If You Can’t Say Nothing, Say Something Bad
More and more I suspect that is the catch phrase of the media today. The New York Times is indulging in wailing and gnashing of teeth because spending this Christmas is only up 3.6%. Only? Had the reporter gotten a 3.6% raise, he would be doing a happy dance down Broadway.
American consumers, uneasy about the economy and unimpressed by the merchandise in stores, delivered the bleak holiday shopping season retailers had expected, if not feared, according to one early but influential projection.
Spending between Thanksgiving and Christmas rose just 3.6 percent over last year, the weakest performance in at least four years, according to MasterCard Advisors, a division of the credit card company. By comparison, sales grew 6.6 percent in 2006, and 8 percent in 2005.
“There was not a recipe for a pick up in sales growth,” said Michael McNamara, vice president of research and analysis at MasterCard Advisors, citing higher gas prices, a slowing housing market and a tight credit market.
Strong demand at the start of the season for a handful of must-have electronics, like digital frames and portable GPS navigation systems trailed off in December. And robust sales of luxury products could not make up for sluggish sales of jewelry and women’s clothing.
What did eventually sell was generally marked down — once, if not twice — which could hurt retailers’ profits in the final three months of year. “Stores are buying those sales at a cost,” said Sherif Mityas, a partner at the consulting firm A.T. Kearney, who specializes in retailing.
MasterCard’s SpendingPulse data, scheduled to be released Wednesday, cover the 32-day period between Nov. 23 and Dec. 24. It is based on purchases made by more than 300 million MasterCard debit and credit card users and broader estimates of spending with cash and checks. It encompasses sales at stores, on the Internet, of gift cards, gasoline and meals at restaurants.
The final numbers are in line with MasterCard’s already modest expectations, which were reduced in the middle of the season. But retail analysts and economists, who scrutinize holiday spending for clues about the health of the American economy, are unlikely to be impressed by the results.
Despite higher fuel costs - which impact all prices across the board - the sales still grew at 3.6%. I'd wager that there are economies on this planet that have not seen growth like this in a decade - but the media is desperate to flog a story about a disaster. Even if they have to make one up.
We have heard, pretty much endlessly, that housing is a disaster, that credit is a problem. Yet there is still evidence that the economy is growing. Just not fast enough to suit some analysts. And just slowly enough that a reporter can make a sow's ear out of a silk purse.





