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Tags: inflation | economy | holiday | christmasshopping

Santa Faces Belt Tightening, Charities Even More So

By    |   Sunday, 20 November 2022 03:34 PM EST

American households are feeling the grip of inflation as they are bracing for a lighter gift-giving Christmas.

According to data from the Wall Street Journal, U.S. consumers and businesses are trimming their spending for this holiday and cutting back on charitable contributions.

"We're hopeful for a strong giving season, but we're not counting on it," said Thomas Tighe, chief executive of Direct Relief, a medical assistance nonprofit that takes in around $2 billion a year in donated medicine, supplies and cash to help people around the globe.

Consumer prices have risen faster than wages this year, and inflation persists against what policymakers have predicted.

The University of Michigan estimated household sentiment in the past six months is comparable to late 2008 and early 2009 when economic disaster and unemployment were on the verge. It also echoed a level of inflation similar to the 1970s when it climbed to double digits.

A Census Bureau survey of households in early October found 41% of Americans, that is, 95 million people, said they are struggling to pay for essential household expenses, compared with 29% a year earlier.

People plan to purchase nine gifts, which is compared to 16 last year, according to Deloitte consulting's 37th annual holiday shopping survey of 5,000 respondents in September. Deloitte said the total anticipated spending budget was $1,455, down from $1,463 a year ago.

The Conference Board, a nonprofit research organization that surveys household confidence each month, said individuals cut spending plans by $613 this year, compared to $648 in 2021.

In an August survey of 2,415 adults by the consumer finance website Bankrate, 84% of holiday shoppers said they would pursue money-saving, relying on coupons and discounts and purchasing fewer cheaper brands.

Companies such as Gap and Target recognize the pullback from consumers and have offered significant discounts. Independent stores have suffered because they cannot afford the slashes that big corporations can.

High inflation appears to be the most significant reason for restraint among holiday-season shoppers for the past eight decades. Eleven times since World War II, the consumer price index has equaled or exceeded 6% around holiday time; this year, it was 7.7% as of October. According to Commerce Department data, consumer spending had an average growth rate of 1.2% in those years, compared with a rate of 3.4% in years with lower inflations.

Consumer spending has been on a downward trajectory, growing less than 2% during the first nine months of this year.

The month between Thanksgiving and Christmas accounts for 20% to 30% of charitable donations, according to the Giving USA Foundation.

People requesting assistance are up 25% to 50% from last year, which correlates to the number of charitable donations.

Crowdfunding platform Kiva surveyed 2,000 Americans and found that many planned to give less to charity: 44% blamed lack of funds, and 42% said donating was "for the privileged."

GivingTuesday, a nonprofit, and the Association of Fundraising Professionals said the number of donors nationwide sharply fell in the second quarter, driven by declines in donations of less than $500. Fundraising was up at 6.2% during that time, but it didn't keep up with the second quarter inflation rate of more than 8%.

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American households are feeling the grip of inflation as they are bracing for a lighter gift-giving Christmas.
inflation, economy, holiday, christmasshopping
Sunday, 20 November 2022 03:34 PM
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