WASHINGTON (11/27/12)--Credit Union National Association (CUNA) Chief Economist Bill Hampel provided the holiday spending analysis for Fox Business Network's
"Special Report" on Black Friday and also discussed how the fiscal cliff may affect spending in the future.
In the 5:19-minute interview Friday, Hampel discussed the Consumer Federation of America and CUNA holiday spending survey, taken three weeks ago, and pointed out that based on the survey's results, he expects about a year-over-year 4% increase in holiday spending this year, up from a 3.5% rise last year.
When asked if consumers were aware of the looming fiscal cliff, he noted that "consumers are paying more attention to their own financial condition and own circumstances and less to what's going on here in Washington."
However, he suspects that will change. "The fiscal news has been restricted to the financial and business news sectors, and the consumers and the general public are just beginning to latch on to" the implications of the fiscal cliff, Hampel told the network.
In the CFA/CUNA survey this year, "more people said they were better off than the previous year than those who said it last year. Last year by a 2 to 1 margin, they told us they were worse off than the year before. That margin has really narrowed and people are feeling a little better." While it won't be a fantastic holiday spending season, it is "another nudge up in the right direction from last year," Hampel said.
"Our survey is a nationwide survey and it showed on balance that people are planning to spend a little bit more this year than last," he noted.
The survey found that the number of people worried about their monthly debt fell. "One of the reasons for that is the household sector is in better condition this year than it has been for four years. The Great Recession was really destructive to the household sector," Hampel said, adding that household debt is coming down and several economic factors are moving in the right direction toward stronger shopping.
Will consumers' improved view of their finances last into the new year? "That does depend entirely on what happens with the fiscal cliff," Hampel said. As the end of the year gets closer, "if Congress has not come to a reasonable solution, the financial market will signal to the household sector that things are bad and stock markets are tanking because Congress hasn't done anything," Hampel said.
Although consumers aren't directly connected to the stock market through mutual funds investments, most households are indeed connected to it through their 401 (k) and defined contributions pensions plans. "That will be the mechanism that signals to consumers that whoops--something's wrong here" if Congress doesn't present a solution, he concluded.