12/23/2013 - Will the shutdown affect holiday purchase activity
With only days remaining until Christmas, official numbers will soon be released on just how much consumers wound up spending for their friends and loved ones in 2013. If polls are reflective of actual intentions, though, they likely didn't spend quite as much as they have in the past.
Approximately 37% of consumers indicated in a recent poll that they planned on spending somewhat cautiously this year on holiday gifts, according to financial services firm Edward Jones. Only one in every five respondents - 18% - said that they would shell out more dollars and cents than they did in 2012.
"While we expect some sales growth in the retail market this holiday season, those polled expressed a conservative view on holiday spending," said Brian Yarbrough, consumer discretionary analyst for Edward Jones. "This differs from our retail forecasts for the remainder of the year. We anticipate solid numbers from most retailers with luxury players leading the charge."
He added that the survey was taken during the partial government shutdown, where legislators closed many federal office buildings and put spending on hold in various sectors. Yarbrough pointed out that events in Washington clearly have an impact on consumer sentiment with regards to how much they intend to buy.
Meanwhile, the National Retail Federation forecasted much of the same, predicting at the start of the season that retailers would see a marginal increase in business, averaging an uptick in earnings of approximately 4% from 2012, or the equivalent of $602 billion.
"Overall, retailers are optimistic for the 2013 holiday season, hoping political debates over government spending and the debt ceiling do not erase any economic progress we've already made," said Matthew Shay, CEO and president of NRF.
Penny-pinching consumers can provide greater protection for their gifts by adding them to a standard homeowners or renters insurance policy. According to the Insurance Information Institute, the most commonly added items include furs, fine art, musical equipment and sporting goods.