Financial Security Index
Financial Security Index
smart spending
Will the economy ruin the holidays?

"The holiday shopping season is really the biggest shopping season of the year by a pretty wide margin. It's not unusual for retailers to do 40 percent of their sales and 70 or 80 percent of their profits in the fourth quarter of the year," says Anthony Chukumba, senior equity research analyst for BB&T Capital Markets.

Black Friday

Unlike consumers, retailers observe the advent of the shopping season on Nov. 1. Black Friday marks the kickoff of the seasonal shopping spree in the minds of consumers.

The reason for pegging the beginning of the holiday season to the day after Thanksgiving has become the stuff of legend – but not much fact.

"Most of the stories we tell ourselves are apocrypha! The most interesting and fun version is that it's the day that the retailers finally go into the black. They have been losing money all year and this day is the turning point so that by the end of the year, the chronological year, they can post numbers in the black and are actually turning a profit," Livingston says.

Though retailers do make most of their profits in the last quarter of the year, they are actually making money all year long, says Chukumba.

"That might have been true 100 years ago and may be true for really small retailers -- mom and pop operations -- but generally retailers are going to make money all year round," Chukumba says.

When it comes to holiday spending, the celebratory nature of the season encourages excess instead of restraint, which may lead consumers to say one thing and then do another -- possibly at the last minute.

"Come on, who doesn't say that (they're going to spend less) every single year? And yet Best Buy and Amazon and Macy's crank out record sales most Decembers. My guess is that the other 10 percent -- those who expect to spend more -- are simply being more honest with us and themselves," says Dan Danford, CFP, principal at the Family Investment Center in St. Joseph, Mo.

Bankrate's survey found one group that says they're definitely ready to splurge this year: 20 percent of 18- to 29-year-olds plan to shell out extra money for the holidays. Only 10 percent of the next age bracket, 30- to 49-year-olds, say they will spend more.

With incomes treading water and decreased appetites for taking on debt, maybe the people who plan to spend more are just taking one for the team and doing their part to bolster the economy.

Bankrate's Financial Security Index survey was conducted by Princeton Survey Research Associates International from Nov. 3-6, 2011. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error is ±3.7 percentage points overall.

 

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