Critique on "Fiscal cliff could weigh on holiday sales"

As the blog post mentions we are currently in the mid of the holiday season. While all the thanksgiving craziness is just over, the shops are already loaded with Christmas things. Even though it is the best period of the year, it also makes people to spend a lot of money to buy presents, food etc. The question is if people take the predicted “fiscal cliff” into account while doing all these expenditures. According to actual data the National Retail Federation released this is not the case. The Federation still predicts a 4.1% increase this year in holiday sales. Besides that, the recent Thanksgiving Day sales were so high that we hit a new record of $59 billion in spending.

One explanation for this could be that people are not aware of the serious impact the “fiscal cliff” will have on peoples’ wallet. The “fiscal cliff” is predicted to occur in 2013. This causes an automatic increase in taxes for middle-class families and spending cuts for the government. Currently, the national debt is extremely high. In fact, each United States citizen’s share of the debt is higher than the national average income. This means that we have a real problem. If the parties in the House of Congress can’t agree on a plan to cut soon, all these consequences will happen on one date. This will certainly affect people’s disposable income so you would expect that the consumer confidence drops. However, the current holiday sales show this is not the case which means, according to the blog post, that people are either not aware or don’t worry about the upcoming “fiscal cliff”.

However, I do think that people in the U.S. are aware of the upcoming “fiscal cliff” because it is a hot item in the newspapers, magazines, news etc. I think there are other reasons for the rise in holiday sales. One reason may be that people in the U.S. try to stay as optimistic as possible towards the future. I think this is a characteristic that distinguishes the American people from, for example, the Dutch people. In Holland people always try to be conservative and save as much as they can to prevent any troubles in the future. In the U.S. people are often more positive towards the future, which can explain the rise in holiday sales. Besides that, people may think that buying goods only stimulates the economy. When people buy more the GDP raises, which is good for the economy. Another reason can be that people are aware of the upcoming “fiscal cliff” and therefore know that taxes will increase. As a result, products will be more expensive. This could trigger people to buy more now they can afford it instead of waiting for prices to rise.