Most data on holiday spending show that it was slower than expected. A division of MasterCard Inc. (NYSE: MA) put the improvement for November 1 through Christmas at only 0.3% compared to last year. But Gallup has issued a minority report. Given its reputation as a research firm, the analysis is worth some consideration.
Americans’ self-reported daily spending surged to $119 during the pre-Christmas weekend spanning Dec. 21-23, easily the highest three-day average for the holiday season and for the year.
The previous weekly high this holiday season was $103 for the Thanksgiving period. Spending has been lackluster since then and fell to $89 last week.
The information is counterintuitive. As consumers approach the fiscal cliff, spending ought to crater. People should become more concerned about higher taxes and budget cuts that might slow the economy early next year. The Congressional Budget Office already has warned of a first half recession if cliff issues are not resolved.
Very few things would account for such a sharp rising in spending. One is that many American consumers believe in a last-minute compromise on the budget and taxes. The other is that consumers want to go out in a wild blaze of glory — one final chance for profligate spending before the economy is doomed again, with high unemployment, tough credit standards, another drop in the housing market and shattered business investment.
It does not seem that Americans have become giddy before the cliff, but the recession and slow growth have been the hallmark of the economy for so long that people might choose a few weeks of false optimism.
The cliff is days away. Americans have increased spending, according to Gallup. Without reaching to the improbable, there is no reason for this at all.
Methodology: Results are based on telephone interviews conducted as part of the Gallup Daily tracking survey Dec. 21 to 23, 2012, with a random sample of 1,440 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.
Douglas A. McIntyre