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Tilting at Windmills

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December 27, 2007
By: Kevin Drum

INFLATION....Michael Barbaro has a followup story about weak holiday season sales today, and this time he takes inflation into account:

A final sales tally from the season will not be available from most chains until next week. But an early projection from MasterCard Advisors, a unit of the credit card company, found that overall spending from Nov. 23 to Dec. 24, when adjusted for inflation, was essentially unchanged over last year, a weak performance.

Given the uncertainties in the proper measure of inflation to use, this is probably OK. In reality, I think the MasterCard projection probably shows a small decrease in sales compared to last year, but depending on how you calculate things it might turn out to be pretty close to zero.

As for myself, I have no data to offer on holiday sales, but I do have an anecdote. I went out to a gigantic new local shopping center today and business was.....normal. I had no trouble parking, no trouble walking right into the movie theater (Charlie Wilson's War, flawed but still lots of fun), and the crowds at Borders, Best Buy, and Whole Foods seemed about like normal Saturday levels.

Leave your own anecdotes in comments. Leave enough of them, and perhaps they'll magically morph into data.

Kevin Drum 1:25 AM Permalink | Trackbacks | Comments (46)

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I went shopping for subprime default homes, half-mil or above, to flip for a profit in 2008, and business was normal there, too.

What housing bubble?

Posted by: Alan Greenspan on December 27, 2007 at 1:50 AM | PERMALINK

My wife and I were marveling that this is our first year ever not to do any Xmas shopping at all in a mall. And we didn't. Everything was either from a specialty store (air hockey table from Sports Authority) or big box discount place, or online.

Can't say I missed the experience of parking in the farthest-out space in the mall lot, or of staring at the vapid faces of mall denizens, or of looking at the same ridiculous crap in various stores.

From what I can see it's nearly an iron law of nature that retailers will complain about holiday business levels. If there were a surplus of shoppers with money burning holes in their pockets, we'd see an onslaught of new retail space built to cater to them. (Actually we see this onslaught anyway.) So the amount of retail capacity will always hover around the point of oversupply, and merchants will always complain about holiday business levels.

Posted by: jimBOB on December 27, 2007 at 1:53 AM | PERMALINK

Well, I didn't have a Christmas tree this year (for the first time in my life) because trees on the East Coast are too expensive, plus I'm fucking broke. I had a standing floor lamp decked with lights. So there's your anecdata.

['It was like Festivus without the commitment.']

Posted by: max on December 27, 2007 at 1:56 AM | PERMALINK

We shopped about as normal, but then we're not into major gifts, more small things that had meaning. Like I got my sister chocolate band-aids that help soothe those emotional hurts. We also shopped a lot more on-line this year.

I did shop at the local mall a bit for some needed items unrelated to Christmas. I was amazed to see that it was not that crowded. Didn't look much different from normal. This was in the SF Bay Area.

Posted by: JohnK on December 27, 2007 at 2:04 AM | PERMALINK

I've been suggesting that we are shopping less at Christmas because everyone we know has no need for anything we could buy them. It's gotten really hard to find gifts for people as everyone seems to have the items they want and it's almost a burden to them to buy them something they have to store or find a place for.

Could this be a factor?

Posted by: david in norcal on December 27, 2007 at 2:12 AM | PERMALINK

Kevin: "I went out to a gigantic new local shopping center today and ... I had no trouble parking ... and the crowds at Borders, Best Buy, and Whole Foods seemed about like normal Saturday levels."

Dude, you are, like, soooooo O.C.!

Posted by: Donald from Hawaii, recalling Valley Boy Days gone by on December 27, 2007 at 2:38 AM | PERMALINK

Back to topic -- today I went to Kahala Mall in east Honolulu, because I had to pick up a few travel-sized toiletries for our trip to New Orleans tomorrow night. It wasn't very crowded at all.

We're dropping the girls off at Grandma's in Pasadena on the way there (actually, my sister is picking them up at LAX very early Friday morning, while we await our connecting flight to the Big Easy).

