Posted by Mike Smith :: December 5, 2007 @ 5:36 amThere are many ways to determine the cost of Christmas and the subsequent effects on the consumer and the economy. One method calculates an increased cost of 4% over last year. This increased cost was released in PNC Wealth Management’s Christmas Price Index. The method used to calculate the index is rather amusing: it is based on the cost of the gifts described in The 12 Days of Christmas carol.
The results were reported recently by the Associated Press in this article:
What makes this method of cost estimation interesting is that it takes a much wider view of the economy into consideration than merely consumer spending. It incorporates commodity pricing (hens and other animals), labor rates (drummers, milk-maids, et. al.), as well as an indirect look at the strength of the dollar (gold rings). While the results are released more for their entertainment value than their accuracy, they nonetheless provide some insight into the state of the economy.
The cost for five of the twelve types of gifts did remain the same as last year, but the range of prices of the gifts, as well as their frequency, creates a weighted sum that can make some gifts more influential in the overall index. So even though the cost of 3 French Hens did not rise, you have to take the cost of that gift ($40) as well as the fact that it is given 10 times (days 3-12) into account when comparing it to the influence of another gift. For example, the base price of 5 Gold Rings ($395) times 8 (days 5-12) makes the price of the gold rings more dominant in the index than the hens.
While you could fund the $19,507 worth of gifts for the 12th day of Christmas with a P2P loan from Lending Club, buying the presents for all of the days is beyond the maximum loan amount permitted. There are probably much better ways to utilize your loan proceeds though, such as paying down your debt or making your holiday purchases more affordable by not using a credit card.
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