Inflation-Shocked Americans Plan To Cut Back On Christmas Gifts, Donations To Charity
As Americans feel the Grinch of inflation and wages struggle to keep up with consumer prices, retailers and charities nationwide are preparing for a light holiday season, the Wall Street Journal reports.
U.S. consumers and businesses have trimmed spending plans for gifts, charitable contributions and holiday events, data show. The penny-pinching threatens to spoil the year-end for many, especially firms and nonprofits that tally their largest share of sales and donations in November and December. -WSJ
According to an October Census Bureau survey of households, 41% of Americans, or around 95 million people, said they were having difficulties paying for essential household expenses, vs. 29% a year earlier.
“We’re hopeful for a strong giving season, but we’re not counting on it,” said said Thomas Tighe, chief executive of Direct Relief, a medical-assistance nonprofit that typically takes in around $2 billion per year in donated medicine, cash and supplies which they distribute around the world.
Despite a strong job market, a little cushion in savings accounts, and early signs that inflation may be slowing, the high cost of living has unnerved Americans. According the Deloitte consulting’s 37th annual holiday shopping survey, people plan to buy an average of nine gifts this year v s. 16 last year, and plan to spend less time shopping than they did last year.
According to the University of Michigan, household sentiment over the past six months is comparable to the credit-crisis, when unemployment was off the charts and the financial system was at the precipice. The Journal notes that the index “echoes wary levels of the 1970s, when inflation climbed to double digits.”
In an August Bankrate survey of 2,415 adults, 84% of holiday shoppers will employ tactics to save money this year using coupons, discounts, buying less, and shopping for cheaper items or just making presents themselves.
Meanwhile, the Toy Association – which represents companies that make 96% of all toys sold in the US, says this will be a season of price cuts. What’s more, analytics firm DataWeave predicts apparel prices are set to fall for thousands of retail items. Of note, Gap Inc. is offering discounts as high as 60%.
High inflation seemed to restrain holiday-season shopping over the past eight decades. Eleven times since World War II, the consumer-price index has equaled or exceeded 6% around holiday time; this year it was at 7.7% as of October. Consumer spending had an average growth rate of 1.2% in those years, compared with a rate of 3.4% in years with lower inflation, Commerce Department data show.
American consumer spending has been on a downward trend for months. After jumping by more than 8% last year, adjusted for inflation, consumer spending grew less than 2% during the first nine months of this year. -WSJ
Wells Fargo financial planning specialist Michael Liersch, who heads up the bank’s local advisers in branches around the US, said he was taken aback by just how many families are talking about scaling back this year.
“If you recall 10, 20 to 30 years ago, there was a notion where families had relatives give essential items. Moving back into that. Less discretionary items, more needs,” he said.
While the month between Thanksgiving and Christmas typically accounts for 20-30% of charitable donations according to the Giving USA Foundation, Salvation Army officials are worried. Commissioner Kenneth G. Holder told the Journal that people are facing a tough holiday season, “particularly those who have to make choices between buying toys, putting food on the table or paying utilities.”
Meanwhile, requests for assistance with people in need are up 25% to 50% from last year, Holder said.
According to a survey of 2,000 Americans by crowdfunding platform Kiva, 44% blamed a lack of funds for giving less to charity, while 42% said donating was for “the privileged.”
Both the Association of Fundraising Professionals and nonprofit GivingTuesday say that despite fundraising totals overall were up 6.2% (which didn’t keep pace with inflation), the number of donors fell steely in the second quarter, primarily driven by declines in donations of less than $500.
Tue, 11/22/2022 – 21:20