need $3,000 in savings to protect against unexpected expenses.
"That shows they're not thinking about losing their job," he said, but rather preparing for short-term problems like unexpected car repair or medical expenses.
Conversely, the survey also asked respondents how they would apply an unexpected $5,000 windfall. Only 8% said they would spend the money, while 45% said they would pay down debt and 43% said they would sock it away in savings. The 8% who say they would spend the windfall represent the lowest percentage in the history of the survey; last year, 13% said they would spend the unexpected cash.
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