Christmas economics

Culturally, we Filipinos will never let the simple problem of lack of money get in the way of celebrating. We get into debt to mark a wedding, a baptism, a debut, a graduation, a fiesta, and even a funeral. Christmas is no different.

I remember the late Senator Raul Manglapus once led a movement called Fiestas for Progress. The aim was to try to change the cultural practice of overspending on fiestas and learning to spend wisely, and even save for rainy days. Of course, the movement failed. Manglapus and his supporters ended up looking like sorry party poopers.

We have been through a pandemic that devastated economies globally. We are just about to get back to normal, discarding face masks and indulging in so-called revenge spending. The US is about to have a hoped-for soft landing, avoiding the recession that was predicted because the Fed had to battle rising inflation with record high interest rates.

Christmas is typically the largest economic stimulus for many nations around the world as sales increase dramatically in almost all retail areas during this time. In 2023, close to 90 percent of people in the United States stated they plan to celebrate the holiday, with less than one in 10 declaring that they would not join in the festivities.

Of course, Christmas spending is a big thing. The global market for Christmas decorations was estimated to be at $6.8 billion in 2021, and is forecast to grow to surpass $9 billion by 2026. In 2023, the value of holiday shopping in the US is predicted to reach almost $1 trillion to $30 billion more than in 2022.

Back in 2020, as we emerged from the first year of the pandemic, the holiday mood was subdued at the end of the year. It was an unusual holiday season as consumers tried to figure out how to celebrate with the reality of the pandemic’s economic devastation. But Christmas was not suspended, even if only for the reunions of families via Zoom.

BSP released data last Friday showing the consumer outlook in the Philippines to be more pessimistic for the fourth quarter of this year. The overall confidence index (CI) became more pessimistic at -19 percent from -9.6 percent in the third quarter this year.

Consumer outlook is more pessimistic across the three component indicators and across income groups (i.e., country’s economic condition, family’s financial situation, and family income). The indices of the component indicators became more negative.

Similarly, consumer confidence for the current quarter deteriorated across the income groups, i.e., pessimism increased in the low- and middle- income groups, and optimism turned into pessimism in the high-income group.

Before the BSP released its downbeat consumer survey, Kantar Philippines Worldpanel Division account director Nino Nierva was expecting an uplift in Filipino consumer spending, citing data from last year. He recalled a spending uplift of seven percent in the total fast moving consumer goods or FMCG segment during the height of the Christmas season last year – from December 2022 to January 2023 – compared to the non-Christmas months covering February to November. This spending uplift translates to an additional P6 billion spent every month within the holiday period.

The holiday mood may still prevails. The resurgence of COVID (plus bacterial walking pneumonia and a nasty influenza virus) may not diminish the determination of many to celebrate this end of the year holiday season. After all, we have had quite a challenging year and the new one is starting with a potential food crisis if our officials are unable to get enough rice imports quickly.

Our economic managers are banking on Christmas consumer spending to boost our GDP to make them look good and competent. For the first three quarters of 2023, GDP grew by 5.5 percent, missing the target of six to seven percent for this year.

Indeed, the stronger-than-expected growth in the third quarter was on account of the significant turnaround in government spending. Who really knows if this represents actual spending or a mere obligation of budgets to give the impression of being spent. Doubts persist given the inability of government departments to execute programs that quickly.

A look at the numbers published by the BSP showed GDP expanded by 5.9 percent in the third quarter of this year, with major economic sectors – agriculture, industry, and services growing at 0.9 percent, 5.5 percent, and 6.8 percent, respectively. Household expenditure, government spending, and net exports grew by five, 6.7, and 12.9 percent, respectively.

Because the inflationary pressures on prices are strong, the Department of Trade and Industry (DTI) has announced its Noche Buena price guide for the holidays. Even then, over 150 Noche Buena products – out of 240 items, saw price increases this year. This covers staple Noche Buena items such as ham, queso de bola, pasta, tomato sauce, all-purpose cream, and mayonnaise.

In the US, CNN reports many Americans tell pollsters they are not happy with the state of the US economy. And yet Americans simultaneously say they plan to ramp up their holiday spending. A clear majority or 71 percent of Americans rate economic conditions in the country as poor, according to a CNN poll. That includes 38 percent who rate economic conditions as very poor. Roughly four in 10 Americans say the economy or the cost of living is the number one issue facing America.

Yet, a survey of 18,906 US consumers during August this year revealed that despite an uncertain economy, many US consumers have healthy holiday budgets.

My friend, Joe Zaldariaga, wrote about how we, as Filipino consumers, can make our spending more meaningful this Christmas:

Buy local – Christmas gift shopping is a good opportunity to buy local to promote Filipino brands.

Support small businesses – Filipinos are naturally entrepreneurial. This holiday season is a chance to support small businesses, such as bibingka and puto bumbong vendors.

Go for sustainable brands – Another way to add meaning to holiday spending is by patronizing brands that promote sustainability.

Travel local – Christmas in the Philippines is bright and colorful. For those planning holiday trips, our tourism sector will surely benefit from a boost in visitors this season.

Lastly, it doesn’t hurt to share. The holidays after all are all about sharing – whether material things, experiences, or time.

Boo Chanco’s email address is [email protected]. Follow him on X or Twitter @boochanco