The 12 Days of Christmas Debt

For many, the winter holidays are filled with fun and family time. However, for an increasing portion of society, Christmas memories are paid for by overspending and racking up huge, unsustainable debts. Today, we’ll assess how serious this situation is and what it means for the economy. Following that, we’ll check over the top tradeable events of the coming week.

Holiday debt on the rise

The trend of overspending during the holidays has been steadily increasing over the past few years and it’s getting to alarming levels.

According to Business Insider, the average American household carries debts of $59,580 across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans. Other sources quote this figure as high as $96,000.

The problem is further exacerbated during the holiday season when this debt spikes due to increased spending on gifts, travel, decorations, and entertainment.

The average American consumer spent $1,049 on holiday shopping in 2022. This figure is up from $979 in 2021 and is expected to continue rising this year and in the coming years.

Holiday Retail Sales, 2001–2022

Source: Experian

So, the outlook doesn’t look great.

The Economic Impact of Holiday Debt

The accumulation of holiday debt isn’t just devastating on an individual level, but it also has a broader impact on the economy.

When consumers consistently struggle with debt, they have less disposable income to spend on goods and services. This can lead to a slowdown in economic growth and even a recession.

If consumers are unable to repay their debts, it can lead to defaults, which can ripple through the financial system and cause widespread economic damage.

A new dynamic to an old foe

Holiday debt isn’t a new thing. But the problem has become increasingly severe in recent years due to the rise of consumerism, the ease of access to credit, and the growing pressure to spend during the holidays.

In the past, holiday debt was typically managed through frugality and budgeting. However, the current economic climate has made it more difficult for many people to make ends meet. YOLO right? Sigh.

As a result, more and more individuals are turning to credit cards to finance their holiday spending and this has gone from a small scale issue, to a potentially recession-inducing crisis.

Top fundamental events week commencing 04/12/23

There’s not a huge amount to shout about this week. Here’s what you have to look forward to…

Monday

● EUR — German Balance of Trade

Tuesday

● AUD — RBA Interest Rate Decision

● USD — ISM Services PMI; JOLTs Job Openings

Wednesday

● AUD — GDP Growth Rate QoQ

● USD — ADP National Employment Report

● CAD — Ivey PMI s.a

Thursday

● AUD — Balance of Trade

● CNY — Chinese Balance of Trade

Friday

● USD — Unemployment Rate; Nonfarm Payrolls; Average Hourly Earnings MoM; University of Michigan Consumer Sentiment Index

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The Contentworks team