Consumer Confidence and the 2009 Shopping Season

Consumer confidence took a slight dip in September, down from August's consumer confidence level of 54.4, according to The Conference Board, which tracks consumer confidence levels each month. The dip to 53.1, which may not appear to be much on paper, doesn't bode well for retailers this holiday season. According to CNN, economists were expecting the consumer confidence level in September to rise to 57, making the backslide a surprise. With the holiday season comprising of as much as one-half of yearly sales for some retailers, the drop in consumer confidence at such a pivotal time of the year is not good news for retailers who were hoping that this year's Christmas shopping season would not be as dismal as last year's.

How is the economy affecting consumer confidence levels right before the 2009 holiday season begins? Read on to find out how the current economy is affecting a friend's 2009 holiday shopping plans as well as my own.

Credit card changes are affecting consumer confidence for the 2009 holiday season

I asked Libby Granigan from Kings Mountain, North Carolina, if the economy was affecting her plans for 2009 holiday shopping and, if so, to what extent. According to Libby, her holiday shopping budget this year is going to be so tight that she will be cutting back on gifts.

"With 3 adult children, 1 teenager and 4 grandchildren we will be stretched pretty tight. I normally buy 7 to 9 gifts each for my kids and grandchildren, plus we usually buy the "Santa" gifts because it helps my daughters," Libby said. "We will focus on our teenager and our grandchildren," Libby said. "And if we are able, then we will buy for our adult children."

Though North Carolina is ranked 41st in unemployment, for now her family's job status hasn't changed. What has changed for Libby is how the credit crunch is affecting her finances and thus her 2009 holiday shopping plans. "Our job status hasn't changed ...but our credit card bills have gone up because of the interest rates going up and dropping credit limits...which I feel is totally not fair to those of us who have been able to make our payments on time."

For Libby and likely millions of other Americans, credit card companies that are tightening purse strings by employing such tactics as raising interest rates and lowering credit limits are affecting consumer confidence for the 2009 holiday season. Higher credit card bills mean less money available to buy gifts.

Consumer confidence and my own plans for 2009 holiday spending

I live in Virginia where the unemployment rate is relatively low (5th lowest) compared to the rest of the country. Because of the low unemployment and abundance of stable government jobs, the recession hasn't been as far-reaching here as it has in such hard-hit states as Michigan. That is not to say that the bad economy hasn't touched me. The home my husband and I purchased in 2005 has dropped significantly in value so as to erase any equity that existed prior to the housing bubble bursting approximately 2 years ago.

Because we want to move, but cannot sell and break even, we plan to more aggressively pay down our mortgage debt in the new year. Therefore, we are not planning to buy any big ticket items this year for Christmas and instead will save money toward making additional principal payments to pay down our mortgage debt.

Holiday spending on family members

My husband and I plan to spend less this year on Christmas gifts and are also planning to use creative ways to stretch our holiday budget. Because our credit card offers cash-back rewards, we will use the nearly $200 we've accrued in rewards and cash them in for gift cards to either buy gifts for family members to give as gifts. Because we do not carry a balance on our credit card, that $200 is essentially free money.

I also plan to buy my children less expensive gifts this year, while making a point of buying them at least one of the gifts that they ask Santa to bring them. For the most part, we expect to buy books, clothing and a few toys. Our son enjoys Leapster2 games, so we will likely purchase him a new game for Christmas. Our daughter plays games on her Nintendo DS, so we will probably purchase her a DS game for Christmas as well. However, the bulk of our children's Christmas gifts will be inexpensive or practical items. Christmas comes approximately half way through the school year, so clothes will be something that we spend money on, replacing anything that is worn or outgrown.

In an effort to help ease the money crunch at Christmas, I have already purchased several books to use as Christmas gifts. These gifts were paid for via Amazon.com certificates earned through MyPoints and SwagBucks.

Tough discussions about money with family members

I don't plan to make any significant changes in my holiday shopping for my adult family members. As I mentioned, I plan to use credit card rewards to help offset holiday shopping costs by redeeming for gift cards. However, I am very mindful of my parents' and siblings' financial situations. Both my younger brother and my older sister are currently unemployed and live in a state where winter comes early and stays late into the year. I worry for them financially, and worry about their high heating costs this winter. I have tried to find a delicate way to approach holiday gift-giving. While I can afford to give gifts to my siblings, they are understandably unable to reciprocate as they have in past years.

Recently, I called my family members to let them know that we do not expect them to buy gifts for us this year. Though awkward to have, the discussion about Christmas gift-giving with my family has largely been met with relief on their end because the future is uncertain for them. I would not feel very good receiving a gift that I know that they could not afford to give, given their employment situations.

Sources:

Pollingreport.com
CNN.com