We know this holiday season is different. Whether we are spending less by choice or by force - it really is making a difference this year. That brings us to this article from CBS News titled Save, Don't Spend, During The Holidays. Lets take a look -
[Not holiday shopping] is, of course, exactly the opposite of what Washington officialdom wants you to do. I don't know exactly how this line of spendthrift thinking started, but my hunch is that its recent antecedents came from President Bush's post-9/11 line that Americans should "take their kids on vacations" and "ought to go to ball games." Bush's more recent suggestion was "I encourage you all to go shopping more."
The reality is that Americans have been on an unprecedented and unsustainable consumption binge for at least a decade. They paid bills with borrowed money. Savings was out, while leased BMWs, large-screen TVs charged to credit cards, and zero-down option ARMs were in.
Now, as the economy is trying to heal itself and return to normal, consumer spending has dropped off. This should be no surprise: When unemployment is rising, people save more because they're worried about losing their jobs. This is prudent and sensible; what's irresponsible is politicians urging visits to the mall when saving may be the wiser option.
A catalyst is that many consumers have pushed their credit cards to the limit and extracted as much as possible from their homes during the real estate bubble. Now that credit card issuers are becoming more restrictive, and the home equity loan spigot is being turned off, more debt is no longer as attractive (or as possible) an option.
Americans are planning to cut their Christmas spending by 50 percent this year, from $859 last year to $431 this year, according to American Research group, a market research firm. That indicates that, after many years of borrowing, people are starting to live within their means. It also shows they have more common sense than their elected representatives in Washington.
While it is going to hurt at first in the long run a new and sustainable economic paradigm is vital. Spending well beyond ones means is only asking for trouble. Perhaps the mindset will trickle up to Washington.
(If we are unable to post tomorrow - have a wonderful holiday!)