We have all experienced it: the unmistakable squeeze that comes from having to tighten one's economic belt. Corners have to be cut, priorities re-organized, and compromises made. And the crunch is perhaps brought even more sharply into focus during the holiday season, when the pressure to spend is at its highest. This year, predictions for holiday spending were very low, but analysts were surprised: Spending was actually even lower than expected.
A division of MasterCard showed holiday spending this year was down by as much as 4% over the same period last year, making this year the worst holiday season for them in modern times. Even retail behemoths such as Gap experienced a drop in sales by close to 20 percent. Best Buy and other electronics and appliance stores experienced even more significant drops than that.
This trend may spell bad news for smaller, less powerful retailers, and threaten to put them out of business. Larger, stronger businesses, although they may find themselves with less competition for market share, will also have to face laying off more and more of their employees the longer the recession continues. .
As 2009 begins to unfold, the retail industry could see a dramatic decrease in its workforce. Starting with part-time workers and trickling down to those in full-time employment, the risk of losing one`s job will be a very real threat to more and more of us.
To help encourage spending and inject life back into the economy, the retail industry recently asked the government for tax holiday periods, periods during which shoppers could buy items tax-free. The thinking behind this was that if more good were being purchased, prices could come down, and therefore more goods would be purchases once the taxes were applied again. However, the problem with this system is that consumers, hungry to go shopping again, could easily run up a considerable amount of debt, having the opposite effect on the economy than that which is desired.
