We previously addressed the holiday retail season (here and here). This week, the Commerce Department released their data, which included food, and gasoline and automobiles also. By pretty much any measure, both holiday sales and total retail sales were below consensus.
Note that these numbers were only disappointing by Wall Street’s bloated expectations; My forecast for holiday sales was 3-4% — on the low end of Wall Street (but Bullish for me!)
That turned out to be precisely correct, with sales coming in ~3.5%.
The strongest year over year gainers in retail sales were:
-Gasoline stations
-Food services & drinking places
-Nonstore retailers (internet/mail order)
-Building material & garden eq. & supplies dealers
Not a very impressive list: Inflation, internet, home boom, and food.
I’m curious as to how much personal bias gets built into these scenarios. Are strategists and economists swayed by their own salaries and bonuses, their holiday shopping and own gift giving ? Its a curious question, one that is deserving of academic study.
Here’s the WSJ’s take on the recent commerce department data:
"Retailers’ December sales showed solid growth from a year ago but appeared to be slowing from prior months, stirring uncertainty about the outlook for consumer spending — a vital force in the economic expansion — in 2006.In the government’s most comprehensive assessment yet of December consumer spending, the Commerce Department on Friday said sales of $358 billion represented a 6.4% increase from a year earlier — less than the 8.7% growth seen in December 2004.
But December’s sales were up just 0.7% from November on a seasonally adjusted basis, and much of the gain came from a bounce in auto showrooms, where sales had dropped sharply between July and October, and from a jump in sales at gasoline-service stations. Excluding those categories, retail sales inched up just 0.1%.
Sales also appeared to decline in several important categories from November, including general merchandisers, department stores, electronics stores and building-supply stores. The estimates were preliminary and will be updated by the government in February.
Meanwhile, the National Retail Federation, a trade group, said holiday sales started out well in November, thanks in part to heavy promotions at the beginning of the shopping season. But sales ended up flat in December after a lull in the early part of the month. Its figures, which exclude car sales and sales at gas stations and restaurants, show December sales rising 5.7% from a year earlier."
Source:
December Retail Sales Grow at Slowing Pace,Clouding Outlook
RAFAEL GERENA-MORALES and AMY MERRICK
THE WALL STREET JOURNAL, January 14, 2006; Page A1
http://online.wsj.com/article/SB113715802966945966.html
ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES
December 2005
FRIDAY, JANUARY 13, 2006, AT 8:30 A.M. EST
http://www.census.gov/svsd/www/fullpub.pdf
PDF: Monthly_sales_for_retail_and_food_services.pdf
But, but, but, you just wait until they redeem all those gift cards.
“I’m curious as to how much personal bias gets built into these scenarios. Are strategists and economists swayed by their own salaries and bonuses, their holiday shopping and own gift giving ? Its a curious question, one that is deserving of academic study.”
I $ HAVE $ NO $ IDEA $ WHY $ YOU $ WOULD $ THINK $ THAT.
I can’t say that I’m surprised. In the two months leading up to December, consumer credit fell for consecutive months for the first time since 1992. That didn’t sound to me like a scenario favorable for more debt-fueled brainless consumption. Coming as it did prior to Christmas, there was a bad moon rising long before these retail figures came out. Worse is yet to come. Retail, we hardly knew ye.
I’m curious as to how much personal bias gets built into these scenarios. Are strategists and economists swayed by their own salaries and bonuses, their holiday shopping and own gift giving ? Its a curious question, one that is deserving of academic study.
Love the question. A friend of mine has a theory that you can’t believe much you hear from the CNBC Bloomberg etc. crowd because these stations survive on advertising, and the folks doing the advertising benefit from rising stock prices. Thus, he feels that there is a quid pro quo very similar to that between the lobbyists and our buddies in Congress.
I suspect he may well be right. I also would expect the analysts are more influenced by the behavior or the circles they travel in than by the economy at large but I have no evidence.
Are these retail figures nominal or adjusted for inflation?
Somebody broke apart the personal income figures for the US by decile. The upper decile was getting a 10% increase in income, the lower deciles only 1%.
Pundits are aspirational creatures too, whether they’re in the upper deciles of income or not. Actually, most “growth” is correlated to population increases – or more lately, decreases. What really counts is “growth per head” or GNP/capita increases.
TV pundits, like TV evangelists, almost always predict that God will provide retail spending far higher than population growth. Actual potential increases in “growth” would take place if people became more productive, which is the true source of spending growth higher than population increases.