What does your family do during the holidays? Maybe you all binge Christmas movies together with cups of hot chocolate in hand, or perhaps you go caroling up and down the street. One thing you almost definitely do, however, is go gift shopping. According to Hult Business School’s blog post, “The Business of Christmas,” around 90% of people say they plan to celebrate Christmas, and a major part of that is gift-giving. This jolly, lighthearted holiday goes deeper into our society than you think, as it has a profound impact on the economy.
During the Christmas season, it is no surprise that lots of holiday shopping takes place. The money spent on gifts alone has a huge impact on our society. Presents are exchanged, but, the Hult blog post says, they can also be returned as much as 10% of the time. The money that is made back, however, is oftentimes not enough to cover the crippling credit card debt that comes with Christmas (Wakefield).
According to Tomorrow’s World, “Consumer counseling agencies see a 25 percent increase in the number of people seeking help in January and February, and most of that traffic is propelled to their doors by holiday bills.”
This is also concerning because as recently as 2022, 35% of people have debt due to holiday shopping, according to a 2023 article in Retail Dive, an industry publication. Also, according to Scripps News, in the U.S. alone, credit card debt passed one trillion dollars in 2023, and the number keeps getting higher without pause.
These are seriously big numbers, and credit card debt is no joke. The interest rates and counseling fees can do serious damage to many people and families, no matter their income brackets.
Although debt is certainly a horrible thing, job opportunities are a good side effect of Christmas. According to the blog “How much does Christmas affect the economy?” from MWT Sourcing, a supply chain company Job opportunities skyrocket during Christmas since the demand for certain products rises. Companies need to make up for this increase by hiring more people they wouldn’t employ otherwise.
However, employment rates aren’t the only things benefiting from the holiday season. Hult’s “Business of Christmas” blog also points out that large companies and corporations also take advantage of the holiday season with appropriately themed marketing and therefore are impacting the economy. “Santa Claus was already being used to sell soft drinks long before Coca-Cola launched their festive ad campaigns around the same time [1934],” Hult says.
That’s right, Santa Claus was being used to sell soft drinks back in 1934, setting a trend that would really take off in later years.
The picture below, from the National Museum of American History, is a Coca-Cola advertisement from 1931, showing that Christmas-themed marketing was present nearly a century ago. Another major corporation that took advantage of Christmas before we were bombarded with Christmas ads is Sears. The Hult Blog described their Sears Wish Book, which was a gift catalog released in September every year. As much as half of the booklet would be filled with toys and Christmas-themed decor.
Not even banks skip out on this holiday trend. Banks take advantage of Christmas with their Christmas clubs or holiday club accounts. People make regular deposits into these savings accounts during the year and withdraw the money at the start of the holidays to make their holiday purchases. Many different banks offer holiday club accounts, but that isn’t the only Christmas competition that takes place.
The final way Christmastime impacts the economy is by boosting the competition between stores. Whether it’s the never-ending conflict of online vs. brick-and-mortar stores or the competitiveness between major brands in general, it is inarguable, according to a recent Time Magazine article on the subject, that Christmas causes competition.
One interesting statistic regarding online vs. physical stores from a 2016 CBS News report, is that “e-commerce is expanding at around a 10 percent annual clip, while physical stores stumble forward at a pace of about 3 percent.” In 2016, CBS reported that retail stores were still more successful, but the last decade has seen a rise in e-commerce.
The competition is close, and proper marketing can play a key role in which brand ends up on top.
Christmas affects the economy with staggering amounts of credit card debt, extra employment, creatively seasonal marketing, and fierce competition. Christmas economics are a convoluted and complicated thing, yet very important to business and society as a whole.
