With last year's dismal holiday spending season behind them, consumers are embracing the idea of gift-giving this year. Yet rather than spending indiscriminately on quantity, they're demanding higher quality and buying fewer gifts.
"Since the recession, people have become more self-reliant," says Jim Taylor, vice chairman of Harrison Group and director of a study by American Express and Harrison Group. "They view themselves as an economy of one and are focused more on their balance sheet."
In what he calls "a more sensible America," Taylor says the holidays now are viewed as an occasion for friends and family rather than as an opportunity to express success through the giving of gifts.
One group to outspend all the others
Individual households across all income levels are expected to spend an average of $670 on holiday gifts this year, 6.9 percent more than they did last year. Total spending on gifts is estimated at $71.3 billion, 7.7 percent higher than last year’s forecast of $66 billion.
The study segments households into the 90 percent, whose discretionary annual income is below $100,000, and the 10 percent, with annual discretionary incomes of $100,000 or more. As a group, the 10 percent are expected to spend $20.7 billion, 8 percent more than last year.
But among the wealthiest consumers, one particular group -- the core affluent, or those with discretionary income of $150,000 or more and household income below $450,000 -- is the one to watch, according to Taylor. It is expected to account for $12.1 billion in gift spending, up 32.7 percent from a year ago.
Due to stock market and real estate gains over the past year, an increasing number of affluent households moved further up the wealth scale into this group, giving them more dollars to spend, Taylor says.
Conspicuous spending is so 2005
Interestingly, the very top of the wealth scale, the 1-percenters (household income more than $450,000), aren't expected to increase their holiday spending nearly as much as the core affluent. Taylor believes it's due to an adherence to a "spending cap" that puts a halt to the extravagance of the past. Since the recession, he says, "conspicuous consumption is out -- way out. Only 18 percent of high-end consumers are conspicuous in their spending."
Taylor believes this new mindset of quality over quantity and an end to conspicuous spending is a permanent change for Americans. During the recession, he says, people experienced losses in their home values and retirement plans and stopped spending. Now that they are opening their wallets again, they are more mindful of what they buy and place more value on fewer gifts.
Do you plan to spend more or less this holiday season than you did last year?
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