Most consumers are of two minds--they want to see the economy improve and they also want to see rock bottom prices (50% OFF) on the things they will be buying for the holidays. The contradiction is one most of us live with, and it's one reason why retailers can't seem to get traction. The latest retail sales numbers reinforce this idea . The news from the October retail sales report, which came out Monday, was generally received as positive, though it wasn't good enough to power a big stock market rally. Maybe that's because the numbers, while not bad, weren't really good, and that has implications for the holiday selling season.
Retail sales rose 1.2% in October, the U.S. Department of Commerce reported. That the biggest monthly gain since March-- though a major part of the gain owes to a 5.7% rise in auto sales. Big decisions like car purchases don't tell you a lot about how loose people are with their everyday spending decisions, and the car numbers also bounce around from month to month. For that reason, the analysts at High Frequency Economics strip out auto sales as well as building materials (which were also up) to get a more useful x-ray shot of consumer health. (Their measure of core consumer spending also excludes two staples, gasoline and food.) After stripping out those factors, HFE analysts conclude that real consumer spending rose about 0.2% in October, which reinforces their view that consumer spending in the 4th quarter of 2010 will rise at a mild 2.5% annual rate.
In the October report we also got a sense of how and where money was flowing. Clothing stores got a nice 0.7% boost in October, while mail order and internet sales rose 0.8%. Furniture store sales fell as did the sales from electronics and appliance stores.
A longer term set of stats is available from the US Census data, and Mark Doms, the Commerce Department's chief economist, had some interesting observations on these stats. Since 2008, he notes, furniture stores have steadily been losing share of consumer spending-- not a big surprise given the collapse in housing. Electronic and appliance stores have also lost share of the consumer dollar since then, though they made a partial recovery in 2010. The big winners in the consumer spending shifts are, first, electronic shopping (i.e., internet) and mail order, which rose 23.7% since the end of 2007. Warehouse clubs were the other big gainer in the consumer world, with their share of the dollar rising 9.2% over that period.
What do these trends say about shoppers? My read is that people everywhere are more thrifty and they follow the bargains. True, the internet doesn't always offer the cheapest price, but it does permit easy price comparisons among retailers. Similarly, warehouse clubs offer volume discounts and while that may not save money because people can easily over consume in such clubs, it has illusion of super-smart shopping. There is no reason to believe these trends will change over the next two months.
There is a bit of hope for high-end retailers this holiday season, according to economist David Rosenberg of Gluskin Scheff, who is examining the consumer confidence tea leaves:
One interesting development in the data is the divergence we are seeing between low and high-income household sentiment measures "” the former edged up to 65.0 from 63.7 and the latter turned in a much more decisive increase, and to a higher level too, to 77.3 from 74.9. This would tend to support the increasing view that luxury retail sales will be an outperformer heading into the holiday shopping season.
Of course, as Rosenberg notes, that thinking only holds up if the stock market hold up. Should we hit a big air pocket in the market--such profit taking often occurs after a big rally--high-end consumers would quickly tighten the purse strings. Rosenberg crunched some interesting stats on this sensitivity: He finds an 82% correlation between the stock market and high-end retail sales (think jewelry), a 70% correlation between stock prices and clothing purchases, and just a 60% correlation with food.
Advice to high-end retailers: Keep one eye on inventories and the other on the Dow.
I guess the aim is to boost the stock market with good news, but its not too exciting. You would expect sales to pick up in October the begiining of the holiday season, preparing for the winter etc. But as you point out the HFE analysts say Oct. had a 0.2% increase.not much at all. For prosective if your one on the lucky who earn say 100k per year a raise of 0.2% will gross you a extra $200 per year or about $3.dollar and 85 cents a week before taxes. Friday night stop in the convenience store and celebrate with a quart of beer and I hope you have a good laugh! Just think, it could be worse.
Get e-mail updates from TIME's The Curious Capitalist in your inbox and never miss a day.
