Why I’m Bullish on Retail Sales

Someone asked me how I can believe Holiday sales increases can be in the 3 to 4% range when I don’t buy the NRF data. The answer is twofold — I am interested in correcting their horrific statistical error, and returning expectations back to baseline (rather than saying Xmas will be lousy this year).

But the main reason for this respectable increase over last year’s robust 6% gains is this chart from Econbrowser:

click for larger chart


courtesy of Econbrowser

Gasoline at $3.10 is fatal to low and middle income consumer spending; Now lower that by 30%. You cannot be too Bearish on the holiday shopping revenue numbers with this decrease in consumer energy costs.

As to retail margins amidst all the discounting — thats a different story, one that’s too early to predict on December 1.


UPDATE December 1, 2005  10:28 am

Jeff Macke of Macke
Asset Management published on Minyanville the following roundup of same
store sales performance in November; There ain’t a whole lot of firms
reporting gains north of 22%:

Download Macke’s Retail Roundup.xls

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What's been said:

Discussions found on the web:
  1. Patrick (G) commented on Dec 1

    The drop in gas prices is most welcome, But what about the rise in Heating Oil and Natural Gas prices ?

    It could well be a damping factor for late Christmas shoppers in the northern half of the country as winter settles in.

  2. sdf commented on Dec 1

    Can you show the same graph from last year instead of from june-july ? It increased from last nov-dec to this year nov-dec by 10-20% ..

  3. charles commented on Dec 1

    I’m with sdf on this one, and also with Patrick. How about a comparison of gas + heating oil from last year vs. this year. Even though prices are down from june-july, people are still feeling it at the pump, especially since wages haven’t increased like prices have (at least mine haven’t ;p)

  4. muckdog commented on Dec 1

    With gas prices falling, people might be seeing that extra $$$ in their accounts and spending it at the malls this Christmas. If gas prices keep falling, watch that Core CPI bump up.

    I think folks have adjusted their thermostats down a few notches this year. We’ll see how the numbers come in, but annecdotally, I’ve heard folks here who have loaded up on blankets and fleece, and who are living with it a bit more chilly in the house this winter.

  5. wolfe commented on Dec 5

    turning down the thermostat is a lot easier than not driving as far to work.

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