More Bad Data from the NRF?

I’m kinda dumfounded to see this issue come up time and again, but — there they go again: The National Retail Federation is once again putting out data which has gotten misinterpreted by most of the MSM:

“Retailers kicked off the holiday selling season in style as shoppers across the country set their alarms for the wee hours of the morning to catch doorbuster specials. According to the National Retail Federation’s 2006 Black Friday Weekend Survey, conducted by BIGresearch, more than 140 million shoppers hit the stores on Black Friday weekend, spending an average of $360.15, up 18.9 percent from last year’s $302.81.*”

Or so said the NRF’s press release. Note that little asterisk?* Follow it, and we see

“*Spending data includes Thursday, Friday, Saturday and projected spending for Sunday.”

Even that disclaimer is inaccurate:  First, this is not based upon actual sales data, but rather, is a survey of consumers. Not only that, but much of the survey results are self-reported projections of spending expectations — not reciepts. The survey dates are 11/23-11/25. This means survey interviews done on Thursday 11/23 are almost all forecasts of future behavior; depending what time of the day they are done on Friday 11/24, between 2 and 3 days of data are predictions, and perhaps one day is self-reported data.

To get an accurate read of retail sales, we need actual DATA — like company sales reciepts or Credit Card purchase totals. Asking people how much they are planning to spend or have already spent is a surefire methodology of getting bad dope.

Note that this has become an annual rite of error by NRF. In my opinion, based on my read of how they present this data, I suspect they are purposefully attempting to mislead the media. We saw the exact same issue last year  in the way they report their survey: In 2005, the NATIONAL RETAIL FEDERATION said holiday Retail sales rose 22%; We later found the actual sales data was nowhere near that statement. Taking a survey forecast and reporting it as actual sales is not honest.

Given last year’s debacle, as well as the more recent cheerleading back-to-school forecast, one would have hoped the NRF would make it clearer that this isn’t actual sales data — but rather, is a survey asking people how much they intend to spend, and on what items.

It is quite unfortunate that most of the media reports this survey as if they were actual sales. They are not.

Why? Surveys are very subjective; People are notoriously inaccurate at reporting their own behavior: Their own Egos can get in the way (Yeah, I’m a big spender!); How questions are phrased impacts answers; Even the immediate prior question on a survey can and will change a respondents answer tot he next question. Phrasing, grammer, buzzwords — all impact results.

Given that the NRF is an industry spokesgroup, we cannot expect any degree of objectivity — but should instead recognize them for what they they are: A industry trade association promoting the goals of their membership. There’s nothing wrong with this cheerleading, as many industry groups have their own trade associations who spin the data (like the National Association of Realtors do with Housing Data). The problem arises when the mass media reports their marketing releases as a form of objective economic data. They are decidely not.

Consider how widely survey results can and do vary. For example, CNBC also conducted a survey of Holiday shoppers — about on-line
sales, specialty stores, big box discounters, and the factors that might affect their
overall spending. Their results? They found that spending this year is likely to be flat. Here’s an excerpt of the CNBC survey result:

“Despite a huge turnout of shoppers on Black Friday and the rest of the Thanksgiving weekend, most Americans will spend less or the same amount they spent last year on gifts, according to CNBC’s exclusive Holiday Central Survey. Surprisingly, overall falling gas and energy prices had little or no effect on overall expenditures, according to the survey…

Specifically, 46% of those surveyed said they will spend “about the same amount” they spent on gifts last year and 32% said they plan to spend less than they spent last year. The average amount consumers plan to spend this year on gifts is $764. Only 20% said they plan to spend more than they did last holiday season.”

I’m not suggesting the CNBC survey accurate,while the NRF survey is not. But it shows how widely varying survey results can be based on who asks what questions.  However, in the spectrum of likely sales gains at this stage of the economic cycle, between a gain of 18.9% versus flat spending, my expectations — a +2 to 4% range — are much closer to flat than a huge increase over last year.

And, its hard to imagine a 19% increase in spending would lead to triple digit loss for the Dow . . .

