Consumers Poised to Spend Big This Christmas

Gallup's early read on Americans' 2006 Christmas spending suggests a potentially strong holiday season in the making for U.S. retailers. The latest USA Today/Gallup poll, conducted Oct. 9-12, 2006, finds Americans planning to spend an average of $907 on Christmas gifts this season. A third of adults nationwide (34 percent) say they will spend $1,000 or more on gifts, 24 percent plan to spend between $500 and $999, and 32 percent plan to spend less than $500. Only 10 percent offer no estimate at this point.

Gallup's final pre-Christmas measure of consumer spending intentions in each of the past few years (conducted in late November or early December) has ranged from $753 (in 2002) to $862 (in 2004). Thus, today's $907 average is a record for this Gallup measure that originated in 1989 and has been asked annually since 1999. 

According to Gallup trends, Americans' Christmas spending intentions typically increase as the season progresses; thus, the average amount of projected spending could go even higher in forthcoming measures in November and early December. In 2005, Gallup recorded an average expenditure of $763 in November, but $840 in December. A similar pattern was seen in 2002, 2003, and 2004.

However, even if this year's number holds at the $907 measured today, it would represent an 8 percent increase over the $840 consumers planned to spend last December for the 2005 holiday. Given that 5 percent annual growth in holiday retail sales is about the norm, this would represent a banner year for the retail industry.

Super Shoppers

Naturally, spending intentions vary greatly by household income. Americans living in households earning $75,000 or more per year plan to spend an average of $1,284 on Christmas gifts this season. This drops to $870 among middle-income earners, and to $482 among those earning less than $30,000.

Christmas spending is also higher among households with children younger than 18 living at home than those without children: $1,105 versus $792.

Younger women could be one of the strongest engines of holiday spending this year. Women aged 18 to 49 plan to spend an average $1,042 -- a bit higher than the $944 among men of the same age, and substantially more than men or women aged 50 and older.

Conflicting Evidence on Spending

Although Gallup's dollar-estimate data indicates Americans are planning to spend more money on Christmas this year than in 2005, when asked to contrast their likely outlay this year compared with 2005, most Americans (67 percent) say they will spend the same in 2006 as last year. Also, only 12 percent say they will spend more, while 18 percent say they will spend less. Last year, Americans were more likely than they are today to say they would be spending a greater amount than the previous year (17 percent), but they were also more likely to say they would be spending less (24 percent). Fewer in 2005 than today said their spending would be about the same (59 percent).

The apparent contradiction between the higher spending estimates -- but with more saying they will spend less money rather than more money -- could be reconciled if the higher spenders increased their spending by a greater amount than the lower spenders decreased theirs. Also, many Christmas shoppers may have good intentions about holding the line or cutting back on Christmas spending, but by the time they have bought the last gift on their list, they will have surpassed their previous year's spending. 

Big Spenders Moving the Mean Higher

Americans' average projected Christmas outlay for 2006 is higher than that seen in December 2005, even though there is little change in the total percentage of Americans planning to spend $1,000 or more (34 percent in 2006 vs. 33 percent in 2005, respectively), and a decline in the percentage planning to spend between $500 and $999 (from 27 percent to 24 percent). In fact, there are twice as many people today as last year saying they will spend less than $100 (6 percent vs. 3 percent).

The reason the mean predicted spending amount rose from $840 to $907 is because there are more people in 2006 spending very high amounts of $5,000 or more than was seen in 2005, as well as more spending between $2,500 and $5,000 than in last December's survey. Gallup will continue to monitor this pattern in November and December updates of this question.

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