Then, we'll spend New Year's Eve on Bourbon Street, and New Year's Day at the Superdome, tailgating with 20,000+ Hawaii fans as we get ready to watch the Warriors play Georgia in the Sugar Bowl.

While We're under no illusions about our team's chances in that game (Vegas currently has Georgia -9), we're just happy to be there and hoping for a good game.

But then again, if Colt Brennan & Co. somehow manage to find themselves at home on the range in the Bulldog secondary, a Hawaii upset of Georgia would undoubtedly be an appropriate capstone to what has arguably been the wildest and wackiest college football season in recent memory, and perhaps even a dagger in the duly maligned heart of the much-despised BCS system.

Wish us luck. We'll need it.

Posted by: Donald from Hawaii on December 27, 2007 at 3:08 AM | PERMALINK

Kevin, you are not alone in your experience. I did all of my shopping on Christmas Eve, and the only trouble I had was parking at Barnes & Noble in a lot that was 1/3 of the size it should have been... took me two passes to find an open spot. Beyond that, I was surprised at how few people were out shopping. This was in Chicago, not SoCal, so count this as an anecdote towards it being a national thing.

Posted by: Kit Smith on December 27, 2007 at 3:20 AM | PERMALINK

I think the influence of online shopping is definite and palpable.

Stores are less crowded because we are shopping less at them. We buy more online.

Am I the only person who did half their Christmas spend on Amazon? Granted I have a family in 4 countries so someone else doing the delivery is important, but still.

At my household in the UK, we have home delivered groceries, use Amazon for much of our book and DVD needs, buy virtually all our computer gear and stationery supplies online... shopping in stores often consists of a bit of browsing and a coffee.

Posted by: Valuethinker on December 27, 2007 at 4:09 AM | PERMALINK

I suspect what happened is that even though domestic spending was flat, the depreciating dollar caused exports of American goods to go up so that overall American businesses did better, perhaps much better, than last year spurring continued economic growth in the strong Bush economy. I think you and others should research this open question because concluding one way or the other.

Al, you not only don't know anything, you don't even suspect anything. (h/t to Twain and another thread.)

Which Al are you anyway? The Philippino Al? The Kenyan Al? The Brazillian Al? Or are you from a whole nuther country entirely?

All we know fer-sher is that all you fuckers posting as "Al"are un-American, and possibly - hell probably - represent a terrorist threat.

Posted by: Isle of Lucy on December 27, 2007 at 4:35 AM | PERMALINK

We had more presents under the tree than normal, but we have three young granddaughters. Their presents were mostly craft supplies Grandpa bought at Hobby Lobby. They had a lot of presents to open, but packages of foam paper and glitter glue aren't very expensive. On average the presents for the adults were far less expensive than normal and included practical things like clothes for the adult children and things we needed like new sheets and pillows. No big screen TVs here. We didn't take our normal Christmas vacation. I wonder how the ski resorts are doing?

Our youngest daughter worked as a sales clerk at the local mall. We visited her regularly during the season. We never had a hard time parking or getting around. Either they have improved traffic at the mall or Kevin's experience extended to Missouri. I was particularly surprised how light traffic was the Sunday before Christmas.

Mostly we funded Christmas this year out of our check book. We tried hard not to use the credit card, limiting it's use to some internet purchases. It was nice to get out of Christmas without a large credit card bill.

Posted by: corpus juris on December 27, 2007 at 5:42 AM | PERMALINK

I can second the comments about the seeming lack of traffic at the malls this past weekend. I had visited a mall in west central Long Island this past Sunday to pick up some ultra-last minute gifts for very close relatives. My spouse thought that the mall traffic was pretty heavy, but I thought it was incredibly light for two days before Christmas. First, when I dropped her off because I thought I was going to need to park somewhere in the hinterlands of the parking lot, I suddenly found that I had my choices of parking spaces no more than ten car width away from the mall entrance. Second, I found that I could actually stride through the mall rather than shuffle along in the coffle along with all the rest of the schlemiels in the mall. Third, our purchases were accomplished in fifteen minutes at a half dozen stores. We spent more time having lunch at a restaurant in the mall than we did shopping. If our experience translates over into the rest of retail, the merchants will be confronting a nightmare. But the sales through January should be very exceptional as they try to unload merchandise going into the end of their fiscal year. Accept nothing less than 70% off.

