Apart from politics, Americans plan to spend with some abandon this holiday season and use a bit more debt to achieve their holiday goals. Average holiday spending plans rose above $1,100 — the first time the holiday survey has seen an average number above $1,000. The prior record was last year’s average of $907. Gains were spread across income groups, but those who approve of Trump and Republicans overall showed some of the biggest increases in year-to-year spending plans.
Twenty-nine percent said they would use credit cards or other debt in their holiday spending, up from 26 percent when the question was last asked in 2016, with about a quarter of those saying they would carry that debt for longer than three months.
Why would Americans spend so much more if their outlook has darkened? The reason may have to do with stronger wage gains and employment over the past year, compared with what people expect next year. Unemployment this year hit a 50-year low of 3.7 percent. Wage gains the past two months topped 3 percent year over year for the first time since the end of the financial crisis.
Among those saying they would spend more this holiday season, 53 percent said it was because of higher income and pay. Just 9 percent said it was due to the economy being in good shape and fewer attributed their spending to tax cuts, lower gas prices and gains in the stock market. At least some of the optimism decline is connected to the recent fall-off in the stock market, although Americans generally do not tie their spending to equity gains or losses.
In addition, while optimism has fallen from record levels the prior two quarters, it remains high and about on par with last year’s holiday season. The 50 percent of the public rating the economy as excellent or good ties it for the fourth highest in the survey’s history. At the same time, most economists expect slower but necessarily slow growth this quarter and next year, and the survey could be picking up that cooling in growth.