Is Recession Over In the US, as the Holiday Season Dawns?

Recession seems to be over and done with for more than half of Americans who were recently surveyed. They plan to spend more during the end-of-year holidays this year compared to 2008 as concerns about the economy subside.

The projected spending boost at Christmas, Hannukah and Kwanza won't come from more or more expensive gifts, but rather from spending on items like entertainment and home decoration, which traditionally account for a smaller portion of the holiday budget, said the annual Deloitte holiday survey of retail spending and trends.

More than half -- 54 percent -- of the 10,878 consumers surveyed for Deloitte's poll said they expect the economy will improve in 2010, and nearly a quarter thought the United States was already in the early stages of recovery from the downturn.

Last year, only 28 percent of Americans were optimistic that the economy would pick up, and 41 percent said they would either maintain or increase holiday spending. This year, more than half -- 51 percent -- said their holiday outlay would rise or hold at the same level.

"We have had stabilization in the housing market; the tax burden on the consumer is less; real wages are higher. The combination of all that is what's leading to consumers' intent to spend a little more on the holidays than they did last year," Stacy Janiak, head of Deloitte's retail group, which conducted the survey, told AFP.

"But they indicated that both the number and dollar amount of gifts are declining," Janiak said.

The average number of gifts Americans plan to purchase declined to 18 from 21.5 last year, while the amount consumers plan to spend on gifts was down to 452 dollars this year compared with 532 dollars in 2008, the survey, which Deloitte has compiled since 1985, showed.

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Meanwhile, expenditures on socializing, entertaining, non-gift clothing and home or holiday furnishings are expected to go up, the survey said.

"People had to pull back on gifts last year, given the economic uncertainty, and they realized what's more important: the gift or bringing people together?" said Janiak, explaining why people were expecting to spend more on socializing and entertaining.

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The "replenishment" factor would see non-gift clothing and home and holiday furnishing sales rising, said Janiak.

"Those items aren't made to last forever and if those purchases weren't made last year at this time, it's another reason that consumers are tending to enter that space again," she said.

The survey also looked at what was likely to be the most popular gift this year.

For the sixth year running, the gift card came out on top.

Nearly two-thirds of consumers plan to buy gift cards as presents, laying out 35 dollars per card, or seven dollars more than the 28 dollars they spent last year.

Americans have also retained the lessons of frugality they learned from the recession.

Two-thirds of those polled said they plan to "shop differently due to concerns about the economy," and of those large majorities said they would look for sales or use money-off vouchers.

Many consumers planning to buy electronics, toys, clothing or jewelry expect to get steep discounts similar to those seen in US shops last year.

But Janiak warned they might be out of luck, because while the US consumer has retained the virtues of thrift from the recession, retailers have learned their own lesson about over-stocking.

"This year, the retailers have been managing their business based on lower consumption levels, and their expectation is that those lower consumption levels will hold through the holidays," said Janiak.

"But if consumers step up their spending, there's going to be a disconnect. And if you're holding out for the 50-percent-plus discount on a wide variety of merchandise, you will be disappointed," she predicted.

Source-AFP