When you think of Christmas, you probably think of presents, family, and food. It’s probably quite unlikely that economics comes to the forefront of your mind. But perhaps it should. One of the biggest business implications of Christmas is economic – put more specifically, the massive increase in spending. Generally, Christmas is thought of as very beneficial to Nigeria‘s economy.
Here’s how the period affects the Nigeria‘s economy.
A boost in production
In the months leading up to Christmas, there’s a huge increase in the need for manufacture. This is particularly prevalent in the toy industry, where the vast majority of sales happen in the lead up to Christmas.
Temporary work
Many retailers and food and drink establishments require more staff to deal with the busier period in the lead up to Christmas. This is predominantly true for larger companies, who need to take on an abundance of staff to deal with online order in particular. This leads to an economic boost, with businesses increasing their profits and temporary workers finding themselves with a little extra cash to spend.
Spending increases
What’s uniquely interesting about the Christmas period is that spending increases in pretty much every industry. Food and drink, consumer goods and homewares, plus entertainment all get a Christmas boost. Even industries like cinemas and pubs can reap the benefits of our spend-happy culture during this period.
While for many, the holiday season is a time of joy, for some it is filled with frustrations over gift-buying for friends and family. David Kyle Johnson, author of The Myths that Stole Christmas, argues that the common wisdom that Christmas is good for the economy is wrong and that seasonal spending actually makes the economy worse by inflating the credit bubble and generating wasteful spending.
He suggests it would be better for people to save or invest their money to encourage economic growth instead.
Johnson says, “Many of us harbor secret frustrations with the holiday season. Most common is the obligation to buy gifts. It looms over us like the sword of Damocles. We dread the inevitable shopping fiasco and despise Black Friday. We hate not knowing what to get, or buying for people who already have more than they need.
“It’s no secret that people are frustrated with the commercialization of Christmas. October Christmas ads? Christmas music in stores before Thanksgiving? And by December (to quote Jon Stewart) in every store it “ looks like Santa’s balls exploded!” Can’t we dial it back a notch—at the least, reduce our gift giving obligation?
“No,” we immediately tell ourselves. “Our economy depends on Christmas spending.” It boosts production. It creates jobs. It increases the GDP. As Sarah Palin puts it in Good Tidings and Great Joy “Christmas helps to employ millions of people and props up our entire retail economy.” (p. 86) As frustrating as the Christmas spending obligation is, it’s all worth it because of its economic benefits.
“But guess what? That’s a myth – a myth perpetuated by capitalistic forces designed to keep you buying presents to justify their existence. It’s a myth that generates spending that hurts, rather than helps, our economy. It’s a myth that keeps us, as the philosopher Tyler Durden once said, “working jobs we hate so we can buy shit we don’t need.”
He added that, “The realization that Christmas spending doesn’t help the economy is obvious enough. Spending is good for the economy no matter when it happens. And if you don’t spend your money at the end of the year on Christmas, you’ll probably just spend it on something else at some other time. So at best, Christmas just concentrates our spending at the end of the year. Besides, Christmas spending is just an indicator of our economic health, not the cause of it. A healthy economy generates Christmas spending by giving us extra money to spend, not the other way around.
“Of course, the social obligation to buy Christmas gifts might make people spend more by forcing them to spend money they don’t actually have. But how is that a good thing? It might create short term gains, but ultimately it just inflates the credit bubble—and the bigger the bubble gets the more likely it is to burst. It might increase our GDP, but an economy isn’t strong when it’s on the verge of collapse, is it? The two-thirds of our Christmas spending that is done on credit may “prop up” our economy—but it only props it up on stilts.
“Of course, instead of spending, in the absence of a Christmas gift obligation, some might take the opportunity to invest, pad their savings or make an extra mortgage payment. But how is that a bad thing? Sure, retail sales would go down in the short term, but saving money doesn’t subtract it from the economy. Investments help business thrive. The more of your money the bank has in savings and mortgage payments, the more the bank can lend it out to new and expanding businesses. And the less debt a family has, the stronger its buying power. The so called “ paradox of thrift” is actually no paradox at all.”
