There is a definite divide when it comes to how people feel about Valentine’s Day. Many enjoy having an excuse to buy cute gifts for their friends and loved ones, while others see it as an overly commercialized holiday with no true meaning.
No matter how you feel about the holiday, there is no doubt that there are benefits to celebrating it. Whether or not you are making purchases for loved ones, the money spent helps the economy to grow. Read below to see the impact of buying that bouquet of flowers or box of chocolates this Valentine’s Day.
In general, how do holidays benefit the economy?
To understand why holidays benefit the economy, it is important to understand the concept of gross domestic product (GDP). A country’s GDP measures the total value of all goods and services produced within the country in a specific amount of time. A rising GDP means the economy is growing. In the United States, 68% of the GDP is from spending.
In the week or so leading up to a major holiday, you are making purchases that you would not make otherwise. These spikes in sales benefit the economy and earn businesses more money. Khawaja Mamun, associate professor of business economics at Sacred Heart University, explained how this spending cycle benefits the economy and increases the country’s GDP.
“As we spend more, many people benefit and earn money,” he said. “As businesses and workers earn more money, they tend to spend that money. If they don’t spend, then those without the income are also not able to spend.”
What is it about Valentine’s Day that tends to boost the economy?
Valentine’s Day is unique in that most consumers have a reason to make a purchase. Whether or not you are in a romantic relationship, there is likely someone you are buying a gift for. Many people tend to buy gifts for their friends, coworkers, children, relatives, etc.
According to the National Retail Federation (NRF), 62% of consumers ages 25-34 plan to celebrate Valentine’s Day in 2024. The projected total in general for spending is $25.8 billion, while the projection for spending specifically on significant others is $14.2 billion. Despite the NRF projecting that consumers will buy less for their nonromantic relationships this year, this gap attests that there are still people buying gifts for their friends and family members.
What are the most purchased Valentine’s Day gifts?
Each year, the NRF takes an annual Valentine’s Day Spending Survey to see what consumers plan to purchase for their loved ones. Here are the results for the 2024 survey:
- Candy (57%)
- Greeting cards (40%)
- Flowers (39%)
- An evening out (32%)
- Jewelry (22%)
- Clothing (21%)
- Gift card/gift certificate (19%)
Consumers are expected to spend $185.81 each on average, which is $8 more than the average for the past five years. Forty percent do their shopping online, 33% at department stores, 31% at discount stores and 17% at florists.
How does Valentine’s Day benefit small businesses?
Although you can probably find the same products online or in a large department store, there are benefits to shopping at small businesses. When you shop locally, you are creating more jobs, helping the local economy and supporting local shop owners. You also may find unique products that are not available at a department store. For example, many small businesses specialize in customizable gifts that tend to be ideal for holidays like Valentine’s Day.
“Mom-and-pop restaurants, local flower shops and small jewelry stores are the ones that really benefit from this holiday,” said Mamun. “There are even customizable candy shops with products you can write a name on.”
Despite the benefits to the economy, it is important to note that love should not be measured in gifts. Mamun has important advice for those celebrating Valentine’s Day: “Remember, it’s not the money that matters; it’s love.”
Want to learn more about economics & finance? Explore programs at Sacred Heart University.
Are you interested in studying economics and finance? Explore the many online, hybrid and in-person undergraduate, graduate and doctoral programs that SHU offers to jumpstart your career in this ever-changing field. Reach out to Ed Nassr at nassre@sacredheart.edu or (203) 396-6877.
