Thanksgiving has come and gone, and the holiday shopping season is now upon us. With just a few weeks until Christmas day, many shoppers are feverishly trying to find the perfect meaningful gifts for everyone on their list. Between the shopping frenzy of Black Friday and Cyber Monday to the last minute sales just before Christmas, the American commercialization of Christmas plays a very big part in how much the average American pays for all of his or her holiday expenses. Between gifts, holiday parties and decorations, Christmas in America seems to be getting more and more extravagant. Here is a look at the average cost of an American Christmas and a glance at why the cost of the holidays is steadily rising.

Americans Spending More on Gifts in 2012
According to a study performed by the American Research Group, Inc., Americans will be spending more money on gifts in 2012 than they did last year. In 2011, the average American spent $646 on holiday gifts. In 2012, it is expected that the average American will be spending $854 in gifts for friends and loved ones. It should come as no surprise that the average cost of gifts is so high. With advertisements for big sales everywhere, there is a greater chance for impulse buys and overspending. Additionally, rising from a period of economic turmoil, many Americans may be more willing to spend this year after years of scrimping.

American Parents Spend $271 on Christmas Gifts Per Child
Costs can rise for families, especially for parents with underage children. According to an article released by MSN in December 2011, American parents planned to spend an average of $271 per child in Christmas gifts. One in 10 parents said the plan was to spend over $500 per child. While this is just an average, American families can definitely spend an astronomical amount of money on Christmas gifts.

Larger families with several children may have to work evern harder to avoid the holiday spending hangover. While this excess would be better placed elsewhere, such as parents creating strong financial futures for their families, these warnings often fall on deaf ears. Christmas spending has taken a dramatic increase in recent years and shows no signs of slowing down.

Dramatic Upswing in Spending Since the 2008 Recession
In 2008, a recession hit the United States, and with many people out of work and struggling, holiday costs dropped significantly. According to Gallup surveys, in 2008 the average American spent 29% less on Christmas gifts than in 2007. Meanwhile, since the economy has slowly recovered, spending has gradually increased. In comparison to the spending levels of 2007, the United States is not spending quite as much. The average family expected to spend $764 in 2012. As the employment rate increased, and the housing and auto market has begun to recover, so have American's spending habits. Although this might support an economic recovery, consumers will have to sacrifice their savings.

The Bottom Line
Americans have been spending more on holiday gifts every year since the 2008 recession. Only time will tell if the predictions are correct. If 2012 keeps in line with past holiday spending, 2012 will be a very big year indeed in the United States for holiday spending.

Related Articles
  1. Economics

    The Problem With Today’s Headline Economic Data

    Headwinds have kept the U.S. growth more moderate than in the past–including leverage levels and an aging population—and the latest GDP revisions prove it.
  2. Investing Basics

    10 Companies That Yuppies Love

    Learn about 10 companies loved by the modern Yuppie, including how this demographic's impressive buying power has boosted these companies' earnings.
  3. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  4. Investing News

    How 'Honesty' Could Pay off for Jessica Alba

    Is it possible that Jessica Alba is one of the savviest businesswomen on the planet?
  5. Personal Finance

    Invest in Costco? First Understand Its Balance Sheet

    A strong balance sheet sets a company apart and boosts investor confidence. How healthy is Costco based on an analysis of its balance sheets from the last two years?
  6. Investing Basics

    The 5 Reasons Why RadioShack Went Out of Business

    Learn five reasons why RadioShack went bankrupt: store concentration, online competition, product concentration, management issues and financial missteps.
  7. Budgeting

    The 5 Most Expensive States for Child Care

    To get a better sense of how child care costs can fluctuate, here's a look at the costs of child care across the country.
  8. Home & Auto

    Looking To Invest In Home Improvements?

    Some home improvement projects could cost you more to complete than they’ll pay out in equity. So, here we show you the worst projects to avoid.
  9. Fundamental Analysis

    Understanding the Internal Rate of Return Rule

    The internal rate of return rule is a popular method used to compare investments or projects.
  10. Stock Analysis

    J.C. Penney: Identity Crisis or Buy Opportunity?

    With so many recent leadership changes, J.C. Penney might be suffering from an identity crisis. Here's why and what you need to know.
RELATED TERMS
  1. Substitute

    A product or service that a consumer sees as comparable. If prices ...
  2. Fast Fashion

    Definition of "fast fashion."
  3. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability ...
  4. Duty Free

    Goods that international travelers can purchase without paying ...
  5. Online-To-Offline Commerce

    A business strategy that draws potential customers from online ...
  6. Chargeback Period

    The timeframe during which a credit card issuer can dispute with ...
RELATED FAQS
  1. How can I invest in electronic retailing (e-tailing)?

    Electronic retail is one of the fastest growing segments of the economy. Every year, more people are choosing to purchase ... Read Full Answer >>
  2. What is the difference between JIT (just in time) and CMI (customer managed inventory)?

    Just-in-time (JIT) inventory management focuses solely on the need to replenish inventory only when it is required, reducing ... Read Full Answer >>
  3. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  4. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  5. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  6. What factors make it difficult to compare performance ratios between retail stocks?

    Companies that operate in the retail sector significantly differ in terms of their profitability and efficiency, making stock ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!