The Cost of Christmas

By the MSN Money staff

If Christmas feels a bit more expensive this year, you can blame it on the pear tree -- as well as the lords a-leaping, the ladies dancing and the drummers drumming.

The annual PNC Wealth Management Christmas Price Index (a tongue-in-cheek economic indicator based on the cost of the items in the song The 12 Days of Christmas) rose 3.1% this year, with the sharpest increase coming from a 44% jump in pear tree prices.

“Robust commercial construction is sparking landscapers’ demand for ornamental trees, such as the species of pear used in the survey,” said Jeff Kleintop, chief investment strategist for PNC Wealth Management, which creates the annual survey.

But it was low unemployment -- and, consequently, higher labor costs -- that really put the bite in the holidays this year.

“The Christmas Price Index reflects trends in the broader economy,” said Kleintop. “After years of stagnation, wages for skilled workers, including the song’s dancers and musicians, have increased as the labor market has tightened. Also, a decline in the housing market has dampened demand for luxury goods, such as gold rings.”

According to the 22nd annual survey, the cost of gifts listed in The 12 Days of Christmas is $18,920 for 2006, compared with $18,349 for 2005.

Gift prices mirrored the U.S. government’s Consumer Price Index -- a widely used measure of inflation calculated by the Bureau of Labor Statistics.

Labor Costs for Dancers, Drummers

The largest dollar increase this year came from rising labor costs, which exceeded the rate of inflation for the first time in years.

According to Philadanco, the Philadelphia Dance Company, the cost of nine ladies dancing was $4,759, four percent more than in 2005. The women’s wage increase outstripped those of their performing peers: The cost of lords-a-leaping rose three percent, while the musicians -- the drummers drumming and the pipers piping -- earned 3.4% more than in 2005.

Maids a-milking, who are paid the minimum wage, were the only service providers not to see an increase this year. The federal minimum wage has been set at $5.15 per hour since 1997. Inflation since 1996 has steadily eroded the purchasing power of the hourly minimum, which would be worth $4.04 in 1996 dollars.

For the Birds: Flat Prices

The price of the partridge (as well as that of turtle doves, French hens, geese and swans) was flat this year, according to The Cincinnati Zoo and Botanical Gardens, as the cost of fuel to ship the birds leveled off. The avian exception was calling birds, which were purchased at a national pet store chain and increased 20%.

Gold rings also stayed constant this year despite a cost increase in the raw material -- gold -- because of softening demand for luxury goods.

“A slowing residential real estate market is making people feel less wealthy this year,” said Kleintop. “Investors have been buying gold as an inflation hedge and prices per ounce remain much higher than last year,” he added. “This may put pressure on profit margins at retail jewelers, who have not been able to pass along the increased cost to consumers.”

As part of its annual tradition, PNC Wealth Management also tabulates the “True Cost of Christmas,” which is the total cost of items gifted by a True Love who repeats all of the song’s verses. This holiday season, very generous True Loves will pay more than ever before -- $75,122 -- for all 364 items, up from $72,608 in 2005. This 3.5% increase is substantially less than last year’s 9.5% increase. Kleintop observed that Christmas Price Index inflation may reflect trends that led the Federal Reserve to pause interest rate hikes this year.

Publisher’s Note

I thought this piece was rather amusing. I don’t know about you, but I personally don’t know anyone who could afford all the gifts mentioned in the 12 Days of Christmas. I do however know of a gift that was given to all mankind on Christmas that was, and still is, the most precious and wonderful gift ever given. That gift was Jesus. Just think. God gave us His one and only Son, Jesus, so that we may have true joy and life everlasting and, the only thing we have to do is to accept Him as our personal savior and follow and obey Him. What an incredibly wonderful gift. If you haven’t accepted Jesus as your Lord and Savior, I pray that the Holy Spirit will prompt you to do so. You will not be disappointed. You have His word on it!