The spirit of giving, reality of finances

WEXFORD, Pa. - Spread out on Clare Bello's work table is the evidence of her year-old hobby - and now, the means for this year's Christmas.

The clear, compartmentalized boxes brimming with colorful beads, semiprecious stones, clasps and string used to be a fun, creative way to keep busy while watching TV and hanging out with family. This year, the jewelry Bello makes will be Christmas gifts for the women in the family - and she also hopes she can sell enough of her handmade crafts to provide money to buy gifts for the men and boys.

In the current economic climate - with unemployment rising, housing prices dropping and stock portfolios shrinking - many Americans are cutting holiday shopping. Gift-buying budgets are smaller and many people, such as Bello, are planning to make gifts when possible.

"Christmas this year has just been really tough and I think it's been tough on everyone," said Bello, 43, the chief executive officer and cofounder of Vertical Claims Management, a medical-malpractice claims company. "My husband's an attorney and I'm an executive, and we're still feeling the crunch, significantly."

The Bellos aren't alone. Nationwide, crowds came out on Black Friday - considered the start the holiday shopping season - and spent about 3 percent more than last year. But analysts say that has slowed in the countdown to Christmas.

Robert Dye, a senior economic analyst with PNC Financial Services Group in Pittsburgh, predicts a 6 percent to 7 percent decline in consumer expenditures for the fourth quarter from last year - the biggest drop since 1980. Shoppers are going to cut back on lavish goods and return to more "traditional values," he said.

People will "shift the focus from gift-giving, more to family reunions, catching up with friends," Dye said. "They're going to need to be creative . . . making gifts, organizing events, things that are not going to require an outlay of a significant amount of cash."

The Bellos, who live in Wexford, an upscale suburb of Pittsburgh, began by slashing their gift-buying budget for their immediate family - Bello, her husband, Sean, 44, and their children, Michael, 9, and Stephen, 6 - from $1,000 last year to $500 this Christmas.

Then, they decided the women in their extended family would get handmade jewelry.

Now, Bello is selling the necklaces, bracelets and earrings to earn the cash for whatever gifts they buy. Already, Bello has made about $200 selling her creations, $300 short of her goal.

The Bellos believe making gifts will save them hundreds of dollars. For example, normally Bello would buy her mother and aunt something like Omaha steaks, costing $60 to $150. This year, the women will get necklaces costing $40 each to make.

"You just really have to try to put money in the bank and cover the mortgage and cover the gas bills and everything else and keep food on the table," Bello said.

Steve Baumgarten, an equity analyst at PNC Bank, said he expects people, in addition to making gifts, to downgrade their shopping - hitting the dollar store and the Walmart, rather than the Macy's and the Saks.

"The magnitude in consumers cutting back in their purchases is going to be greater than what we've seen in more recent history, the past 20 years or so," he said.