Economics of Christmas facts for kids
Christmas is a super important time for businesses all over the world! It's when people buy tons of gifts, decorations, and supplies. Because of this, sales go way up.
In the United States, the "Christmas shopping season" often begins as early as October. In Canada, stores start advertising just before Halloween (October 31st) and really ramp things up after Remembrance Day on November 11th. In the UK and Ireland, Christmas shopping usually kicks off in mid-November, around the time the Christmas lights are turned on in towns.
Did you know that in the U.S., about one-fifth to one-quarter of all personal spending happens during the Christmas and holiday shopping season? For example, in December 2004, spending in department stores jumped by 54% compared to November! Bookstores saw a 100% increase, and jewelry stores even saw a 170% increase. This huge demand also creates more jobs. In the two months before Christmas, about 200,000 more people were hired in American retail stores in 2004. So, while people spend more, there are also more job opportunities!
Some industries rely almost entirely on Christmas. For instance, people send about 1.9 billion Christmas cards in the U.S. each year! Also, over 20 million real Christmas trees were cut in the U.S. in 2002. On Christmas Day itself, most businesses are closed, making it the quietest day of the year for commerce. In England and Wales, a law called the Christmas Day (Trading) Act of 2004 stops large shops from opening on Christmas Day.
Some economists have looked at Christmas spending and found something interesting. They say that even though a lot of money is spent, there's a "deadweight loss." This means that sometimes, the value of a gift to the person who receives it is less than what the person who bought it paid. For example, if you get a sweater you don't really like, it might not be worth the full price to you, even if your aunt paid full price for it. In 2001, this "loss" was estimated to be about $4 billion in the U.S. alone! This idea helps economists think about how people value things.
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History of Christmas Economics
In the early 1990s, an economics professor named Joel Waldfogel wrote about how the value of a gift to the person receiving it might be different from its actual cost. This idea led to the term "deadweight loss," which describes when money isn't used as efficiently as it could be.
Later, in 1993, another economist, John L. Solow, argued that sometimes giving a gift of money is best because it lets people buy exactly what they want. But he also said that sometimes a specific gift can be better if it makes both the giver and receiver happy. More recently, in 2009, Lydia Yao explored how to measure the special, non-money value of a gift compared to its cost.
Getting Ready for Christmas Shopping
Christmas Club Savings
Christmas clubs are special savings programs that started in the U.S. during the Great Depression. The idea is simple: people put a small amount of money into a special savings account each week. Then, at the end of the year, they get all that money back just in time for Christmas shopping! Banks used to compete to offer these clubs, sometimes even giving out special tokens. People liked these accounts because it helped them save money specifically for Christmas, knowing they wouldn't spend it on other things.
Sears Wish Book
The Sears Wish Book was a very popular catalog for Christmas gifts. It was released every September by Sears. This catalog was filled with toys and other holiday items. The first Sears Wish Book came out in 1933. In its 2007 edition, half the pages were just for Christmas toys, and the rest showed other items like appliances and clothes.
Christmas and Business
Christmas really boosts the economy! When it's Christmas time, people want to buy more things and use more services. This means that both the supply (what stores have to sell) and the demand (what people want to buy) go up. Stores use Christmas to make lots of extra sales. Sometimes, people feel like they need to buy many gifts to fit in with the holiday spirit, which can even lead to debt.
All this extra buying means more jobs! For example, more people are needed to ship and deliver products. So, the demand for Christmas gifts and celebrations creates jobs that might not exist otherwise. Advertising for Christmas also plays a big role. It encourages shopping and highlights how important gift-giving is. This has changed how many people see Christmas, where getting presents and traveling to see family are big parts of the celebration, all of which help the economy.
When Christmas Shopping Starts
Christmas Creep
"Christmas creep" is a term that describes how stores start the Christmas shopping season earlier and earlier each year. This term first appeared in the mid-1980s. Stores do this because they want to sell their Christmas items for a longer time and make more money. They want to give shoppers who like to start early a head start. In the UK, retailers call the last three months of the year (October to December) the "golden quarter" because they hope to make the most profit during this time. This early start can also happen for other holidays like Valentine's Day or Easter.
United States Shopping Kick-off
Black Friday is the Friday after Thanksgiving Day in the United States. It's seen as the official start of the Christmas shopping season. Many big stores open super early on Black Friday (sometimes even on Thanksgiving night!) and offer big sales to get people to start their holiday shopping. Even though it's not a national holiday, many non-retail workers and schools have the day off, which means more people can go shopping. Since 2005, Black Friday has usually been the busiest shopping day of the year. In recent years, other countries like Canada and the UK have also started to have Black Friday sales.
Mexico's Shopping Event
El Buen Fin is an annual shopping event in Mexico. It started in 2011 and takes place on the third weekend of November. During this weekend, major stores stay open longer and offer special deals, including payment plans and discounts. The goal of El Buen Fin is to boost the economy by encouraging people to buy things and to help Mexican families by offering promotions and discounts. It was inspired by the American Black Friday.
Christmas Shopping Traditions
Christmas Markets
A Christmas market is a street market that celebrates Christmas during the four weeks leading up to it (called Advent). These markets first started in Germany, Austria, and parts of France, but now you can find them in many other countries. The history of Christmas markets goes way back to the Middle Ages. For example, Dresden's Striezelmarkt first happened in 1434, and the Vienna "December market" dates back to 1294!
Christmas Price Index
The Christmas Price Index is a fun way to look at economics. It's put together by a U.S. bank called PNC Wealth Management. This index tracks the cost of all the items mentioned in the famous Christmas song "The Twelve Days of Christmas." PNC calculates two things: the "Christmas Price Index" (just adding up the cost of each item once) and "The True Cost of Christmas." The "True Cost" is much higher because it calculates the cost of buying all the items each time they are mentioned in the song (for example, buying 22 turtle doves in total, not just two!).
End of the Shopping Season
Super Saturday
Super Saturday is the last Saturday before Christmas. It's a huge day for American stores because it's when last-minute shoppers rush to buy gifts. On this day, stores often have big one-day sales to try and make as much money as possible before Christmas.
Christmas Day Rules
Christmas Day (Trading) Act 2004
The Christmas Day (Trading) Act 2004 is a law in the United Kingdom. It stops large shops (over 280 square meters or 3,000 square feet) from opening on Christmas Day in England and Wales. Smaller shops can still open. This law was created to keep Christmas Day special, making sure that all major stores would be closed. Even though most big stores traditionally closed on December 25th, some started opening in the late 1990s. Both religious groups and shop workers were against this, which led to the government passing this law. A similar law was passed in Scotland in 2007.
Images for kids
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The King of Prussia mall in King of Prussia, Pennsylvania decorated during the Christmas season
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Christmas decorations abound in many shopping malls such as Iguatemi Florianópolis in Florianópolis
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Each year (most notably 2000) money supply in US banks is increased for Christmas shopping.
