Consumer Insights

January post-holiday sales are expected to plunge to some of the lowest levels in years thanks to a surge in credit card spending over the Christmas season, which followed three years of major cutbacks in credit card use.

That’s the assessment of America's Research Group Chairman Britt Beemer, who asserts that shoppers will respond by cutting back in a significant way in January and February.

“Now that those credit card bills are hitting mailboxes, shoppers will cut back in a very significant way relative to January and February of the last few years,” Beemer said. “Black Friday was so big that Americans in record numbers – 43.8% - said that they exceeded their spending limits. These numbers are much higher than the 15% and 16% that signaled major drops in credit card usage that we’ve seen in the last couple of years. Americans now face the challenge of bigger credit card debt until they get their income tax refunds. But regardless, spending levels will drop for at least the month of January as the sticker shock hits big-time.”

Beemer said the other reason for suddenly higher credit card debt “is the increase in online spending, which is totally credit driven.” Online spending was up 10 points – from 16% to 26%.

“Unless consumers see ‘70% off,’ they will be holding back in January, and in February and possibly into the spring,” Beemer said. “Moreover, the stronger credit card usage this holiday season will have major consequences for many Americans who, in record numbers in the last two holiday forecasts, told us that they are living from week-to-week, which makes this the worst economic picture in ARG survey history.”

Beemer noted that many Americans chose to forgo the mall this year in favor of dollar stores and discount stores, in addition to online spending. Indeed, it was the lure of discounts – that is, mega-bargains – that drew Americans out of the credit card fear that has gripped them for the last three years and into the over-spending zone once again.

“This month,” he said, Americans will face one of the biggest retail hangovers on record for our surveys.”

Charleston, S.C.-based consumer research and strategic marketing firm America’s Research Group is a key resource and advisor to leading brands and top retailers.