What Christmas Trees Say About the Holiday Economy

Like a jigsaw puzzle, Christmas tree facts have begun to fit together. They create a picture of the holiday economy.

Christmas Tree Demand and Supply

From November 10-11, 2020, 1032 online survey participants were asked if they planned to put up a Christmas tree. (I wonder if artificial won because they were last year’s):

Those responses add up to a 29 percent spike in U.S. real tree sales as of the beginning of this month.

Demand

In Hong Kong, IKEA has run out of Christmas trees. With people lining up at nurseries, retailers raised prices by as much as 7 fold to $1500 for a 6-footer. A bit similarly, in the U.K. and EU, tree orders were constrained by lockdown concerns. So now, growers are cutting more trees and rushing them to markets.

At the same time, in the U.S. the median price of a U.S. tree is $81. But, based on the past, prices will go down as we get closer to Christmas:

Supply

Because it takes 7 to 10 years to grow a Christmas tree, planning ahead is tough. Today’s 6 to 8 foot trees could have been planted at the end of the last recession, most likely in Oregon. The other top Christmas tree planting states are North Carolina at #2, and then Michigan. Pennsylvania, and Wisconsin come next. Meanwhile, the number of tree farms is estimated at somewhere between 3,000 and 4,000 (a big spread because the data varies):

Can Christmas trees give us a pulse of this economy?

A Harris Poll tells us that last year, 41 percent of us went to in-person celebrations. This year, the numbers are projected at 21 percent. Meanwhile 14 percent say they are hosting compared to last year’s 23 percent. I know we cannot be sure of the precision of any of our numbers. But the trend is clear. Because of the pandemic, more of us are planning a traditional holiday at home.

Our Bottom Line: Demand

An economist might explain our elevated demand for Christmas trees and other holiday celebrations through the determinant of demand called utility. Referring to usefulness or pleasure, the utility of staying at home has soared because of the pandemic.

Indeed, whatever our holiday preference, home for the holidays means a shift in demand for all we will be willing and able to buy. And, as demand shifts to the right, price and quantity go up:

Returning to where we began, you can just explain that an 8 foot Christmas tree in Hong Kong has a $2,000 price tag because utility shifted its demand curve.

My sources and more: After a WSJ front pager on Christmas trees, I decided to look further. From there, the the National Christmas Tree Association,  CNBC and then the Harris Poll added some insight. I also discovered more facts at NBC News and this tree site.