Posted by: PrahaPartizan on December 27, 2007 at 6:06 AM | PERMALINK

I'm also wondering about online sales. I did all my Christmas shopping via the Web. I don't drive, and getting to the mall by public transportation is a pain, so that explains my case; but the high price of gasoline may have made online shopping more appealing to those who do have cars as well.

And then there's gift cards, sales of which are said to have taken a significant jump this year, and which make a lot of money for retailers when they aren't redeemed, are only partially redeemed, or are redeemed for items costing more than the gift card amount.

Seems to me it'll take awhile for all this to settle down into solid figures.

Posted by: Swift Loris on December 27, 2007 at 6:12 AM | PERMALINK

I didn't spend a dime today

does that affect the data ???

Posted by: freepatriot on December 27, 2007 at 6:57 AM | PERMALINK

This was an online exclusive year.( I'm so bad )But the parking lot at the mall looked about 95% full as I was driving by.

Posted by: bill reporting from 12 oaks mall on December 27, 2007 at 7:10 AM | PERMALINK

I went out looking for a printer last night (12/26). I was busy all day and couldn't go until after 5:30. Went to Best Buy, Circuit City and then CompUSA (where I found what I was looking for). I thought it would be a huge mistake going out right after the end of the workday on the day after christmas, but none of the stores was terribly busy. Best buy had less than a dozen people in line to buy something -- Circuit City had none and CompUSA there was only one person in the checkout line (and only one cashier).

Posted by: Dave on December 27, 2007 at 7:16 AM | PERMALINK

I didn't buy a single christmas present. Couldn't afford any, even for the children. A $700 dollar plumbers bill disposed of well... all my disposable income for the previous and next several months. Go figure.

Posted by: Aaron on December 27, 2007 at 7:16 AM | PERMALINK

For me the difference in stores between this year and previous years was how well stocked they were. They were crowded with extra shelves and the shelves were brimming. No trouble finding a range of sizes even during last minute shopping. And, non-clothing items were there in plenty too. Regarding crowds: I'm a bad judge on that one. They always seem crowded.

SE Mich

Posted by: dennisS on December 27, 2007 at 7:33 AM | PERMALINK

No shopping anecdotes per se. However, I'm a member of two large, extended families. Each year at Thanksgiving names are drawn for a Christmas gift exchange. This year both families, independent of each other, decided to skip the gifts and do with getting together for food and drinks as usual. I've talked to several other people in my immediate circle of friends and coworkers and discovered many did the same. These aren't paycheck to paycheck workers and most could afford at least some small gesture. Still, a sense that bad times were down the road, the housing crunch, rising energy costs and just a general uneasiness about money and credit led many to play this holiday close to the vest. This often included even the festivities under their own roof. I think this attitude towards spending will be around long after the trees and lights are taken down.

Posted by: steve duncan on December 27, 2007 at 7:38 AM | PERMALINK

I did all my shopping at book stores and Best Buy. I bought very little, since my children (20,17,17) need almost nothing. My wife needs nothing either. She didn't buy anything for anyone including me. She did a lot of housecleaning, which is more useful.

Crowds at the bookstores were small.

Posted by: POed Lib on December 27, 2007 at 7:49 AM | PERMALINK

Went out Christmas eve morning to buy in the Roseville MN mall--pretty empty (like a Tuesday night in February).

Look for Bill OReilly's war on non-consumers next. Damnit, just go out and shop!! If you don't buy, you make baby Jesus cry.

