Nobody would admit it, but what people really want for Christmas this year are basic necessities, like gasoline and underwear. JPM retail analyst Charles Grom took a look at gift-card behaviour this year, and found that more and more, people are redeeming them for these very un-gift-like household staples. For retailers, that’s a bad sign, because it means shoppers aren’t applying gift cards to larger purchases (like TVs), that would have to be augmented with their own cash.
This also bolsters a common argument against the economic benefits of the Christmas season — namely that there is a lot of sub-optimal purchases around this time. When you’re shopping for someone else, you’re much less likely to achieve as high utility on the purchase than when you’re just shopping for yourself. So if this year people want groceries and socks, but they get Wii Fits and massage chairs, that’ll represent a larger-than-normal misallocation of resources.
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