December’s Perfect Storm
Posted on October 18, 2005 No Comments
According to CNN, this holiday season is poised to create the perfect storm…in your wallet. I can’t get to the story (because I don’t have a plug-in), but here’s the headline:
CNN’s Ali Velshi says the holiday season economic forecast, pressed by rising energy and food prices, looks gloomy. (From CNN.com)
Another story from Reuters predicts a colder winter than usual, further fueling the above arguement:
Cold, expensive winter forecast
Americans should brace themselves for a frigid season and high heating bills, EarthSat says.October 17, 2005: 3:58 PM EDT
NEW YORK (Reuters) – U.S. households should brace for a frosty winter, particularly in the Northeast, which consumes the most heating oil around, private forecaster EarthSat predicted Monday.
“The current winter outlook is colder than last year and much closer to the 30-year normal for the national average expectation,” EarthSat said in its revised outlook.
“The focus of the coldest anomalies should be more frequently toward the East Coast rather than midcontinent,” EarthSat said.
You get the general idea without reading too much further. Predicted higher gas prices mean more Americans will spend more money heating homes. Meanwhile, the cost of gas will drive up the price of everyday goods, like food. All this means ordinary babes and boys should spend less while holiday shopping this year, but alas, the National Retail Federation says we’ll actually spend more:
Early signs good for holiday retail
Hurricanes, gas prices haven’t deterred shoppers
By KARA KRIDLER Daily Record Business Writer
Even higher energy costs and the impact of two hurricanes aren’t expected to ward off holiday shoppers, according to numbers released Friday by the National Retail Federation in Washington. The organization said strong retail sales last month — which jumped 7 percent over the same period last year — are a good indication the holiday season will follow a similar path.
Although many shoppers wait until the last minute to make holiday purchases, the holiday shopping season kicks off Nov. 1.
“While many analysts expected consumers to hold back on spending as a result of higher gas prices, shoppers had other plans,” said Rosalind Wells, chief economist for the retail federation, in a statement. “This is a good sign for retailers as they head into the holiday season.”
Although our nation’s willingness to spend more during the holiday season is well-received by retailers across the country, it doesn’t mean we’ve been saving up all year for these purchases. On the contrary, Jean Chatzky, from the Today Show, says:
“It’s official — and it’s abysmal. The latest report of the Bureau of Economic Analysis shows that in August, just as it was in July, the personal savings rate in this country dipped below zero. That’s worse than simply not saving. It means that, on average, we’re spending more than we are earning. ” (October 17, 2005)
Before holiday shoppers bust into Tazmanian-Devil-in-the-Mall mode, it’s worth reminding ourselves that some years, simpler, smaller, more intimate gifts with more meaning can be worth more than big, expensive impersonal ones. Here are some gift-giving tips I’ve compiled over the past year that are worth sharing again as you prepare for your holiday shopping bonanza:
- Before going to the store, make a list consisting of each person you want to buy for and how much you’re willing to spend. Be honest about how much you can spend – you won’t appreciate the gift-giving process as much if you’re anxious about your credit card bill. These price limits can also come in handy to curb impulse buys in case you can’t find the item you want to buy.
- Don’t feel bad if you can’t spend as much as you like on someone – remember it’s the thought that counts. I don’t know many people who get upset because their Christmas presents are too cheap. Your family and closest friends understand your financial situation; I bet they’re happier to spend time with you then get your gift. Admittedly, we all know people completely obsessed with price tags and labels. Don’t try to appease them with a gift you can’t afford. They have larger issues to deal with than your underpriced gift!
- Don’t go shopping during your holiday vacation time in order to bond with your friends. See a movie, go to a concert, exercise together…whatever. Do something where you pay first, then enjoy (instead of spending limitlessly throughout the day). When bonding while shopping, you risk equating the great feeling of friendship to the feeling of shopping.
- Pay with cash. This is a serious deterrent for girls and guys who are serious about curbing spending. When you have to plunk down every precious penny, you’re forced to look at the money leaving your hands. Ouch! (Truthfully, I still can’t do this without weeping.)
- Try a grab-bag exchange this year. You’ll only buy one present for your best friends instead of 10. It cuts down on shopping anxiety and bills. Plus, you have to throw a holiday party to exchange gifts!
I’ll have more tips to share with you throughout the holiday season. Stay tuned!
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