Creighton University Economist Ernie Goss says the two surveys he conducts don’t show a lot of promise for merchants this holiday season.
“Holiday and Christmas buying probably up about 3 to 4% — and most of that’s inflation,” Goss says. “So when you look at it, when you subtract out inflation, you’re at zero to one percent increase from last year at this time.”
Goss says high interest rates will impact holiday spending. “One of the problems with it is credit card balances are maxed out, we’ve got the highest balances there on record. And of course that individuals are paying 20 to 30% on balances that are carried forward,” he says. “So that’s a real issue. And we got a nation of creditor of high a lot of debt out there right now.”
He says the high interest rates are also taking away more income with increased mortgage rates. “Individuals now are spending as much as 40 % of their income on housing. Now, that should be 28 to 30%, well it’s now that 40%,” Goss says. “Of course, that just that just reduces your ability to go out there and spend for the Christmas and holiday buying.”
Goss says he’s seeing people opting to get out of town instead of spending on gifts. “A lot of buying is going into things like air travel and travel, even automobile travel to locations for leisure and hospitality,” he says. Goss says October retail sales were not that good and were also down for September. He says some of that September buying was for seasonal purchases, so it’s going to be interesting to see what happens with Black Friday and the rest of the holiday season.