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I sit and type this while my email inbox is deluged with sale notifications: Buy one sweater get one free! 30% off already markdown prices! 40% off! Deepest Discounts ever! All of J. Crew is FREE! Meanwhile every other commercial on television is for $17 diamond baubles because if you weren't buying diamonds before this recession then clearly NOW is the time to stock up. And if I see another blaring ad for ridiculously low prices only between 6 and 7 AM on Black Friday, my eyes are going to pop right out due to extreme pressure thanks to incredulity.
Incredulous because according to a Forbes list of Twenty Reasons Why We're Not Consuming the number one reason is that "The U.S. consumer is shopped-out, having spent for the last few years well above his means." Ding, ding, ding! Yet here we sit being inundated with offers from companies hoping that decreasing prices will increase consumer spending especially with the holidays less than a month away; a time when people are easily swayed by anything sporting a red tag. Though I must include myself in that group of people easily wooed by the prospect of buying when there's a sale, but I know my limits. Stores are finding that more and more people are now realizing their personal finance limitations and reeling in their spending. Though it might be a little too late for some, others are finding ways to cutback and it shows.
After being 'shopped out', other reasons for why we aren't consuming include:
2. The U.S. consumer is savings-less, as the already low household savings rate at the beginning of this decade went to zero/negative by 2006 and now has to rise to more sustainable levels.
8. The credit crunch is becoming more severe as the recent second quarter flow of funds data and the Fed Loan Officers' Survey suggests: It is spreading from sub-primse to near prime to prime mortgages and home equity loans; and from mortgages to credit cards, auto loans and student loans. Both the price and quantity of credit are sharply tightening.
9. Consumer confidence is down to levels not seen since 1973-75 and 1980-82 recessions.
12. Employment has been falling for 10 months in a row and the rate of job losses is now accelerating. In the last recession in 2001, which was short and shallow (eight months from March to November 2001, with a cumulative fall in GDP of only 0.4%), job losses continued all the way until August 2003 - with a job loss recovery and a total cumulative loss of jobs of over 5 million from the peak. In this cycle, job losses have, so far, been "only" slightly over a million, while labor market conditions are severely worsening based on all forward-looking indicators such as initial and continuing claims for unemployment benefits. Massive job losses and concerns about job losses will further dampen current and expected income, and further contract consumption.
You can read the rest here but the underlying reason for why we are consuming less seems to be a two prong effect of fear and lack of money after so many years of biting off more than we could chew and now we're forced to sit back and learn the hard way why overspending is - to put it nicely - a very bad thing. So we spend less even though we're being lobbed sales and rebates and the like all the while waiting for it all to blow over which means turning the Holiday season into a more reflective time than watching our available credit shrink to nothingness. Shockingly enough, I'm all for the latter. Of course that doesn't mean totally giving up and not shopping but here are some additional tips on how to curb holiday spending, make a budget and wear to find awesome handmade gifts.
A Christmas budget from Stacking Pennies
Six tips for smarter holiday shopping from MSN money blog
How do you plan to curb your spending over the next month? I'm looking for tips. Seriously.
Heather B. also writes at No Pasa Nada. She and her family will be having a 'kindler, gentler' Christmas this year which means more for her to spend on herself or stash away in an ING account. Whatever.
