Haas Center: Holiday Spending Strong in 2019
Floridians can expect to see more presents under the Christmas tree this year, according to the Florida Retail Federation, which predicts about a four percent jump in holiday sales for 2019.
In addition to buying gifts for family and friends, Floridians are expected to spend more than $150 on themselves as well. Federation CEO Scott Shalley says that’s a sign that people feel good about their financial situations.
“The average shopper is going to spend a little over $1,000 on gifts, decorations and those sorts of things,” said Shalley. “So, there is a sense of optimism in the air that I think is going to carry over into the retail environment.”
Concurring is Jerry Parrish, who works with the UWF Haas Business Center and is chief economist at the Florida Chamber Foundation in Tallahassee.
“All over the country, consumers are continuing to spend money,” says Parrish. “That’s driving some job creation and certainly driving tax receipts for our states and counties and cities. I think we’ll see a slight improvement over last year, because it appears the consumers are feeling good about the economy.”
It’s not called “Black Friday” for nothing. The day after Thanksgiving signals the start of the biggest time of the year for stores, with many doing 20 to 40% of their annual business in the run up to Christmas. That in turn enables businesses to turn a profit, or “go into the black” for the year.
“I think overall, we’re going to see some improvement in spending; this is a big time for people to buy things like flat-screen TVs and cars, certainly leading up to the Christmas season,” Parris said. “Those are the big-ticket items that produce a lot of sales tax revenues for Florida.”
Seventy-six percent of Florida’s general revenue comes from sales and use taxes, according to Parrish. And the holiday spending benefits coffers from Tallahassee to the grassroots. Another substantial portion of holiday spending comes from visitors – last year, 127 million of them, providing about $12 billion in state and local taxes.
“They come in here, they spend money, and in a lot of cases they’re shopping to take back to their home state or their home country,” said Parrish. “They don’t put their kids in school and they typically don’t interact with our law enforcement agencies. So it’s a pretty low impact way to gain a bunch of revenue. And that’s the reason we don’t have a state income tax in the state of Florida.”
In December of 2018, per-capita spending in Escambia and Santa Rosa counties was $1,347 according to the Haas Center – up, says Parrish, from the previous year.
“What will 2019 be? I would expect it to be higher than that,” said Parrish. “Now’s a really good time to donate to local charity – whether it’s taking care of homeless, providing meals for lower-income people, presents, and certainly people typically get in the mood to give, this time of the year.”
However, what’s being shelled out at the end of 2019 is not that much of an indicator of what’s going to happen in 2020. Parrish says it will depend on the direction of the economy.
“Probably, one of the best leading indicators is what the consumer sentiment is,” said Parrish. “It’s done by the University of Florida, and I look at that a lot, as well as other things. And we put a ‘Probability of Recession’ indicator on our Florida scorecard – www.thefloridascorecard.org.
Spending in Florida’s metro areas – it stands to reason – would be higher than in rural counties because of greater population densities and incomes.
“But in general, the medium-sized metropolitan areas spend about the same, as they do in one part of Florida or another,” said Parrish. “[In] the bigger metro areas, there’s a lot more spending because they draw in people from the surrounding areas that want to do their holiday shopping or have a family get-together at one of the bigger areas. That happens a lot.”
And in a nod to modern times, sales increases are expected both online and at traditional brick-and-mortar stores. Part of that is fueled by many businesses offering deep discounts to get customers through the doors and onto the websites.