Repeat After Me: Spending Surveys Are Meaningless

Cue stage lights.

Pre-roll curtains.

AnnouncerIn tonight’s performance, the role of the National Retail Federation will be played by CNBC


Yesterday morning, CNBC announced yesterday that "Americans plan to spend an average $839 during the holiday season, up 17.6% from last year, the survey says."

That may be technically true — that’s what they said they plan on spending — but as any good behavioral economist will tell you, what people say they are going to do, and what they actually do are often worlds apart.

Blame it on Fox Business. With competition heating up, we now have a race to put forth the most cheerleading happy talk either station can muster.

As we have so painstakingly detailed in these pages over the past few years, consumers — indeed, Humans in general — are notoriously bad at forecasting even their own behavior. These surveys are classic examples.

The mother of all survey abusers are the National Retail Federation. Each holiday season, this group polls a group of shoppers, and declares that spending will be up by some outlandish amount. Each year, this survey driven forecast is proven to be wildly wrong.

In 2005, based on a survey on Black Friday and Saturday, the NRF forecast a 22% rise in holiday shopping gains for the Thanksgiving Weekend. The results were off that 22% gain by an order of magnitude: Up just 1%. The WSJ eventually ran a piece dissecting the methodology: Holiday Sales Numbers Don’t Add Up

We saw the same foolishness resurface again in 2006, with an 18.9% sales increase forecast  (More Bad Data from the NRF?). Of course, the reality was nowhere near that, with sales gains below 5% (How Good Were Retail Sales Really?). And of course, back-to-school-season was another opportunity to repeat the error: There They Go Again: NRF Redux.    


If you want to know how much people THINK they are going to spend, you can ask them. 

If you want to know how much people ACTUALLY SPENT, count the cash register receipts. 

As history has proven again and again, there is little correlation between the two.


Surprise! Americans Set to Open Wallets This Holiday  15 Oct 2007 | 08:48 AM ET

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What's been said:

Discussions found on the web:
  1. blam commented on Oct 16

    22 % in 2005, 18.9 % in 2006, 17.6 % in 2007

    Come on Barry give them some credit. They are getting closer and they have resisted adding a second decimal place !

  2. X commented on Oct 16

    Not only this report on CNBC yesterday, but what about the idiot real estate agent acting the part of David Lereah?

  3. Mike commented on Oct 16

    As the Guiness commercial says “brilliant!”

  4. dblwyo commented on Oct 16

    Thanks for pointing this out. Kasriel at Northen Trust dissects this report very nicely in last week’s “Week in Review” ( ) – worth your time. What he finds is that once you set aside the inflation-bumped food & energy plus autos sales were not robust at all.
    My own take with pretty pics and everything is similar:
    Better yet the recent numbers continue a long-standing downtrend where the best that can be said is that the downward pressures, which have not seen much impact from housing yet, is flattening. Which still doesn’t argue for a very positive outlook.
    There’s a broader issues here in that Retail is not the only industry facing severe pressure:

  5. Justin commented on Oct 16

    I’m starting to believe that’s why I love this game – the difference between psychology and reality. Now if I can only get my timing down! lol

  6. JustAGuy commented on Oct 16

    Wouldn’t it be pleasant if the nightly newscasts told us this too? You know, like this:

    “Americans plan to spend an average $839 during the holiday season, up 17.6% from last year, the survey says. It should be noted that this same survey forecast 22 % in 2005 but the actual results were 1%, and a forecast of 18.9 % in 2006 but the actual results were less than 5%. So stay tuned.”

  7. Groty commented on Oct 16

    Apparently, NRF’s 1.6 million retail establishment member’s don’t rely on the survey. If they did, they would have been overstocked to the rafter in prior years, resulting in huge markdowns, promotions, margin compression, etc. in subsequent quarters to move the excess inventory.

    So if NRF members aren’t using the survey results to help them make inventory investment decisions, the purpose of the survey is to use it as just another marketing tool intended to influence consumer buying behavior?

  8. cm commented on Oct 16

    Perhaps it’s a PR gimmick and the point is to provide a “reference” for what you should spend?

  9. Al Czervik commented on Oct 16

    I planned to buy a lotta things – when I still had a job.

  10. jopo commented on Oct 16

    the 17.6% clearly reflecting how much more it will cost getting to and from the mall….

    $839 is the new $500

  11. Norman commented on Oct 16

    Maybe the year-to-year change in their expected X-mas spending plans would give a clue as to consumers’ state of mind.

  12. Al Czervik commented on Oct 16

    Or maybe it means that, on average, they are still about $839 below the credit limit on their last credit card.

  13. Aaron commented on Oct 16

    Completely agree with your statement on this. There is nothing more worthless than these spending surveys. They really think the American shopper knows how much they will spend going into the holiday shopping season?

  14. rebound commented on Oct 16

    JustAGuy is SPOT ON. Reporting “the number” is just shoveling useless data … in effect parroting it. Putting “the number” in context helps provide actual information … which I thought was supposed to be the primary “product” cranked out by so called journalists. Right now is seems like there are simply mouth pieces (or glam pieces of ass) in front of teleprompters … which act as if they have umbilical chords tied to RSS feeds from wire services.

    Is this a market failure … or is there simply not enough demand for quality information … and therefore businesses are actually efficiently delivering the crap which customers demand?

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