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Is A Decrease In Halloween Spending Threatening The Economy?

Halloween is one of the many holidays that contribute to America’s consumer-driven economy. This year, retailers are worried, as it’s projected that by the end of the week Americans would have spent a total of $8.8 billion collectively this Halloween season, according to The Hill Magazine. While that figure is huge, it’s a decline from the past two years income of $9.2 billion for both 2017 and 2018. Retail experts aren’t considering this to be a “decline” but it is definitely way less than what the industry has seen come in throughout the past decade. 

According to John Leer, an analyst at Morning Consult, “the trend for consumer sentiment over the past year has been clear. We recently launched a daily consumer sentiment index that tracks how consumers feel about the current economy and their expectations of where the economy is headed. For all these consumer indexes, we see that they are considerably lower than they were at this time last year.” 

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Consumer sentiment is basically a fancy term for how average consumers think the economy is functioning based on their own experience and financial situation. A drop in sentiment means that consumers are more likely to spend way less than they normally would, especially around the holidays. Consumers are more likely going to turn to online retailers and alternative cheaper options, which isn’t a bad thing for them, however, for the economy it could be detrimental. 

According to The Hill, consumer spending accounts for around 70% of the US economy, which is why the industry is worried about the decrease in sentiment. In the past, there has been a steady increase in sentiment and spending around the holiday season. This increase has indicated to the government that consumers have a lot more disposable income to spend on holiday products that they’ll really only need for one day of the year, depending on the holiday in this case Halloween. 

“An increase indicates that we are simply much wealthier than we used to be, and we spend a significantly smaller percentage of our income on food, clothing and shelter than did our parents or grandparents. This leaves us much more to spend not just on the new gadgets they didn’t have but everything from Halloween to Valentine’s Day to bar mitzvahs, birthdays and barbecues,” said Steve Horwitz, an economics professor at Ball State University.

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However, when there’s a decrease in holiday spending, it can be an indication for how much disposable income the average American is willing to spend/has in general. Especially around Halloween, a holiday that is built around flashy expenses. Family oriented homes are more likely to want to spend more as a means of fitting in with the rest of the neighborhood, and giving their child the best and spookiest experience they can while they’re still kids. At the same time, needless decorative expenses that a household will only get use out of for one week of the year is typically the first thing to go when a family needs to make some budget cuts. 

It’s the same with Christmas and the holidays in general. Added expenses can be expected to decrease as the focus shifts to gifts and food purchases, and any other big ticket holiday need. With Halloween, the focus becomes the costume and candy purchases, both of which seem to receive an increase in price when October rolls around. 

Luckily, November and December is right around the corner, and any decrease in economic growth that occurred within the past month is expected to be made up for and then some for the holidays. The National Retail Federation forecasts that holiday winter sales can hit up to $730 billion, about a 4% increase over last year, according to the Hill

“There are enough signs of toil and trouble that could spook markets and send a chill through the economy. I wouldn’t put it ‘the world is falling apart’ phase yet. But the trend that we see is really concerning, and it’s consistent among all demographic groups,” said Mary McGinty, a spokeswoman for the National Retail Federation.