U.S. shoppers will trim their holiday budgets by about two percent as they wait to see how the government shutdown and fiscal impasse will affect the economy, according to the National Retail Federation.
The average American will spend $737.95 this year on holiday purchases such as gifts, decor and greeting cards, down from the $752.24 they spent in 2012, the survey released Wednesday showed. Most of their holiday shopping budget is set to go toward gifts for family members and more than half of consumers will shop online.
U.S. politicians have been locked in negotiations since Oct. 1, when the government partially shut down leaving about 800,000 federal employees temporarily out of work, and are rushing to come to an agreement to end the fiscal impasse and extend U.S. borrowing authority which lapses Thursday.
“Americans are questioning the stability of our economy, our government and their own finances,” said NRF President and CEO Matthew Shay. “It’s evident some could second-guess their spending” as shoppers wait to see what will become of the U.S. economy in the coming months.
Twenty-nine percent of those surveyed said the political gridlock specifically would affect their holiday spending while more than half said the overall state of the economy would impact their spending this season.
The NRF survey comes on the heels of a study commissioned by Goldman Sachs Group Inc. and released Tuesday which showed two out of five Americans have cut spending because of concerns over the government shutdown.
Although the average consumer is expected to spend less this year, the NRF predicts holiday sales will still increase 3.9 percent to $602.1 billion. More than 40 percent of consumers say they will start holiday shopping before Halloween with almost two-thirds of those saying they are buying early in order to spread out their holiday budget. Almost 65 percent say they will buy their holiday items at discount stores, followed by department stores and grocery stores.
The survey of 6,415 consumers was conducted Oct. 1 to Oct. 8 by Prosper Insights & Analytics for the NRF.