by Damozel | Economist Yves Smith of Naked Capitalism says cheerfully: Santa left retailers lumps of coal in their stockings.
I'm really looking forward to a return to simpler times, when there were fewer choices and consumer goods were built to last; and Santa brought pajamas and underwear along with maybe ONE comparatively high-tag item (also lots of oranges). Such is my wan hope. If Americans of all ages become less obsessed with acquiring toys, some good could come out of this crisis.
In the meantime, consumers really don't have a choice and only someone very, very out of touch with reality didn't hold back on the spending this year...which isn't good for the economy. But the retail industry is going to adjust. Looks as if people have got the message: no more money.
The U.S. economy shrank in the third quarter at a 0.5 percent annual pace, the worst since 2001, according to the Commerce Department. Consumer spending fell the most in almost three decades and forecasters project an even deeper slump in the final three months of this year. Jobless claims rose yesterday to a 26-year high.
Retail sales declined 5.3 percent Dec. 19 to 21 because of inclement weather and a slowing U.S. economy, Chicago-based research firm ShopperTrak RCT Corp. said yesterday in a statement.
“It’s a terribly challenging environment for retailers,” Scott Krugman, a spokesman for the National Retail Federation, a Washington-based trade group, said in a Dec. 24 Bloomberg Television interview. “The week after Christmas is going to be more crucial for retailers than ever. The Friday after Christmas, with the discounts we’re hearing about, is going to be like another Black Friday.”
The Standard & Poor’s 500 Retailing Index has shed 34 percent this year, with only two of its 27 companies gaining.(Bloomberg)
According to The Wall Street Journal (via memeorandum), even a great slashing and burning of prices failed to win back nervous consumers. The biggest plunge seems to have been in "luxury goods." While this shouldn't surprise anyone who credits his or her fellow Americans with even a touch of common sense, the people who decide these things don't do that, and luxury goods were apparently considered "immune from economic turmoil"---like housing prices, I guess.
Despite a flurry of last-minute shoppers lured by the deep discounts, total retail sales, excluding automobiles, fell over the year-earlier period by 5.5% in November and 8% in December through Christmas Eve, according to MasterCard Inc.'s SpendingPulse unit.
When gasoline sales are excluded, the fall in overall retail sales is more modest: a 2.5% drop in November and a 4% decline in December. A 40% drop in gasoline prices over the year-earlier period contributed to the sharp decline in total sales....
But considering individual sectors, "This will go down as the one of the worst holiday sales seasons on record," said Mary Delk, a director in the retail practice at consulting firm Deloitte LLP. "Retailers went from 'Ho-ho' to 'Uh-oh' to 'Oh-no.'"
The holiday retail-sales decline was much worse than the already-dire picture painted by industry forecasts, which had predicted sales ranging from a 1% drop to a more optimistic increase of 2.2%....
The real beneficiary of all this belt-tightening seems to be Wal-Mart. Wal Mart's stock rose 15 cents ($55.44). That's bad for all sorts of reasons, but also sort of inevitable till other retailers work out how to adjust to consumers' revised priorities.
The last desperate last ditch hope of retailers? Yves Smith:
Gawker is so, so right:
How desperate are they? Embarrassingly, "J.C. Penney Co. is offering free wake-up calls to rouse department-store shoppers at 5:30 a.m. Friday," reports the Wall Street Journal. So far, the biggest drop in holiday spending was in luxury goods, electronics, and women's-clothing....
We've been trained to think it's our patriotic duty to shop: to Save the Economy, ease the pain of 9/11, et cetera. Are discounted pillows from Bed Bath & Beyond what we're really looking for?
Libby says:
If so, we haven't yet learned the last great lesson for the apocalypse of the consumer economy: what everyone needs is less of every thing. I have a feeling that lesson's in the mail, though.
As icebergslim says:
Such is my New Year's wish for us all.
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