Hello dear reader! Once again, we have entered into a glorious season of love and selflessness. When the crisp white snow falls, and we are once again surrounded by our holiday cheer. As I thought about a subject, we could all relate to during this magical time of year, I was intrigued by the thought process of Christmas, and the other holidays that bear gifts around this time of year. While we all enjoy the thrill of opening presents on those magical days, nobody really thinks of the backstage effects on, you guessed it, our economy.
Of course, any economist (or high school senior, looking to flex his A in AP Microeconomics) will tell you that Christmas, and all the other winter holidays are a major beneficial variable to the global economy. Even during the COVID-19 pandemic, the economy has seen a lovely little upturn whenever the sleigh bells begin to jingle and white snow starts to fall.
The upturn begins towards the end of Thanksgiving. In the months leading up to Christmas, there’s a huge increase in the need for manufacturing. This is particularly prevalent in the toy industry, where the vast majority of sales happen in the lead up to Christmas. In fact, a lot of the toy industry’s product development and timing is based around the Christmas period in order to maximize profits, especially after Black Friday. Once purely an American tradition, Black Friday and Cyber Monday have been gaining traction in the UK in recent years. The Friday and Monday following American Thanksgiving now make up one of the biggest shopping weekends in the calendar. Not only do people spend a lot at this time in the lead up to Christmas, but it’s essentially the biggest weekend for discounts in retail, too. This of course primes the pump, so to speak, for the real Christmas season to begin.
Another major benefactor for the economy comes from the increased temporary holiday work brought on in late November and December. This of course relates back to the law of diminishing marginal returns. The law of diminishing marginal returns stipulates that as the demand for objects increases, more workers can be hired to maximize output. This of course could not be possible during a regular time of the year, as more workers would only inhibit the output of products for sale and restrict income for businesses. In short, the winter holidays create temporary jobs beneficial to businesses and the economy as a whole.
But what about after Christmas? Well contrary to some expectations, the period immediately after Christmas doesn’t reflect a prompt drop in spending. This can be mostly attributed to the Boxing Day and January sales. Although these sales have taken a slight hit thanks to the growth of Black Friday and Cyber Monday, they are still some of the premier shopping events in the UK. Many take them as an opportunity to spend their Christmas money, or as a sort of “last hurrah” in terms of holiday excess.
So, dear reader, while this might have not been the longest article I have ever written, I thought it might be an interesting fact to spread about our favorite time of the year. May this knowledge of economic security ensure you a very happy holiday!
Remember, there is always the possibility of a better tomorrow — what can you do to make it a reality?