Cost of gift giving and living changed little in 2019
As 2019 comes to a close, the economy is setting records. The unemployment rate is at a 50-year low, and the current, decade-long economic expansion is the longest on record. With such a robust economy, inflation would be expected to heat-up. Instead, it has been subdued. That’s good news for holiday shoppers and for all consumers as the cost of gift giving and the cost of living changed little in 2019.
Cost of gift giving
As a spoof, PNC Financial Services Group compiles an annual price index measuring the cost of gift giving. According to PNC, “True Loves will find all is calm when putting the gifts under the tree this holiday shopping season.” To purchase the gifts included in the classic holiday song “The 12 Days of Christmas,” it will cost just 0.2% more than it did in 2018. Although inflation has been subdued, the cost of the 364 gifts including the “The 12 Days of Christmas” is beyond the reach of all but the very rich. PNC’s 36th annual holiday economic analysis estimates the price the gifts at $170,293.03 (see table).
To be on the receiving end of those gifts would be more like 12 days of hell than 12 days of Christmas. Imagine cleaning up the mess all those animals would make. That’s certainly not what anyone needs amid the holiday frenzy of planning get-togethers with family and friends, making travel plans and shopping for last-minute gifts. You would also need a sizable chunk of land for the 12 pear trees and 40 milk cows, plus a very large pond for 42 swimming swans as well as a sizable henhouse for three French hens, and an aviary for the partridges, doves and calling birds. Besides all that, you would need a concert hall for the dancing ladies, leaping lords, piping pipers and drumming drummers. That sounds like a way to wreck a relationship. If you want to build true love, then forgo the animals, milk maids, dancers and musicians, and just send your lover the 170 grand.
Cost of living
The U.S. Department of Labor’s Bureau of Labor Statistics compiles much more practical measures of inflation, although they are certainly not as much fun as the PNC Christmas Price Index.
According to the BLS’s Monthly Labor Review, “Of all the economic statistics produced by the U.S. federal government, none has a direct impact on the lives of everyday Americans quite like the Consumer Price Index. Numerous government programs, such as Social Security benefits, are adjusted each year on the basis of changes to the CPI. Countless contracts — whether business agreements, government obligations, leases, or court orders — also utilize the CPI, to adjust the dollar amounts associated with these settlements.”
For example, in January 2020, Social Security retirement beneficiaries will receive a 1.6% cost-of-living increase. That increase is based on the annual increase in the consumer price index from the third quarter of 2018 to the third quarter of 2019. The average retired worker’s check will increase by $24 from $1,479 to $1,503.
The Labor Department’s latest report on inflation shows inflation rose more than expected over the last couple of months. According to the CNBC article “U.S. consumer prices increase more than expected in November,” “U.S. consumer prices rose more than expected in November, which could further support the Federal Reserve’s intention not to cut interest rates again in the near term after reducing borrowing costs three times this year.” Still, inflation is likely to remain subdued throughout 2020. According Kiplinger’s recent economic forecast for 2020, inflation will “stabilize at around 2%.”
Kiplinger’s also expects GDP/output growth to continue but “will soften a bit dropping to about 1.7%,” while job growth averages 150,000 per month down from the 2019 monthly pace of 180,000 jobs.
If the economy does continue its current course of subdued inflation, low unemployment, and expanding GDP in 2020, then it will certainly be worthy of dancing, leaping and drumming over.