Posted by: Neal on December 27, 2007 at 8:37 AM | PERMALINK

In Austin, the only place I had trouble finding parking and had more shoppers than normal was at a Fry's on Saturday (12/22). Other than that, parking was easy, and places had normal (or lower) shopper levels. Yesterday it was even easier.

Posted by: Bill on December 27, 2007 at 8:45 AM | PERMALINK

OT, but Benazir Bhutto has been killed in a suicide attack in Pakistan. I don't pretend to understand Pakistani politics--from what I read, she was not anyone's epitome of clean government herself. But I don't think it's going to help.

Posted by: DrBB on December 27, 2007 at 8:53 AM | PERMALINK

In the week before Christmas, in NYC, Circuit City was pretty crowded, though not out of control, but the women's clothing departments at Saks (that is most of Saks, of course) were very empty. Much emptier than last year, and a lot of stuff was marked down even before Christmas. I would suspect that retail sales in Manhattan were substantially below last year, given the current expectations for bonuses, plus the fact that everyone's options are underwater at present.

Posted by: y81 on December 27, 2007 at 9:20 AM | PERMALINK

I went to Circuit City in Santa Cruz on Christmas Eve and the line was out the door. That was because they only had two check-out registers working (out of six). Talk about misexecution on basics: can't get clerks at Christmas time?! time to short the stock of that company.

Posted by: Nils Gilman on December 27, 2007 at 9:48 AM | PERMALINK

Not one shop, in or out of a mall, this year.
I have discovered a winery on line that delivers (at modest charge)to the doors of my giftees.

Two weeks ago, Home Depot's lot was half full.

Posted by: monzir on December 27, 2007 at 9:57 AM | PERMALINK

We, like most of your posters, did a lot of our shopping online, but we spent less than we did in past years. I did go out to help my mom with her shopping the week before the big day. In-town Atlanta malls were jammed. I was quite surprised given the news coverage. I think it's less a good economy (who really thinks this??) and more an addiction to shopping.

Posted by: cayce on December 27, 2007 at 10:19 AM | PERMALINK

Second, I found that I could actually stride through the mall rather than shuffle along in the coffle along with all the rest of the schlemiels in the mall.

Praha-- one of the things I really love about the New York City area is the influence of Yiddish on the language-- 'schlmiels'. I can't think of anywhere else in the world (not even Israel) where Yiddish is so palpably part of the language (Miami, maybe?).

Nils Gilman

PC World here (UK) a Circuit-City type operation, has exactly the same type of problem.

There are security people, there are 'helpful' people to sell you stuff you don't need. But try to check out some time.

My favourite was after queuing for 10 minutes, I was told they weren't taking cash, as there was none in the till. Cards only (which slows everything down even more).

I have a game at our local PCW where I try to buy things, with a set time delay (usually 5 minutes). At the end of that time, I put down the product, go home, and buy it on line.

I have about a 70% hit rate, regardless of whether the store is busy, or half empty.

Another 'feature' they had was an XBOX 360 at the front of the store. To walk in, you would have to squeeze by an inevitable team of local yoof, 16-17, excited by whatever game they were playing on XBOX360, yelling and cheering.

Whenever I read that they have 'disappointing sales performance' I laugh to myself and think of Charles Darwin.

Posted by: Valuethinker on December 27, 2007 at 10:22 AM | PERMALINK

The NY Times wrote: MasterCard Advisors...found that overall spending from Nov. 23 to Dec. 24, when adjusted for inflation, was essentially unchanged over last year, a weak performance.

Note that the last 3 words (which I have bolded) are someone's opinion. Who says it's weak, MasterCard or the Times? We cannot tell.

From the POV if these chains, I don't care how they do. That's their problem.

From the POV of the overall economy, this result is not terrible. First of all, the gains for internet sales continue to be huge. Web sales from November through Dec. 21 rose 19 percent. Second, the difference between no growth after inflation and, say, 2% -3% growth after inflation isn't that much.

The conclusion ought to be that despite that mortgage crisis and high oil prices, total consumer spending has held up pretty well.