Last year, numerous media mistakenly trumpeted misleading data as an actual measure of sales, rather than a mere survey. Once again this year, we saw similar errors showing up in various Holiday Retail articles — some more or less erroneous than last year:

WSJ:  “In a survey of 3,090 consumers, the trade association found that shoppers spent an average of $360.15 this weekend, up nearly 19% from last year’s $302.81. Discounters were still the most popular shopping destination, but their share dropped significantly from last year; about 50% of those surveyed said they visited a discounter over the weekend, compared with 61% last year.”

They didn’t spend that much, they said they spent that much — and that’s huge difference. Bloomberg is even more explicit:

Bloomberg: “U.S. consumers shopping over the Thanksgiving holiday weekend spent 19 percent more than a year earlier, outpacing the advance of 2005, after retailers slashed prices to attract customers.

Consumers spent an average $360.15 from Nov. 23 through yesterday, up from $302.81 a year earlier, the National Retail Federation said yesterday in a statement. Fewer people shopped, with about 140 million visiting stores during the four days including Thanksgiving, down from 145 million last year.”

No, spending was not up 19%. People said they expected to spend 19% more. These were not actual spent dollars, but rather, were expectations of spending. There’s an enormous difference, especially when we consider that people tend to be very poor judges of their own behavior.


Newspaper readership has dropped significantly over the past few years. Budget cuts have reduced the number of reporters, fact checkers, assistant staffers. And, it may only get worse, as the internet pulls even more readers from traditional print outlets, pressuring news gathering budgets even further.

Its easy for trade organizations to crank out official sounding statements; their adeptness at manipulating the media is apparent. We should brace ourselves for more of this sort of marketing spin being reported as fact in the future.

And thats a shame . . .


UPDATE: November 28, 2006 11:09 am

So, now that the data is out — how did the NFR “forecast” square with reality? The WSJ’s  Holiday Sales News Tracker noted:

Chain-store sales slipped 0.4% in the week ending Saturday from the prior week, the International Council of Shopping Centers reported Tuesday. Not too impressive given all the reports of jam-packed malls over the holiday weekend. However, when you compare last week’s performance with the same week a year earlier, chain-store sales increased 2.6%.

Redbook puts out a similar survey but got slightly different results. Chain-store sales rose 0.1% in the first four weeks of November from October, and 3.2% from November 2005, according to Redbook’s gauge.

2.5% . . . 3.2% — thats very consistent with my pre-Black-Friday forecast of 2.5-3.5% range for the holidays.



UPDATE: November 28, 2006 4:37 pm

I spoke with Scott Krugman of the NRF; He pointed out that the full press release specified that this was the result of a survey and not actual sales reciepts; The NRF retains the services of “Big Research,” an independent marketing research firm — and then reports back the results of their survey.

Further, the NRF economic forecast back in September was fairly circumspect:  NRF Sees Subdued Holiday Gains in 2006.
So to be fair, while I have issues with their first paragraph, its the Media’s responsibility to do their homework and report the news accurately — not a Trade Association’s.




Early Birds Catch Plenty of Worms as Retailers Have Lucrative Black Friday

Black Friday survey

CNBC, November 27, 2006

CNBC Video Report on Black Friday

Holiday Sales Get Off to Solid Start, But Wal-Mart Doesn’t Share Cheer
November 27, 2006; Page A1

U.S. Thanksgiving Spending Increases 19% on Discounts
Mary Jane Credeur
Bloomberg, Nov. 2006

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What's been said:

Discussions found on the web:
  1. agent00yak commented on Nov 27

    Well, another factor would be the higher skew from people planning on buying a PS3 or a Wii. Adults without children underestimate how “essential” these items are to kids around holiday season.

  2. Kevin_r commented on Nov 28

    Two good points.
    1) The problem isn’t people whose job it is to push PR. The problem is media that report PR as though it is data.
    2) The net does a much better job of this (your blog for example), but as newspapers die, we will have to find a way to fund and organize data collecting.
    Personally, there is a fair amount of this I would be willing to organize through the government _IF_ it were under the direction of non-partisan office charged and judged _solely_ on the accuracy of the data it generated and sent out.
    I understand that for many, this is a repulsive notion and the free market should take care of it. Just that the free market is mostly paid PR.

