The Ironies of Thanksgiving

11/21/2011 9:51 am EST


Terry Savage

Author, The Savage Truth on Money

Despite what you may be hearing on every channel, it is not your duty to save our economy by going into debt with your shopping spree, writes personal finance expert Terry Savage.

The Thanksgiving weekend and the holiday shopping season are upon us. And the combination is filled with enough ironies for an entire column!

The first irony is that we equate the two events—stuffing ourselves with turkey and then running out to shop like crazy. You’d think that those who have enough to be thankful for—including a nice holiday dinner with friends and family—would realize that these are the greatest presents of all.

And those who have no one to share the holidays with, or no money to provide a Thanksgiving feast for their family, are certainly not the ones who should run out for midnight bargains.

(A word of warning to my family: I’m cooking the Turkey. Anyone who leaves to go shopping gets no leftovers!)

Every year, the “shopping season” starts a bit earlier, with some retailers planning to open at midnight on Thursday, beating those who have started the shopping season at 4 a.m. in recent years. “Doorbusters” have incited near-riots, and trampling, in the rush to get the good deals. What a great irony that this season of peace and fellowship should be marked by the competitive urge to spend.

The second irony comes in the fact that the health of our economy will be measured in terms of consumer spending. With retail sales providing as much as 60% of some stores’ revenues and profits, analysts will be closely watching the sales figures as they are reported over the weekend.

The National Retail Federation says its survey shows that 74 million consumers—about one-third of all shoppers—say they will “definitely” shop over the Thanksgiving weekend . That’s up from about 27% planning to shop in the same survey last year.

But here’s the great irony: Those great deals being offered by merchants may result in lower total dollars being spent. Stores can sell a lot of “stuff” to more shoppers. But if they do it at lower prices, then overall sales figures will be down, sending negative signals about the economy.

In fact, there are several forecasts that sales for the entire holiday shopping season may increase only less than 3% in 2011. That would be slower than the 5.2% year-over-year gain reported in 2010. So, more people shopping for more bargain prices could result in disappointing overall figures—truly a great irony.

And there’s one final irony. This one has a name: The Paradox of Thrift.

Basically it says that if I advise you to be careful about staying within your budget, and not getting carried away with the holiday shopping spirit—which is exactly my advice—then I may be helping you, but not the overall economy. This ironic paradox says that while individuals may do what is good for themselves by being frugal, if everyone follows this advice, it will be bad for the economy as a whole!

Nonetheless, I will repeat my annual admonition: It is not your duty to save the economy by going on a shopping spree. Consider the following alternatives:

  • Divide the shopping. Have your family agree on a “grab-bag” approach this holiday season. Thanksgiving is the perfect time for each family member to pick a name out of a hat, and only shop for that person. Set a dollar limit on each purchase.
  • Or, decide that there will be no “adult” presents—except for kids to Mom and Dad. Then teach your children that a present doesn’t have to be store-bought. A handmade card that promises an uncomplaining task, such as walking the dog or taking out the garbage, will get a lot of appreciation from Mom and Dad.
  • Give children gifts that have meaning and last a long time, such as a small contribution to a college savings fund, or a few shares of stock. (More on that in Thursday’s column.)
  • Ban all gifts that are not hand-made—whether a drawing from young children to be posted on the refrigerator, hand-made ornaments for the tree (you’ll treasure them for years), or making cookies or a favorite recipe for the coming holiday celebrations.

You’ll notice that all my suggestions have a minimal impact on the retail spending statistics.

Sadly, I think my advice about restraint will be muted by the overwhelming surge of holiday cheer. For sure there will be some who shop wisely, but the vast majority of holiday shoppers will be facing huge credit-card bills in January. That’s why bankruptcies always rise in the first quarter of the year.

But just in case you are inclined to heed my warnings, there is a bright silver lining to the cloud of restrained consumer spending. If merchants are faced with huge overstocks of un-purchased goods, there will be incredible sales in January.

That’s when you’ll really get a bargain. And that’s The Savage Truth.

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