Tuesday, November 17, 2009

Might we spend even more this Christmas?

"I am not saying that people lie, but they might deceive themselves, plan to spend less and then the Christmas spirit starts to spread"

If the global recession didn't kill Christmas, might the global recovery?

That's the question raised by a Westpac - Melbourne Institute survey showing that one-third of Australians plan to spend less on Christmas gifts this year than they did in 2008.

December 2008 was the vortex of the global financial crisis but was also the month in which millions of Australians received bonus cheques totaling $8.7 billion, enough to push up Christmas spending 13 per cent to an all-time high.

This year without the cheques the survey suggests 35 per cent of us are going to wind back our Christmas spending, swamping the 14 per cent who plan to spend more.

Most households are still planning to spend at least $300 with an impressive 40 per cent planning to spend more than $500.

But on balance every age group and every income group says it's cutting back...

Australians aged 45 to 49 plan to spend the most, preparing to shell out $403 per household. Households headed by the youngest and oldest Australians plan to shell out the least, perhaps because they're the poorest and have fewer friends and family to spend it on.

Because it's the first time Westpac has conducted the survey its senior economist Matthew Hassan cautions against taking it too literally.

"What people say they will do is not always the same as what they turn out to do," he told the Herald.

"There might be a bit of intention about these responses. People think back to last year and say I'm going to economise this year, I am going to be good. You see that every year going into the Christmas season."

"I am not saying that people lie, but they might deceive themselves, plan to spend less and then the Christmas spirit starts to spread and things slip and the kids start to plead for better presents."

Westpac is predicting a slightly bigger spend this Christmas than last, boosted by population growth, a return to economic growth and much stronger consumer confidence.

"If it happens it'll be a very good result," said Mr Hassan. "Last year we had $8.7 billion reasons to spend and we spent like never before. This year we are banking on an improved economy and improved confidence."

Retailers’ Association executive director Russell Zimmerman expects "modest" growth.

"We believe that consumers and retailers are in a much better place this year than Christmas last year, remembering that as we came to Christmas last year we were going into a global financial crisis," he said.

"This year we have low interest rates, the Aussie dollar is really strong ... employment is still quite stable and I think the consumer knows we have avoided a recession."

Published in today's SMH

Christmas Spending

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