Well, as forecast, the retailers had an awful holiday season. From the Census Bureau:
"Advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $382.9 billion, a decrease of 0.4 percent (±0.7%)* from the previous month, but 4.1 percent (±0.7%) above December 2006.
Total sales for the 12 months of 2007 were up 4.2 percent (±0.4%) from 2006. Total sales for the October through December 2007 period were up 4.9 percent (±0.5%) from the same period a year ago. The October to November 2007 percent change was revised from +1.2 percent (±0.7%) to +1.0 percent (±0.2%).
Retail trade sales were down 0.4 percent (±0.7%)* from November
2007, but were 4.3 percent (±0.8%) above last year. Gasoline station
sales were up 18.5 percent (±2.8%) from December 2006 and sales of
nonstore retailers were up 12.1 percent (±1.8%) from last December.
Bloomberg wrote:
Sales at U.S. retailers unexpectedly
fell in December, capping the weakest year since 2002. Sales dropped 0.4 percent, the first decline since June,
following a revised 1 percent gain in November, the Commerce
Department said today in Washington. Purchases excluding
automobiles also decreased 0.4 percent.
Unexpectedly? Well, only if you believed the hype. This does not mean the end of the world is here — gross sales were still up year-over-year. As we warned, Real inflation adjusted sales were negative.
Still, consumer spending for December was $382.9 billion — thats a lot of money no matter how you slice it.
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chart courtesy of Barron’s
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The silver lining is that sales aren’t bad everywhere: the new $410,000 Rolls-Royce is sold out (more here).
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Previously:
Real Holiday Spending Was Negative in 2007 http://bigpicture.typepad.com/comments/2007/12/holiday-spendin.html
Retail Sales Softer (Ignore the Surveys) http://bigpicture.typepad.com/comments/2007/12/retail-sales-so.html
More Retail Sales Hype
http://bigpicture.typepad.com/comments/2007/12/retail-sales-da.html
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Sources:
ADVANCE MONTHLY SALES FOR RETAIL TRADE AND FOOD SERVICES http://www.census.gov/svsd/www/marts_current.html
U.S. Retail Sales Unexpectedly Declined in December
Bob Willis
Bloomberg, Jan. 15 2007
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVzW9CqcO2Yg&
and with no catalyst to improve the situation from here and home value declines accelerating, it’s over. Cutting rates will not fix this as we now move to a solvency crisis. MBIA issuing debt @ 14% (ya, and that’s triple A)…I give it 4 months (max). Heaven help us come April.
“Unexpectedly.”
“You keep using that word. I do not think it means what you think it means.”
Also, as pointed out by Tim Iacono, when the inflation numbers are released, it is likely that inflation adjusted retail sales were actually negative for 2007; even using the bogus CPI figure.
Credit Card Usage Soars at a 9.4% Annual Rate Since April
How are consumers hanging on?
Through their credit cards. Consumers have tapped an additional $11 billion over
the past two months and the trend over the last six months has accelerated at a
9.4% annual rate – the fastest rate since guess when? Try the opening months
of 2001 when the economy was heading into recession. During the boom times
of 2004 and 2005 when employment and income growth were decent and the
ability to tap double-digit home price appreciation was in vogue; households had
a ton of cash flow to spend at that time.
Now we have employment growth at 1%, about half the pace of a year ago, and
home prices declining at over a 5% year-on-year rate and deflating in 75% of the
country. The ability to tap regular sources of credit has dried up, so consumers
are now tapping their plastic at a rate last seen almost seven-years ago – a
classic counter-cyclical development.
Although I do think we’re at the beginning of a nasty downturn, I also think it’s important to look at retail over the season (including sales deferred into January through gift cards).
A lot of retailers were very aggressive in discounting and advertising, but inventory levels may have been too low. I bought three computers at BestBuy for example, but had to return repeatedly until I found an advertised PC that was actually in stock, so I didn’t actually buy two of the three until after Xmas.
In general, I found stores understocked, understaffed, poorly merchandised, but well trafficked. I have a background in retail, so maybe I notice things others don’t. Anyway, I’m waiting to see how January pans out before pressing any more retail shorts.
Careful here. Ben might turn you into rally fuel pre-market.
Retail sales down in December? Geez that’s not what Jerry Bowyer, Don Luskin and Brian Wesbury have been expecting therefore how can it be true?
Sorry I will have to wait for Bowyer to chime in before I can believe it.
I have to echo Estragon’s comments re: understocking. My wife complained of the same thing repeatedly.
Odd.
Leads me to an old marketing maxim I learned. If they don’t have it, you can’t buy it.
“thats a lot of money no matter how you slice it.”
It sure is considering alot of that will probably be written off in the future by various creditors.
They reported today that the same states having the most problems with foreclosures are also the ones having the most problems with credit card debt default. Who knew?
Estragon: “I have a background in retail, so maybe I notice things others don’t.”
How can one not notice empty shelf sections, or the item that you are looking for conspicuously missing? Same thing for long checkout lines, and no personnel to be found to even point you in the general direction where to look. Whether the store looks a bit worn and shabby or fancily remodeled does not make a big difference in the above. With all due respect, but I don’t need retail background for that. :-)
Innocent Bystander: The question is, how strongly does this imply they will settle for the “alternative” you are pushing.
When I shop for something specific or go to a store for a particular item (which is frequent), if they don’t have it I’m out of there. OTOH I rarely have really pressing needs other than staples.
Recession Resmeshion, I’m a bull
BooooYaaa
if you just stop talking about it it won’t happen!!!
I can hear the sobbing on the phone from Wall Street, “Help Ben. Please help!!!”
cm,
The retail background thing was meant to be somewhat tongue-in-cheek.
so would those figures be $153M wholesale + 50% markup’d retail sale @ $229M = $382M
There’s nothing particularly alarming about today’s retail-sales number. Just look at the chart. It’s impossible to tell whether retail sales are in an uptrend (since Jan 07) or downtrend (since Jan 06). Anything can happen from here, but so far, nothing much has happened.