Charles Hugh Smith
November 23, 2010
Of Two Minds
Santa, please, please, please strangle the idiotic fantasy that Americans buying a bunch of junk (or gift cards for after-Christmas purchases of junk) will “save” the imploding U.S. economy. My Christmas wish to Santa: please let this be the last Christmas in America that is dominated by the propaganda that holiday retail sales have any more impact on the $14.7 trillion U.S. economy than a moldy, half-eaten fruitcake left over from 2007.
Fact: the 2010 GDP of the U.S. is projected to be about $14.7 trillion. (CBO estimate) The Federal Budget Primer.
Fact: total holiday retail sales were $504 billion in 2009. Holiday sales–National Retail Federation.
That means holiday retail sales are a mere 3.4% of the U.S. GDP.
Despite the Financial and Mainstream Media’s pathological obsession with holiday retail sales numbers as proxies for the “health” of the entire U.S. economy, holiday sales don’t really change much:
2007: (pre-recession) Holiday sales: $516 billion
Holiday sales as percentage of annual retail sales: 19.5%
2008: Holiday sales: $495.5 billion
Holiday sales as percentage of annual retail sales: 18.6%
2009: Holiday sales: $504.8 billion
Holiday sales as percentage of annual retail sales: 19.4%
So the start of the 2008-09 recession saw a drop of $21 billion in holiday sales: statistical noise in a $14.7 trillion economy and a modest 4% decline from pre-recession levels. 2009 saw sales rise by about $10 billon (about 2%), so a rise of 2% from 2009 would return holiday sales to pre-recession levels.
Now the propaganda machine is cranking up to announce that a 2% increase in holiday retail sales means the U.S. economy is off and running. Santa, please, please, please order your reindeer to stomp the life out of the idiotic fantasy that Americans buying a few billion dollars more needless junk from China is any sort of evidence that the U.S. economy is “growing at a healthy clip.”
The entire retail sector is 7.9% of the GDP compared to a 21.4% share for the FIRE tranch (finance, insurance and real estate) of the economy.
Does anyone seriously believe that 3.4% of the economy can possibly leverage up the entire GDP with a razor-thin increase of $10 billion in holiday sales?
Santa, you have my deep gratitude if you could jam the propaganda machine so that this is the last Christmas in America where trivial retail sales are hyped as the bellwether for the $14.7 trillion U.S. economy.
Originally published at Of Two Minds