If last Christmas season was a disaster for retailers, 2009 looks like the Titanic. Gallup reports that its survey of consumers shows holiday spending down 20% or more each of the last three weeks from the previous year. Its job survey continues to show no improvement over 2008, either:
Self-reported consumer spending was down more than 20% in each of the last three weeks from last year’s depressed weekly comparables. At the same time, Gallup’s Economic Confidence and Job Creation Indexes were essentially unchanged. …
Gallup’s attitudinal economic data suggest that the Main Street economy continues to lack a lot of merriment this holiday season. Neither economic confidence nor job creation has shown much improvement during recent months, while consumer spending continues to trail significantly behind last year’s recession-depressed levels. This seems to comport well with the assertions of Dr. Christina Romer, chair of the president’s Council of Economic Advisers, on “Meet the Press” this past weekend that most Americans will continue to feel as though the country is in a recession until the jobs situation improves significantly.
On the other hand, Gallup data contrast with many economists’ optimistic reactions to recent government reports suggesting a slight decline in the unemployment rate last month and an uptick in retail sales. For example, White House economic adviser Larry Summers said “everybody agrees that the recession is over” this past weekend on “This Week.” He went on to talk about the usual progression from the return of economic growth to increased job growth after some period of time.
The economic science is “settled” at the White House, but not at the malls. The National Retail Federation showed a 0.8% decline in top-line sales numbers between November 2008 and this November in its own survey, released last Friday. It also noted that those top-line sales involved more discounting than usual:
As shoppers – and retailers – set their sights on the holiday season, low prices and pent-up demand helped entice Americans back into the stores. According to the National Retail Federation, retail industry sales (which exclude automobiles, gas stations, and restaurants) rose 0.6 percent seasonally adjusted from October and dipped 0.8 percent year-over-year. The numbers are in line with NRF’s forecast of a 1 percent decline in holiday sales.*
“Unlike last year, when the economic downturn caught everyone off-guard, retailers were able to plan ahead this holiday season with an eagle eye on low inventory and aggressive discounts,” said NRF Chief Economist Rosalind Wells. “Retailers are encouraged to see momentum building in sales as they prepare for the final ten days before Christmas. Although November sales were encouraging, companies know that the holiday season is far from over and expect this year to come down to its usual photo finish.”
A decline in top-line sales does not indicate a recovery, though, and the discounting means lower profits for a sector already struggling with too many locations and personnel. A poor holiday season will force even more closures and cutbacks for some retailers, with the exception of the big discount stores, where customers have flocked.
On the day the NRF released this survey, our family trekked to the Mall of America, the largest retail mall in the US and usually all but impossible to access during the Christmas season. We easily found parking on the entry level and saw what would normally be considered a decent crowd for a mid-year weekend afternoon. The ease of shopping two weeks before Christmas spoke loudly about the reluctance of shoppers to part with cash this year, and made Gallup’s survey look very close to the reality on the ground. (h/t Geoff A)