Posted by: ex-liberal on December 27, 2007 at 11:30 AM | PERMALINK

And so at last my prediction has come to pass. Finally, every reasonably well-off family in America has either: 1) filled up both its home and its rented storage unit to the roofline with Chinese-made geegaws; or 2) lapsed into a debt-induced coma. Or both.

Posted by: Mandy Cat on December 27, 2007 at 11:32 AM | PERMALINK

The clutch on my car went out on my way up to visit my family, saddling me with an $1100 repair-bill (blasted overpriced european car parts!). That sucked, but I can cover it.

There were traffic jams to get to the mall over the weekend, but that's the consequence of having a full weekend right before christmas... all of the people do their "last minute" shopping over the weekend, rather than on a weekday.

However, Bloomingdale's had pre-Christmas sales of 40% off on cashmere overcoats. Not that I could afford to buy one, but it's pretty rare to see such deep discounts a full 10 days before Christmas.

Posted by: Tyro on December 27, 2007 at 11:51 AM | PERMALINK

From the comments, it would appear that the only options are the mall, big box stores and the Internet.

I did most of my shopping at locally owned main street stores, thus doing my part to shift the power from megastores that take their profits out of the community to local businesses whose profits cycle back into the community. I also found much more interesting and unique merchandise.

Many in our town are doing this. The result: a vibrant, revitalized downtown area with shops, cafes and a good chance of meeting someone you know and stopping to chat and catch up on things.

Check out http://www.amiba.net/ for more on the advantages of shopping at locally owned businesses.

Posted by: weedgardener on December 27, 2007 at 11:55 AM | PERMALINK

I saw a very large pile of unsold Xmas trees at a site near me yesterday.First time I ever saw that.

Posted by: R.L. on December 27, 2007 at 12:24 PM | PERMALINK

Proud to say except for the cost of a family meal we would have eaten anyway, we spent ZERO this year.

FUCK consumerism. It's ruined this country.

Posted by: getaclue on December 27, 2007 at 1:04 PM | PERMALINK
….Who says it's weak, MasterCard or the Times? We cannot tell. … ex-lax at 11:30 AM
If there is no real growth from one year to the next, it's weak. Web sales are by credit card so that it taken into account. Look to rising debt defaults. Your attempts to boast the sad Bush economy are as pathetic as your hackneyed boosterism for his failed wars. Posted by: Mike on December 27, 2007 at 2:00 PM | PERMALINK

Here's some anecdotal evidence for you, of a different type.
It's stated above that consumer spending (and thus, retail sales) are "essentially unchanged over last year, a weak performance."
Anyone think this has anything to do with the fact that, for seven years, real wages are "essentially unchanged over last year, a weak performance."
Ultimately, if workers aren't actually EARNING more, where would those retail dollars come from? What kind of a crappy treadmill are we all on? Are we, the earners of stagnant wages, expected to pony up more and more of our stagnant incomes, pile on more and more credit card debt, and then ultimately take out more and more of a mortgage -- just so we can pump those dollars into retail revenues? Is this what we as Americans do now?
Next time some jagoff republican mentions that "what's good for business is good for everyone" I'm going to feed him a knuckle sandwich and let the free market decide who deserves to have the money in his wallet. That goes for family too. Watch it Uncle Phil.

Posted by: Govt Skeptic on December 27, 2007 at 2:14 PM | PERMALINK

I bought four major gifts this year: one online, two from local artisans at a holiday bazaar, and one from a big-box retailer. Didn't go anywhere near a mall.

Posted by: Peter on December 27, 2007 at 4:32 PM | PERMALINK

Took a long lunch on Christmas eve, and went to the nearby mall. Fairly crowded, but most people just seemed to stalking around, not that many packages in hand. Then went across the street to the Best Buy, and it was pretty dead.

This is in Northern Virginia, with the government workers being given the day off as well.

P.S. I bought nothing this year, except flowers for my mother.

Posted by: Juanita de Talmas on December 27, 2007 at 4:51 PM | PERMALINK

What kind of a crappy treadmill are we all on?

