Many Americans are facing severe economic hardship and their credit has suffered. Because of this, people who have had credit cards to use for holiday spending in the past may not have them to use today. Those who still maintain a positive credit record are likely to feel the pressure of the economic crisis, and desire to protect their positive credit rating by keeping expenditures low.
In my opinion, people should be careful on buying too much stuff on credit. Nobody knows how the economy will look next year. Also, the unemployment rate has skyrocketed, and there has been no real sign of it getting any better. I am going keep it safe this year, and save a little money for the future.
Given the period of economic uncertainty we have been through, it is unreasonable to expect that consumers will simply forget about this and go back to their old, unsustainable way of spending. Many people have learned that you cannot simply rack up debt after debt. At some point, you have to pay your bills and economize.
The continued recession, or this continued recessional attitude, has continued to put a cramp on the economy. People do not want to spend or lend, and it makes it difficult for anyone to make more money to get out of the debt they are currently in. Since it is so hard to get out of current debt, incurring new debt is being avoided like the plague.
Holiday spending will be an issue in the upcoming season, because the American people have realized that it isn't wise to apply for new credit cards when the old cards are maxed out. Many Americans are already carrying their maximum debt load, and will be reluctant to go deeper into debt with massive layoffs looming.
Some people may have learned their lesson, but most people are going to end up in the same boat again. The holidays are an enormous time for people and they are going to buy presents for everyone they know and spend way too much money, even if it means going into debt for them. People did not cut back during the holidays that much in the middle of the recession, so they are not going to cut back more now. The holidays are important to people. They are all looking for the best deals they can find.
I do not think there will be a sudden return to spending, even after the government announces the recession is over. Following the Great Depression, it took decades before people returned to spending, and there are still those elderly who remember the Great Depression and still live with their frugal ways to ensure they receive the best deals. This will continue for several years until people have been able to clear the debt they accumulated already and begin to feel secure enough to spend again.
I do not believe that the overall economy or the jobless rate will improve enough by the next holiday season to make many consumers comfortable spending a lot of money. Even though we get reports from the government and the media that things are getting better, I do not believe that average middle class people have seen much improvement in their financial lives while they are struggling to make ends meet and I do not believe that things will be that much better next holiday season. Now, we are seeing increased gasoline prices which will only make the situation worse for many people. It is hard to go on a holiday spending spree when you are worried about feeding your family.
Many people are still out of work, many are underemployed, and there is little consumer confidence that we are on the road to relief.
People will worry about overextending credit this year because many are out of work and being forced to turn to credit as a means of shopping this holiday season. The vicious cycle of borrowing to make ends meet is a real problem many consumers face in this economic decline.
There was a time a few years ago when consumer spending around the holiday time took a major hit. Those days are gone however because the economy has rebounded and people are more capable of spending some extra money on gifts. The credit problems still exist for some, but many consumers have paid down their debt and are ready to splurge again after such a long time cutting costs in their families.
Since the economic downturn, people have gotten wiser about how they spent their money. While this initially was viewed as a bad thing, I think people have been dealing with it and realizing that overspending is not going to get them anywhere. Instead of spending however they want, people will have to budget themselves--and look for better deals at the retail venues in which they visit. It's easy to spend it, but harder to earn it and people are coming around to realize that.