Yesterday Gallup released its latest survey on holiday spending plans. The title nicely summarizes their findings: “Consumers’ Holiday Spending Intentions Perk Up in November.”
The Gallup chart accompanying the piece shows the spending estimates for the same week all the way back to 1999. Of course, over the 13-year time frame, the value of the dollar has shrunk considerably. If you adjust for inflation using the Consumer Price Index, that November 1999 dollar is worth about 74 cents today. So let’s compare the Gallup nominal dollar spending plans with their “real” values, chained in November 1999 dollars.
The adjacent table helps to quantify the real spending plans of the participants in the latest survey. Today’s holiday spenders obviously do not envision partying like it’s 1999 (to borrow a Prince lyric). The latest spending plans are about 34% below the average amount reported in the equivalent 1999 survey. In fact, the table gives us crude but convincing snapshot of trend consumer sentiment since the turn of the century. The contour of the inflation-adjusted series in the chart below corresponds rather closely with the broader snapshots of consumer sentiment:
- Reuters/Michigan Consumer Sentiment Index
- Conference Board Consumer Confidence Index
Based on their historical data, Gallup explains that “The 7% increase in Americans’ 2011 November Christmas spending forecast compared with last year’s — from $714 to $764 — points to a modest increase in 2011 holiday retail sales, perhaps on the order of 3% to 4%.”
We’ll take a look at retail sales after the holiday season to see if Gallup’s observation holds true this time around.
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