"Price of gifts" is also playing a role in consumer attitudes toward spending, with 32 percent saying they would somewhat or greatly decrease their spending as a result. That number was up from 26 percent last year. "Your family's current finances" and "your general household expenses" were cited less frequently, with fewer than 30 percent citing each of these factors.
"It is noteworthy how frequently consumers cited rising energy costs as a reason they plan to cut back their holiday spending, far more frequently than they cited general family finances," said CUNA Chief Economist Bill Hampel. "They are clearly quite concerned about the escalating price of gasoline and home heating oil," he added.
The CFA/CUNA survey was conducted November 8-11 among more than 1,000 representative adults Americans by Opinion Research Corporation. The survey's margin of error is plus or minus 3 percentage points.
More Consumers Plan to Spend Less than in Previous Years
Thirty-five percent said that, in thinking about their holiday spending plans, they intended to spend less than last year. This percentage was the highest in the eight years CFA and CUNA have surveyed holiday spending. Moreover, the number was up from 32 percent last year.
The group saying they are most likely to cut spending are from lower-middle income households with incomes between $25,000 and $50,000. Forty-two percent of this group said they are likely to reduce spending. On the other hand, the percentage who said they planned to increase spending, 15 percent, did not change from 2005. What decreased was the percentage who said they would spend about the same as last year.
"While it's true that consumers actually end up spending more than they think they will, consumers are feeling the bite of rising energy costs, and other factors, with the likely result that spending growth will be weak this year," said Hampel.
Consumer Debt Repayment Not an Important Factor in Planned Holiday Spending Cuts
Despite rising attention paid to the mortgage meltdown and general credit crisis, fewer consumers than last year said they were concerned about making monthly payments on mortgage and consumer loans. This year, 40 percent said they were concerned about making these payments, down from 43 percent last year.
Also, fewer consumers than last year said they were concerned about paying off credit card balances from holiday-related spending. Only 24 percent indicated this concern this year compared to 33 percent last year. Low and lower-middle income and minority Americans, however, were much more likely to voice concern about debt. Fifty-three percent of those with incomes under $50,000 expressed concern about making monthly debt payments, and that concern was indicated by 55 percent of Hispanics and 49 percent of African-Americans.
Thirty-four percent of those with incomes between $25,000 and $50,000 said they were concerned about paying off holiday-spending related credit card balances. That compared to only 24 percent for the whole population.
"The good news is that a declining percentage of Americans express concern about paying off consumer and mortgage debt," said CFA Executive Director Stephen Brobeck. "The bad news is that these percentages are relatively high, especially for moderate-income and minority Americans," he added.
Debt-related concerns for these groups are also seen in their responses to the question about what they would do with an unexpected windfall of $5,000. While 42 percent of all consumers said they would use this windfall to "pay down some debt," 55 percent of those with incomes between $35,000 and $50,000, 53 percent of African-Americans, and 50 percent of Hispanics said they would favor debt repayment over adding to savings or spending.