    Back to the data itself. It seems quite possibly that all the doorbuster loss-leader sales on relatively big ticket items may have pulled a certain percentage of sales forward to the past weekend, at the cost of lower sales in the coming weeks. Not sure how to tease that out of the data (once there is actual data to tease it from).

  3. Curt Smith commented on Nov 28

    I read your blog several times a day for objective econ info.

    I’d like to see the synthesized M3 chart that I’ve seen on some econ sites with political / market events anotated in a perma corner of your or some site.

    The fact that magic money is being pumped into the market / economy should be constantly visable.

    BTW where does that money come from that the fed or proxies pump in?

    tnx curt

  4. Josh commented on Nov 28

    I planned to spend $500 on that 32″ flat screen at Best Buy, but they were all out on Friday, so I spent $0.

  5. David commented on Nov 28

    In addition to Curt’s M3 request, maybe an analysis on the Velocity component of the quantity theory of money would be valuable as well.

  6. Philipp commented on Nov 28

    Great Job Barry,

    Thanks a lot,

  7. Bob_in_ma commented on Nov 28

    Good post, Barry.

    I’m always surprised that Bloomberg puts stuff like that up, in some ways, they’re worse than the wire services. They also post things like, “Home sales fell 1.2%, economists predict.” I’ve never seen another news service that uses such tortured locution to make something less clear.

  8. S commented on Nov 28

    As I’m reading this I’m thinking to myself, “where are the editors/fact checkers”?

    As I make my way to the last couple of paragraphs, you answered that question. Very nice job. Thanks.

  9. Michael C. commented on Nov 28

    So few you can trust these days. Not these trade associations. Not the government. Perhaps not even many corporations given the options backdating scandals and restatements.

    So who can you trust? Or is it all just relative.

  10. calmo commented on Nov 28

    So last year’s numbers upon which this year’s look so good (stampedingly good in light of yesterday’s DOW performance), were *not* based on consumer expectations but on real receipts?

  11. S commented on Nov 28

    Incidently, not sure how strong the correlation is between US and UK retail sales.

    But I was watching Bloomberg last night and some guy commented on retails sales in the UK. He characterized them as “worse than a disaster”. Blamed weather and lack of a compelling new fashion trend. Went on to say he thought sales this holiday season could be the worst he’s seen in 25 years.

  12. my1 commented on Nov 28

    Is this It?

    Median sales prices fell a record 3.5% year-over-year to $221,000, the third decline in a row. Since 1968, when the Realtors began collecting the data, prices had never fallen three months in a row on a year-over-year basis.

    “Falling prices are ‘a good thing, Lereah said”. Man, I love this guy!

  13. advsys commented on Nov 28

    I can relate to your frustration!
    Fortunately despite the degredation of quality in print media, there are new and better means for news dissemination. Like this blog!

  14. Chad commented on Nov 28


    The strip malls were PACKED in my mid-sized midwestern city on Friday. Saturday and Sunday (although I did no shopping, I drove around town), the crickets could be heard chirping. I went to Macy’s last night and there were VERY few people shopping at the largest mall in my state.


    I told my wife before the holidays that we would buy our “stuff” closer to the end of the shopping season because I expect big discounts the week before Christmas. I still believe that forecast.

  15. V L commented on Nov 28

    Thank Barry for this fantastic and factual post!

    It is a shame that US media has become so irresponsible and opinionated – too much of spinning and fact distortion.

  16. cm commented on Nov 28

    Josh: You are a cheat, you were supposed to buy some merchandise, not just show up for the large discount. :-)

  17. cm commented on Nov 28

    Chad: Make sure you get what you want (for others that is), not just the leftover cheap stuff.

  18. Robert Coté commented on Nov 28

    I don’t mind their trying to get out preliminary data as long as there is truth in packaging. What I do mind is lack of followup in accurately reporting and giving at least equal weight to subsequent revisions.