A very dangerous treadmill. Savings rates have been negative since 2005. In the past 20 years or so, the financial industry has solved the problem of how to get blood out of a rock. When people owed too much money in the past it wasn't usually credit card debt, etc. If you wanted to get a new room full of furniture you went to the bank or finance company and talked to a *person* that made a decision whether or not you were likely to make good on that specific loan and you were either approved or denied and the furniture become collateral for that loan.

Boy, have we come a long way baby! Cards maxed out? No problem, we'll just open a HELOC for you, so feel free to buy all the stuff you want. Underwater, LTV on your house negative? Get a loan against your retirement. The next thing that is going to really scare the bejeezus out of people is when stocks eventually bust and then retirements are untappable. The rock won't giveth forth any more blood.

Posted by: Doc at the Radar Station on December 27, 2007 at 4:53 PM | PERMALINK

I think that some other posters are onto something:

PEOPLE HAVE EVERYTHING THEY NEED. Of course, I am not talking about luxury goods, high-end equipment etc. I am referring to the fact that most middle-class and above consumers have accumulated almost everything they need which historically has satisfied as a Christmas gift. My family has gotten to the point where most gifts are either books, movies, or gift cards. Rarely are clothes purchased anymore (which I think also plays into the fact that we are a much more discerning consumer as well ~ Sears dress pants no longer cut-it).

I would also add, that with the Internet, now people can actually search out for that rare, moderately priced gift that is so elusive. As such, you can get for example a discontinued China pattern, or a geek-specific t-shirt for your brother. No amount of searching at a mall is going to get you that. So this also eliminates the need to go to the mall. In fact, could we be seeing the end of middle-class malls? High-end malls will always succeed, because they contain luxury clothing stores, which always will do well with wealthy people.

And this is why this downturn could be all the more troubling. Consumers really can cut-back, and cut-back significantly. Also- watch the credit card delinquency, default rate. These are already rising, and I think we could be the sign that consumers are finally tapped out.

Thank our Congress for the Bankruptcy bill from a couple of years ago.

Posted by: Brad on December 27, 2007 at 7:56 PM | PERMALINK

My personal economic gut check is the "Starbucks metric". If the service at Starbucks is great, the economy isn't.

Posted by: larry birnbaum on December 27, 2007 at 9:39 PM | PERMALINK

larry birnbaum, Good economic gut-check. Before Walmart put in the self checkout lanes, lots of waiting with slow-poke new employees signaled an improving local labor market. When the service sped up and seemed consistently good at Walmart, the local manufacturers had been laying off.

Posted by: Doc at the Radar Station on December 27, 2007 at 9:55 PM | PERMALINK

Not as many people in Sun Valley this week....you can actually pick a line and ski it uninterupted.

Posted by: landofid on December 27, 2007 at 11:16 PM | PERMALINK

Lower Manhattan was jammed, but there were deep discounts before christmas in all the clothing stores.

However, I don't think any one gives trendy clothing for Christmas. Too much chance of getting it wrong. The perfect pair of boots is something you find for yourself.

Posted by: Diana on December 28, 2007 at 12:16 AM | PERMALINK

In Los Angeles, I went to malls that were packed!
People were buying shopping carts full of all kinds of junk. I had to wonder that so many people go into debt to buy things they don't want or need. I saw plenty of excess.

And, as the first poster noted, I'm now immune to retailers saying it's such a terrible year when they only made 6% more than last year. Must EVERY year be a record?

So, IMHO, I did not see fewer shoppers, or less traffic. And I just heard a news report saying even with high gas prices people are driving MORE this year than ever.

Big surprise.

Posted by: Clem on December 28, 2007 at 7:45 AM | PERMALINK

I visited a close-out mall in KY Saturday with stores like J.Crew, Eddie Bauer, Polo, Nike, etc. At 9:30 in the morning the parking lot was virtually empty but the stores were completely empty.

Posted by: Zane on December 28, 2007 at 2:45 PM | PERMALINK



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