Leading into the holiday period, the data — and by data, I refer to actual sales numbers, and not surveys, gut feelings or instincts — was strongly suggesting that the 2010 orgy of consumerism known as the holiday shopping season was likely to be stronger than expected.
The first clue I had of this was the Amazon sales from TBP. The embedded code of each link allows me to track click-throughs and purchases. All year long, it has been running significantly higher than 2009. (I’ll post some charts later this week).
Of course, plenty of people were stuck looking backwards. They gave tortured reasons as why this was not going to be a decent season. Call it a classic case of confirmation bias, these were the folks who simply refuse to acknowledge any improvements in the economy. These analysts seem to be shell shocked from the collapse; you should feel free to to do what you like, but once I recognize someone is caught in a negative loop, I tend to avoid their work until they prove they have some objectivity.
Why were the improved sales not a surprise to those people paying attention to the data? The negatives — weak job gains, housing overhang, consumer deleveraging, terrible municipal finances — were already well known all year. Even Oil over $90 was a not a big deal — it seems to have been in the $75-85 range for so long that gasoline over $3 had little shock value.
The newest data included more positives: Improving job market, equity gains, and an upcoming two percentage-point cut FICA payroll tax holiday in 2011. The 90.2% of the workforce that have jobs feel more secure (if they didn’t get laid off by now, they probably won’t). There is also a sense of widespread Recession fatigue; people are tired of living in bunkers, and are coming out to play again.
Lets consider the actual data, and what it might mean going forward:
• U.S. retailers’ 2010 holiday sales (excluding automobiles) jumped 5.5% — the best performance in five years, versus 4.1% in 2009 and down 6.1% in 2008
• Total holiday sales were $584 billion from Nov. 5 through Dec. 24, with notable increases starting as early as the second week of November
• Online seasonal sales up 15.4%; This is against an ongoing rise in online sales
• Apparel grew 11.2% over 2009 (-0.4%), with Menswear up 10.5%, and Women’s Apparel plus 5.6%
• Electronics lagged in dollar terms, growing 1.2% vs a 4.6% decline in 2009. Declining flat panel TV prices is a suspect
• Furniture sales were plus 3.8% vs minus 2.2% in 2009.
• Jewelry gained 8.4%
• Luxury (ex-Jewelry) grew 6.7% versus falling 0.9% last year.
Two last interesting datapoints worth mentioning:
Via the WSJ: 2010 consumer spending was 68.6% of the economy. This reflects an increase — yes, an increase — from 66.5% in 2007. The reasons are 1) A sharp decrease in businesses spending; 2) The ongoing contraction of housing within the overall economy — currently at its lowest level since World War II.
Last, the US still has too large of a retail footprint — 40 square feet of retail space for each person; that is the most per person in the world. As I first noted in several speeches back in 2008, that needs to come down appreciably.
All told, a pleasant improvement over prior years . . .
Anecdotal Evidence: Shoppers Out in Full Force (November 21st, 2010)
Improving Holiday Sales Reflect Economic Recovery (November 29th, 2010)
SpendingPulse 2010 Holiday Wrap-Up Report
MasterCard Advisors’ SpendingPulse, December 27, 2010