Americans Worried About the Economy Plan to Spend Less on Christmas Gifts: Survey

Guests shop at the TJ Maxx store in the Mall at Prince George's in Hyattsville, Md., on Aug. 17, 2022. Chip Somodevilla/Getty Images

U.S. citizens, worried about the state of the economy, are now planning to spend less on buying holiday gifts and cut down on shopping this holiday season.

According to a survey by the University of Michigan, consumer sentiment declined 15.7 percent year-on-year to 56.8 in November. On a monthly basis, it fell by 5.2 percent. “Along with the ongoing impact of inflation, consumer attitudes have also been weighed down by rising borrowing costs, declining asset values, and weakening labor market expectations,” said Surveys of Consumers Director Joanne Hsu.

In a recent poll by The Economist/YouGov, 69 percent of respondents said that the current state of the American economy was “fair/poor,” 42 percent believed the economy is shrinking, and 56 percent think the United States is already in an economic recession.

Inflation was ranked as a major problem by 54 percent of the respondents rather than unemployment, with 43 percent expecting higher inflation over the next six months.

With American citizens worried about the economy and battered by inflation, they might not spend as much money on holiday gifts as they used to, according to certain reports.

A survey by nonprofit The Conference Board has found that individuals plan on cutting down gift spending to $613 this year from $648 last year. The biggest spending cuts are expected to be seen in categories like jewelry, home décor, appliances, furniture, and tools.

In an interview with The Wall Street Journal, Maggie Enriquez, a single mother in Austin, Texas, said that she spent roughly $1,000 to buy gifts for her 2-year-old daughter and her extended family last year.

But this time around, she plans on gifting her daughter with toys and games that her older child does not use anymore. “I am feeling a bit bereft that I can’t give the way I want to this year,” she said.

The 2022 Deloitte Holiday Retail Survey (pdf) found that consumers are cutting down their spending on non-essentials in order to give gifts and socialize.

“Looking for ways to outsmart inflation, customers plan to purchase 9 gifts (vs. 16 in 2021) and spend less time shopping (5.8 weeks vs. 6.4 in 2021),” the report said.

Savings Crunch

Another factor that might be playing a big role in the public’s decision to cut down on gift spending is the level of savings. The pandemic and the ongoing elevated inflation have coincided with a drop in the savings rate.

According to the St. Louis Federal Reserve, the personal savings rate, which was at 33.8 percent in April 2020, had fallen to just 3.1 percent in September 2022.

In a Nov. 3 press release, Massachusetts Mutual Life Insurance Company (MassMutual) said that more Americans are dipping into their savings to cover expenses this year.

The company discovered that 45 percent of respondents had taken out their savings funds in the last three months compared with 38 percent in the last quarter and 33 percent last year.

“Of those taking from their savings accounts, 55 percent attributed their decision to the rising cost of living and 52 percent used the funds to help pay their bills,” the release said.

MassMutual found that 47 percent of Americans were planning on spending less this holiday season when compared to the last, up from 38 percent in the previous quarter. Concerns about the economy are forcing 22 percent of Americans to avoid traveling to visit their loved ones.