Consumers spent less than expected this holiday season as the shopping spirit was diminished by poor weather, economic concerns and national tragedy. According to MasterCard Advisors SpendingPulse, a report that tracks spending on holiday merchandise, spending in the two months prior to Christmas increased only .7 percent compared to 2011—significantly less than the 3- to 4-percent growth analysts had forecast. Last year, despite higher unemployment, sales grew by 2 percent over the year before.
“A lot of the Christmas spirit was left behind way back in Black Friday weekend,” NPD Inc. chief research analyst Marshal Cohen told CNBC, referring to the traditional retail rush the day after the Thanksgiving holiday in late November. “We had one reason after another for consumers to say, `I’m going to stick to my list and not go beyond it.’”
Retail sales were actually their weakest since the 2008 holiday season when the US was in the midst of recession. This year’s shoppers were distracted by the aftermath of Superstorm Sandy in the northeast, decreased consumer confidence as the U.S. teeters on the edge of the fiscal cliff, and the massacre at Sandy Hook Elementary in Newtown Conn. on Dec. 14—right in the heart of the holiday shopping season, which can account for as much as 40 percent of annual retail sales.
“The Newtown massacre, psychologically I think, spread through the country,” New York retail consultant Robin Lewis told Bloomberg. “This event was not isolated in the Northeast. It slammed the consumer with a lot of sobriety and made us think about what is happening in this world we live in, particularly around the holidays, when things are supposed to be wonderful and peaceful.”
Shopping reports weren’t the only indication consumer spirit was dismal this holiday season, although they were a sure-fire symptom. According to a Thomson Reuters/University of Michigan Dec. 21 report, consumer confidence slid to 72.9 this month—its lowest point since July—after peaking at 82.7 in November.
“You are looking at modest to marginal growth from a year ago,” Michael McNamara, a SpendingPulse vice president, said in a telephone interview with Bloomberg. “Weather events and the fiscal debate both anchored the season in terms of growth. The media coverage, which did a good job of explaining the negative consequences of the fiscal cliff, created this negative trend in consumer confidence and spending.”
Still areas hit by Sandy saw the greatest impact in total receipts, as holiday sales in the Mid-Atlantic and Northeast—together accounting for 24 percent of national consumer spending—dropped by 3.9 and 1.4 percent, respectively. Likewise, luxury sales—20 percent of which come from the New York area—took a hit this season as well.
“Sandy reached into people’s holiday pocketbooks to pull money out that we spend on gifts to spend on ruined appliances, household repairs,” Lewis told Bloomberg.
