Debt Stress Shapes Holiday Spending in America

Many Americans feel more stressed about debt this holiday season. Because of this, fewer people are spending freely. Instead of acting like Santa, many shoppers feel more like Scrooge.

An Associated Press–GfK poll shows that 93% of Americans plan to spend the same or less than last year. About half say debt causes them stress. Nearly one in four say the stress feels severe. This number has risen since spring, even with talk of economic recovery.

Cash Spending Replaces Credit Cards

Most shoppers plan to use cash instead of credit cards. Around 80% say they will avoid borrowing for holiday purchases. Paying with cash often leads to buying fewer items and setting stricter limits.

Families Cut Back on Gifts

Joy McGavin, a 26-year-old mother from Pennsylvania, plans to spend a few hundred dollars less this year. She will pay only with cash. Her family will skip gifts for some relatives due to cost concerns.

Her husband recently lost work hours at his second job. The family also faces large medical bills and lacks health insurance. As a result, they now shop at discount stores instead of major retailers.

Business Owners Feel the Pressure Too

Diane Morrison, a payroll business owner from New Jersey, also plans to cut back. She clips coupons and waits for major sales. Many of her clients have laid off workers or shut down. She expects her income to decline and feels increased financial stress.

Job Loss and Debt Weigh on Consumers

High unemployment continues to hurt families. The jobless rate has crossed 10%, making bill payments harder. Foreclosures and credit card defaults are also rising. These pressures affect how people shop during the holidays.

Why Cash Limits Spending

Psychologists say cash creates natural spending limits. When shoppers carry only a fixed amount, they make careful choices. Credit cards, however, encourage impulse buying.

People who plan to spend less report higher debt stress. Those who rely on cash also feel more pressure. Stress levels rise further for shoppers who expect to carry credit card balances into the new year.

Long-Term Thinking Replaces Impulse Buying

Debt anxiety pushes people to plan ahead. Shoppers avoid splurging because they worry about future expenses. Many save money for emergencies instead of holiday treats.

Holiday Sales Matter to the Economy

Holiday shopping plays a major role in economic recovery. Consumer spending drives the economy. For many retailers, this season generates up to 40% of annual sales.

Retail experts expect sales to fall again this year, but not as sharply as last year. High unemployment and tight credit continue to limit growth.

Looking Ahead to Next Year

Economists predict slow spending growth next year. Consumer spending may rise only 2%, which could delay recovery. Unemployment is expected to remain high.

Most shoppers who use credit say they will pay their bills in full. Still, average credit card debt has risen to $5,600. Total household debt now averages $46,000, far higher than past decades.

Source: News Runner