FISCAL CLIFF COULD WAY ON HOLIDAY SALES

With the holidays right around the corner, many consumers are prepping to do their holiday shopping. Also right around the corner is a fiscal cliff that is ready to increase taxes and cut government spending. There are many economic problems that will occur for many middle-income families because of the fiscal cliff, and these problems could lead to some households spending less this holiday season. The fiscal cliff is something we have gone over in class recently and I thought that going over an article that incorporates what we learned and talks about something all college students deal with would be interesting to do.

As we have talked about in class a number of factors including the Bush tax cuts and the Budget Control Act have led to the fiscal cliff. The end result of the fiscal cliff problem could mean tax increases to Americans and a decrease in government spending. Other long term problems like more debt for America are likely to occur as well.

Because the holiday season is right before these effects will occur, many consumers might be hesitant to spend a lot of money this season. If the amount of money spent this holiday season is significantly lowered compared to last year it could also have negative affects on the economy. To give a broad idea of how important the holiday season is to industries in America, a report conducted by President Obama’s top economic advisors said the holiday season “accounts for close to one-fifth of industry sales.” Some effects that could occur are “consumer confidence will go down, retailers will be hurt, and jobs may be cut.” Wal-Mart CEO Mike Duke said, “They are shopping for Christmas now and they don’t need uncertainty over taxes.”

However with how high the level of worry may be, and the amount of uncertainty in the air over this holiday season, the National Retail Federation still predicts are 4.1% increase this year in holiday sales. The recent Thanksgiving day sales were also so high that we hit a new record of $59 billion in spending.

With so many people in the industries relying upon consumers to do their part, there is reason to be scared, but it looks as if the holiday sales won’t take a hit because of the upcoming fiscal cliff. Maybe people don’t worry about the fiscal cliff and will take their chances when it hits, or maybe people don’t know about the upcoming cliff. Whatever the case the fiscal cliff certainly will play into sales next holiday season, after the tax increases for households. It will be interesting to see all the other little affects that this fiscal cliff will have on the economy and the American people.

Kurtz, Annalyn. "Fiscal Cliff Could Weigh on Holiday Sales." CNN Money. N.p., 26 2012. Web. 29 Nov 2012.

http://money.cnn.com/2012/11/26/news/economy/fiscal-cliff-holiday-sales/index.html?iid=EL