Santa Claus is coming to town, says a new Gallup poll predicting that retailers will enjoy holiday revenues as high as or higher than those of last year. It is officially the pre-holiday spending speculation season, that special time when analysts attempt to predict how many dollars shoppers will spend this coming Christmas season.

 

The Gallup poll results are surprisingly optimistic, considering Americans’ year-long complaints of high gas prices, the dismal housing market, lack of universal health care, mounting credit card debt, and generally negative attitude towards the economy. Dr. Anthony L. Liuzzo, professor of Business and Economics and Director of the MBA Program at Wilkes University in Wilkes-Barre, PA, is skeptical about the poll, which asked Americans how much they planned on spending this holiday season. According to Gallup, the current average anticipated spending on Christmas gifts is $909.   

 

“It must be kept in mind that there can be big differences between what consumers say they will do, what they actually expect to do, and what they actually do,” warns Liuzzo, who has been forecasting holiday retail sales since 1988.

 

Indeed, last year’s Gallup poll predicted spending at an average of $907 in October, but dropped to $826 by mid-November. The Gallup Poll report states that “Americans' perception of the total amount they will spend often changes as the season progresses.”

 

Dr. Eugene Fram, the J. Warren McClure Research Professor of Marketing at the Rochester Institute of Technology, says tracking holiday consumer spending must begin at the end of the summer. "I watch what retailers are saying in August. Take Target, or Wal-Mart, who have been rather cautious in their reports. Wal-Mart has reduced prices on 20 percent of their inventory."

 

Fram, whose main areas of expertise include retail malls and shopping, as well as Internet retailing, adds that "a series of reports of this nature have come from various sectors of retail."

 

However, Gallup also reports that if the predicted spending remains consistent, retailers will enjoy a “better-than-average” Christmas 2007 retail season, with over one-third of adults (35 percent) planning to spend $1,000 or more on gifts, just over one-quarter (27 percent) figuring they will spend between $500 and $999, and under a third (30 percent) predicting that they will spend less than $500. Just under 1 in 10 (8 percent) offer no estimate, including poll respondents who do not celebrate Christmas.

 

Annual household income is a major factor in predicted spending, with households making over $75,000 expected to spend an average of $1,309. With households making under $30,000 a year averaging a predicted expenditure of $601, high-income households are expected to spend more than double that of low-income households.

 

High-income households notwithstanding, Liuzzo tells demo dirt, “Given the state of the economy, and the fact that the pressures upon the economy will not ease in the next two months, I remain fairly certain that we will not see a significant rise in consumer spending.”

 

Liuzzo‘s 2007 holiday retail sales report also forecasts a less rosy picture than does Gallup, citing several variables that will affect retailers: “...consumer confidence has taken some significant hits recently; the stock market remains volatile; retail sales for most stores during recent months have been disappointing; consumer debt, bankruptcies, and foreclosures continue to increase; the housing and sub-prime credit market has begun to impact the overall economy; oil and gas prices remain relatively high, and continue to take their toll on consumers’ wallets; and the geopolitical situation remains unstable (especially in the Middle East),” Liuzzo states in his report.

 

Fram names similar factors which will affect holiday spending. Some include "the price of fuel, increased costs of basic food items, like wheat, and the housing issue, especialy for those who have sub-prime loans. They are in a difficult situation."

 

Liuzzo predicts an increase of a mere 3.5 percent in 2007. “Indeed, for the reasons I enumerated in my report, I am sticking with my prediction of a rather disappointing holiday retail season,” Liuzzo maintains.

 

"The outlook is tepid. It will not be a robust Christmas," Fram tells demo dirt.

 

However, bargain hunters may reap the benefits. "It's good for those who want to delay purchasing." Those shoppers can take advantage of "a markdown on post-Christmas bargains," adds Fram.