According to some, the spending outlook for the 2016 holiday season is anyone’s guess. In the uncertain weeks leading away from last week’s political backdrop, this is an important topic for your clients. Will winter holiday spending continue to rise as it has for over a decade, or will post-election drama pull it down?
Some psychologists say the US is suffering from PTSD (Post Traumatic Stress) after 9-11. They say national events over the last 12 months are evidence things are coming to a head. The most recent of these is the rising dissention among divergent groups across the country. Will this affect holiday spending adversely or will people use shop therapy as they lick their wounds?
Christmas, a civil holiday celebrated by Christians as well as Non-Christians, is typically the largest economic stimulus for many nations around the world as sales increase dramatically in almost all retail areas. Fundivo.com reports that since 2004 ($414.6 billion) spending increased every year until 2008 when the economy fell sharply, and spending went from $526 billion down to $503.1 in 2009.
In 2010 spending began to climb once again, notes Fundivo.com, peaking at $630.5 billion last year. The largest share, $480 billion, went to gifts for family. Candy and food came in second at $110 billion. [Note: Statista.com says closer to $3 trillion dollars was generated by the retail industry alone.]
Winter holiday employment was at a high in 2013 but fell in 2014. With more jobs brought by a recovering economy, time will tell how this year’s statistics pan out. It appears—as we are all learning during the election aftermath— recovery is a relative term. Many people have more disposable income while much of Middle-America is still out of work and struggling.
By the end of October, 20 percent of holiday shopping was complete and this month we’ll add another 42 percent, with the rest of holiday expenditures traditionally being made in December. It’ll be interesting to see what happens this year.
Business owners are also consumers. Before the holiday season is in full swing, tax preparers would be well-advised to counsel their business clients on which expenditures are tax deductible and which are not. Don’t assume they should know. It’ll be better for both of you if you inform them in advance, rather than to disappoint them when tax time comes around.
IRS Solutions’s guide to 4 Steps to Getting Started in Tax Resolution is FREE. Grab your copy now and start offering – and charging for – services that will boost your bottom line year-round. Get started in tax resolution today. Learn more about all of the features IRS Solution membership brings