    Anecdotally, were I interviewed Wed on my Fri spending expectations I would have said $2300; a plasma and $900 of misc preidentified bargains. There weren’t any good plasma bargains and the $700.51 I did spend per the receipt came with better than $350 in rebates and most of the rest were loss leaders as well. I may still pick up the plasma if there is a desperation sale in the next few weeks but no one will be making money on the transaction.

  19. Bob A commented on Nov 28

    ..and why does Marketwatch headline a blip in housing and bury this as a mere aside within the housing story?

    Durable orders fall 8.3%, most in six years
    Core capital equipment orders fall 5.1%, first decline in six months
    PrintE-mailDisable live quotesRSSDigg itDel.icio.usRelated Blog Posts & ArticlesBy Rex Nutting, MarketWatch
    Last Update: 12:09 PM ET Nov 28, 2006

  20. sam commented on Nov 28

    cote, $990 for 42″ plasma ain’t a bargain?

  21. DD commented on Nov 28

    Bernanke is sooooooo dreeeeammmmyyy……

  22. Chief Tomahawk commented on Nov 28

    BR, who is paying any attention to the derivatives market? Aren’t these the 800lb. gorilla in the room? I was reading The Prudent Squirrel, and their size and growth rate are huge.

    I guess I’ll go search for a derivatives blog…

  23. Teddy commented on Nov 28

    I see there was a wall street shill on a nightly business show last night talking about the strong earnings of the stock market. When the government grossly understates inflation, wall street treats these inflationary profits as increased productivity, and foreign central banks conundrumize long term rates to levels below the inflation rate, it is not a question of economics, but rather a lack of morals, no code of eithics, and a paucity of family values. Let’s stop beating ourselves up over why the stock market went up. And btw, MEDIAN wages for the average working person are still grossly negative after adjusting for inflation, another factor in these “strong earnings” reports.

  24. Josh commented on Nov 28

    Robert Cote hit on something I haven’t thought of….same store sales, ex-rebates. Sales may look decent, but I’m curious if there is a figure for real spending minus anticipated mail in rebates.

  25. Robert Coté commented on Nov 28

    cote, $990 for 42″ plasma ain’t a bargain?

    Nope. Not for me at least. I was looking for a 42″ with 1366×768 (WXGA) and built-in digital for $1400 and not waiting in line for hours. Didn’t happen so no purchase. The missus tells me the line at Fry’s was 1400-2000 shoppers long at 4:15AM for a 5AM opening. I walked straight in at 6:15 to short lines, bountiful service and inventory.

    There’s some “Big Picture” in here someplace. Consumer electronics (-4.39% industry 10yr survivor biased return) are deflationary and thus masking the inflationary pressures in the rest of the economy.

  26. John Mugarian Investor Alert commented on Nov 28

    Market Has More Downside

    The market has more work to do on the downside, but I do have some reservations. I have reservations because I don’t know what former Goldman Sachs boss, and current Treasury Secretary Hank Paulsen has up his sleeve. All things…

  27. njnyctrader commented on Nov 29

    I was in Circuit City in Union Square this past Sunday. People were mainly looking around. I bought some DVDs and surprisingly, did not wait in line…. and got to a cashier immediately. Down the block, Whole Foods was packed. Gotta eat before you can buy gadgets!

  28. cm commented on Nov 29

    Josh: Figuring in (or rather out) rebates is not straightforward, as many/most come in the form of vendor rebates that don’t even go through the store. And at any rate the store will at best issue you the rebate form, and you have to mail it in to a separate entity. Last time I got a rebate form in the store it was the very same thing that I could have printed from the manufacturer’s website. Good luck piecing all that together.

  29. cm commented on Nov 29

    sam: I suppose it’s a deal when you get it. Quantities on the better doorbuster deals were very limited. The reason several thousand people lined up at night was that everybody wanted be among the first 100 or whatever number pocketing the most coveted deals, “as long as supplies last”.

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