The Curious Capitalist Favorite Links Barry Ritholtz Calculated Risk Econbrowser Econlog Ezra Klein Floyd Norris Greg Mankiw Growthology James Pethokoukis John Gapper Justin Fox Marginal Revolution Mark Thoma Market Observation Nicholas Carr Paul Kedrosky Paul Krugman Philip Coggan Planet Money Roger Parloff Ryan Avent Swampland The Stash adFactory.getCmAd(300, 250, "global", "tout").write(); adFactory.getCmAd(300, 100, "article", "tout").write(); ArchiveNovember 2010SMTWTFS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 More News from Our Partners CNN The theology of Facebook, an online 'altar' Imagining a moon colony in 2069 FCC chief on net neutrality: Trust me Huffington Post Raising Retirement Age Hurts The Poor, Say Government Auditors Robert Teitelman: Edward Kane on Dodd-Frank Brett King: Book Review: The Complete Banker Series DailyFinance.com Was Washington Right to Bail Out General Motors? The Highest-Grossing Global IPOs of All Time Meet New Jersey Governor Chris Christie, the Brand Rotten Tomato Total Recall: Ralph Fiennes's Best Movies How Was Cats & Dogs: The Revenge of Kitty Galore Nominated for an Animated Oscar? Green Lantern's Transformation, Shot By Shot Life Outbreak: Cholera in Haiti 2010 Seeing Red The World of Blind Photographers More on TIME.com » What the Midterms Meant: Thunder from the Left Conan and Jersey Shore: Reinventing Late Night Who Is Best Qualified to Run a School System? Quotes of the Day » "International terrorism would like to spread fear and horror in our country. We will not allow this." THOMAS DE MAIZIERE, German Interior Minister, after a suspicious package — it included a detonator and a ticking clock — was found before it could be loaded on a flight to Germany More Quotes » var ad = adFactory.getAd(88, 31); ad.setPosition(13) ad.write(); Today in Pictures » Sacrificial Stay Connected with TIME.com Learn More » Subscribe to RSS Feeds Sign Up for Newsletters Add TIME Widgets Read TIME Mobile on Your Phone Become a Fan of TIME Get TIME Twitter Updates adFactory.getCmAd(115, 42, "homepage", "tout").write(); © 2010 Time Inc. All rights reserved | Privacy Policy | RSS | Newsletter | TIME For Kids | LIFE.com Subscribe | Contact Us | Terms of Use | Media Kit | Reprints & Permissions | Opinion Leaders Panel | Help | Site Map TiiAdTrackRevSci(); function tiQuantcast() { } _qoptions={ qacct:"p-5dyPa639IrgIw", labels:tiQuantcast() } var _sf_async_config={uid:3088,domain:"time.com",pingServer:"ptimeinc.chartbeat.net"}; (function(){ function loadChartbeat() { window._sf_endpt=(new Date()).getTime(); var e = document.createElement('script'); e.setAttribute('language', 'javascript'); e.setAttribute('type', 'text/javascript'); e.setAttribute('src', (("https:" == document.location.protocol) ? "https://s3.amazonaws.com/" : "http://") + "static.chartbeat.com/js/chartbeat.js"); document.body.appendChild(e); } var oldonload = window.onload; window.onload = (typeof window.onload != 'function') ? loadChartbeat : function() { oldonload(); loadChartbeat(); }; })(); Powered by WordPress.com VIP var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-10268691-1"); pageTracker._trackPageview(); } catch(err) {} var _sf_async_config={uid:3088,domain:"curiouscapitalist.blogs.time.com",pingServer:"ptimeinc.chartbeat.net"}; (function(){ function loadChartbeat() { window._sf_endpt=(new Date()).getTime(); var e = document.createElement('script'); e.setAttribute('language', 'javascript'); e.setAttribute('type', 'text/javascript'); e.setAttribute('src', (("https:" == document.location.protocol) ? "https://s3.amazonaws.com/" : "http://") + "static.chartbeat.com/js/chartbeat.js"); document.body.appendChild(e); } var oldonload = window.onload; window.onload = (typeof window.onload != 'function') ? loadChartbeat : function() { oldonload(); loadChartbeat(); }; })(); // /* a.like').click( function(e) { e.preventDefault(); jQuery('#wpl-mustlogin').remove(); jQuery.post( 'http://timecuriouscapitalist.wordpress.com/wp-admin/admin-ajax.php', { 'action': 'wpl_record_stat', 'stat_name': 'loggedout_like_click' } ); var tenMins = new Date(); tenMins.setTime( tenMins.getTime() + 600000 ); document.cookie = 'wpl_rand=9a7f89e5b7; expires=' + tenMins.toGMTString() + '; domain=wordpress.com; path=/;'; jQuery('#wpl-count').after( '\ \ \Just one more step to like this post:
\ Username \ Password \ \ \ \Not a member yet? Sign up with WordPress.com
\ \ \ '); jQuery('#wpl-mustlogin').hide().slideDown('fast'); } ); jQuery('#wpl-mustlogin input.input').live( 'focus', function() { jQuery(this).prev().hide(); }).live( 'blur', function() { if ( jQuery(this).val() == '' ) jQuery(this).prev().show(); }); jQuery('#wpl-mustlogin input#wp-submit').live( 'click', function(e) { e.preventDefault(); jQuery.post( 'http://timecuriouscapitalist.wordpress.com/wp-admin/admin-ajax.php', { 'action': 'wpl_record_stat', 'stat_name': 'loggedout_login_submit' }, function() { jQuery('#wpl-mustlogin form').submit(); } ); }); jQuery('#wpl-mustlogin a#wpl-signup-link').live( 'click', function(e) { e.preventDefault(); var link = jQuery(this).attr('href'); jQuery.post( 'http://timecuriouscapitalist.wordpress.com/wp-admin/admin-ajax.php', { 'action': 'wpl_record_stat', 'stat_name': 'loggedout_signup_click' }, function() { location.href = link; } ); }); }); /* ]]> */ _qoptions={qacct:'p-18-mFEk4J448M',labels:'language.en,type.wpcom,vip.timecuriouscapitalist'}; // ' ).html( data[key] ) ); } } }; jQuery(document).ready(function($){ Gravatar.profile_cb = function( h, d ) { WPGroHo.syncProfileData( h, d ); }; Gravatar.attach_profiles(); }); // ]]> try{COMSCORE.beacon({c1:2,c2:7518284});}catch(e){} st_go({'blog':'5320466','v':'wpcom','user_id':'0','post':'12369','subd':'timecuriouscapitalist'}); ex_go({'crypt':'RDZ8LFkxbXF2TVluJVFmT0xoZkVaUCVrM3R3cCU2Wi10dT9ta3VEZG89N3pwOFdMRVB3Rls4VHhUemlpOFY0W1V+X0prOW16LU5rfktuc29XPUtiMXlVUyY9aiszRzc2T3lKJnlXcEpSOTBkQVRYd3xWYVIvZEN+MV9fflpoNTlBSFk2aTRSUGRiUy1XWGFGK0pJU0xHUkFUX3BWWXFlWVhiVWQsRmFDbE1VXUdranROdD8xR2hER0NaVT9EMltjTT9JNER0bUlybnAyfF9aNGovLVszdGk2LWxpRXQwUFlfW3h6UnZlaCxdUTcmcTM='}); addLoadEvent(function(){linktracker_init('5320466',12369);});Not a member yet? Sign up with WordPress.com
Read Full Article »