Christmas may not weigh so heavily on economy
The Hartford Courant
Imagine if we set aside one day of the year, call it White Sunday, during which millions of Americans madly prime their houses and walls for painting.
White Sunday would fall on the day before Memorial Day, ushering in the all-important, late-spring painting season. Through most of June — the perfect month for painting — we’d scramble around, finishing the brushwork in time for the summer solstice, a glorious morning of light and color.
Sounds crazy. But consider this: Strictly by the numbers, the painting industry is just about as important to the U.S. economy as Christmas.
Christmas gift buying, in fact, is not a huge driver of prosperity in America. Plumbing, electrical work, dentistry and many other ways we spend our money are bigger.
How can this be? After all, consumer spending accounts for two-thirds of the economy, and Christmas — with Hanukkah and Kwanzaa along for the ride — is the culminating linchpin of the retail year. Certainly that’s the case for many merchants, who count on the season for 40 percent or more of their profits.
For the economy as a whole, the numbers tell a very different story.
Spending in stores this year will total $437 billion in November and December, a widely reported forecast based on a survey by the National Retail Federation. That total includes most of the stuff we buy, including food and drinks but not restaurant meals, vehicles or gasoline.
What about gift-buying? The retail federation predicts the average adult will spend $507 this year. That comes out to $117 billion for the nation. But the difference between total retail sales in November-December, compared with other months, suggests the “holiday excess” is closer to $60 billion.
But many shoppers buy “gifts” for themselves while they’re out picking up the perfect vase for Aunt Selma. And a huge chunk of Christmas buying is “substitution” spending: laundering as gifts the things we would have bought anyway at some point in the year, like all those LCD TVs and GPS systems.
When it’s all said and done, the bottom-line amount of Christmas gift spending that would not have happened without the lure of the holiday amounts to, perhaps, $40 billion. That’s a nice chunk of change, about $300 for every household in the nation.
It’s not much bigger than the painting industry.
Come to think of it, since retailing is not hugely profitable, and much of the money flows back to China, where the stuff under the tree (not to mention the tree itself) was likely made, Christmas is even less an economic driver than the numbers would have us believe. And the difference between a good and bad selling season is minuscule, to the economy.
The myth is harmless, said economist Nicholas Perna of Ridgefield, a Yale University lecturer and adviser to Webster Bank. “It’s one of these things where being truthful doesn’t advance society an awful lot,” he said.
So, let the myth live on. Have a great holiday season and keep spending. It can’t hurt.