Saturday, November 7, 2015, AM | Leave Comment
Consumers spend more on the Winter Holidays (Christmas, Hanukkah, etc.) than any other holiday—in fact, they spend over $630 billion, nearly ten times the amount spent on Mother’s Day, Father’s Day, Valentine’s Day, Easter, and Halloween combined!
Every person spends about $809 on gifts, food, and decorations during Christmas. These astonishing numbers actually have a profound effect on the economy.
The high velocity of currency that takes place during this season actually creates an interesting effect that temporarily boosts the economy.
The holidays are an artificial stimulant for the economy, as more people spend, more money is circulated, even counting for almost half of the annual revenue for many stores.
Increase in Jobs
Many stores seek seasonal employees to help them keep up with the demand of the season. This boost in employment allows many people to in turn increase their holiday spending.
Jobs can open as early as September and can last through January. Due to the Christmas Creep (the phenomenon where retailers slowly push the beginning of Christmas sales earlier in the year), the starting dates for many seasonal employees are occurring earlier and earlier in the year.
The following retail categories experience the greatest increase in seasonal employees:
Department stores, cosmetic supply stores, photography services (although their increase pitters out towards the end of November), furniture and home furnishing stores, electronics retailers, clothing and accessory stores, sporting goods outlets, and skiing-related businesses (both facilities and equipment retail) Over the past fifteen years, the average number of seasonal employees is about 672,000.
More than half of those employees are hired in the month of November.
However, before 1999, the increase in seasonal employees was higher than it is now (849,500 employees were hired for the holiday rush in 1999).
That is mainly due to the dot-com boom. One in five people do all of their Christmas shopping online, and 43% of all gift spending will be spent on the internet.
Increase in Spending
The National Retail Federation (NRF) has predicted that holiday sales will be up 4.1% from last year. Most of this is spent on gifts for friends and family, nearly 75% of the total spending!
On average, people spend about $500 on Christmas gifts. The funny thing is that nearly 1/3 of those gifts are unwanted presents.
Many argue that if Christmas did not exist, people would spread their spending out across the year, buy things they actually want, and it would be better for the economy, but in reality, those unwanted gifts actually do the economy good.
Most people do not return the unwanted gifts. Either the recipients sell the gifts online, or they stash the item in the attic, throw it away, and buy the things that they actually wanted (each circumstance adding another round of activity to the economy).
Some people do curb their spending in previous months to save up for the Christmas season, and the economic boost may only seem so high because it is artificially deflated in the months just before the holiday.
Additionally, many holiday purchases are made on credit, and while the spending may be beneficial for stores, banks, and the economy, it is not so great for the individual.
Christmas Economy Boost Only Helps Local Markets
While holiday spending does boost the economy, only the amount spent locally has a benefit on the economy.
Many, if not most, of the toys and presents purchased for Christmas can trace their manufacturing back to China (some studies put that number at 50%, others place it closer to 75%).
Outsourcing to China (and other countries) is simply cheaper for most companies, but the negative effects are profound. About 3 million jobs were lost to China between 2001 and 2013 as exports grew nearly 400%.
Americans who were able to keep their jobs (and didn’t find their employment outsourced to China) experienced a $1,400 decrease annually. The United States exports a total of $2.251 trillion of goods per year—about 15% of the Gross Domestic Product.
However, 55% of the value of imported goods from China does stay within America. That is significantly higher than the 36% that Americans receive from all other countries that we import from combined.
The cheap costs of labor and products allow the companies to hire additional workers within our country, as well as continue to grow their businesses.
This is a guest post by Darci Maxwell