Santa Left Retailers Lumps of Coal in Their Stockings

The run-up to Christmas sales levels in the US failed to meet low expectations. Now retailers are hoping for a wee bit of salvation in after-Christmas clearance.

From Bloomberg:

Cutbacks on clothing, electronics and jewelry led U.S. retail sales to drop as much as 4 percent this holiday season as consumers limited purchases to necessities, according to SpendingPulse data.

Spending was the lowest since MasterCard Advisors started tracking data in 2002 to provide the SpendingPulse service, said Michael McNamara, vice president of research and analysis, in an interview yesterday. He estimates sales, excluding autos and gasoline, fell 2 percent to 4 percent from Nov. 1 to Dec. 24….

From Nov. 1 through Dec. 24, women’s clothing sales dropped 23 percent and men’s fell 14 percent, according to SpendingPulse.

Combined electronics and appliance sales tumbled 27 percent, with purchases over $1,000 suffering the most, according to SpendingPulse data. Luxury sales, including jewelry, plunged 35 percent, the data showed.

Purchases over the Internet fared better, with a 2.3 percent decline.

From the Wall Street Journal:

….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%.

Luxury goods, once considered immune from economic turmoil, were hardest hit, with sales falling 21.2%, compared with a jump of 7.5% a year ago, when the economy had just begun to sputter. Including jewelry sales, the luxury sector plunged by a whopping 34.5%.

During the same period last year, overall retail sales rose a modest 2.4%, helped by late-season discounting that enticed procrastinating shoppers. But this year, after a moderate uptick in shopping activity boosted by steep promotions the Friday after Thanksgiving, shoppers closed their wallets and reopened them only cautiously, worried by job losses, a sinking stock market and a recession climbing into its second year.

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  1. Unscripted Thoughts

    “Luxury goods, once considered immune from economic turmoil, were hardest hit..” Hmmmmm….more evidence to confirm that people were spending WAY TOO much on things they ‘deserve’. Or as a friend put it, “Buying loads of crap they didn’t need with money they didn’t have–the American way.” Maybe consumers really are changing their habits. Wonder if Big Ben is paying attention? (Answer: Not bloody likely)

  2. russell1200

    Luxury goods are not considered immune to downturns: except for the shallow thinking economists who don’t pay much attention to business cycle trends.

    Luxury goods are susceptible to downturns when high wealth persons start feeling the pain. High wealth persons traditionally feel the pain when their is a real estate collapse: which we have. Throw in the hedge fund fiasco and you would expect to see worse then usual luxury spending.

  3. Anonymous

    DIGITAL DEBT does not purchase a lot of luxury items, especially when those who thought Madoff, et al (hedge funds) were going to create the kind of wealth that the Rockefellers and Rothschilds have.

    Ha ha ha ha. It is always a great idea, “rich,” but when it comes to the reality of this idea (ah what a shame we have to lie, cheat, steal and mass murder to get this rich), there are not too many who want to actually see what the money is buying, other than ceiling wax, and other fancy stuff.

    HEDGE FUND MEET UP GROUPS abounded during this frenzy to be filthy rich. People were invited to join, as small groups to become like the one big investor – a billionaire, kind of.

    PLEASE AMERICANS wake-up and smell the coffee: rich is not wealth when it is ill begotten.

    Rich on earth means that there are a lot of poor, count on it.

    Time to redefine the idea of rich.

    Maybe it is not becoming a modern day Shylock, but indeed, a contemporary scholar of life.

    Create a new idea about what America defines in the reality: wealth.

    Maybe wars without end do not do what the “rich” of planet earth intend, and so perhaps it is time to hire new people for the job of defining peace on earth?

    Why, it is a novel idea and therefore ripe for plucking at a fruit we can eat without poisoning our future “wealth” … LIFE for each and every human, not just those with the biggest and baddest weapons.

  4. Anonymous

    I believe Americans have been like junkies with a habit they were dying to kick but could not. Now they are in forced rehab after the pushermen were busted. I think they actually secretly welcome someone yanking the crap spending needle out of their arms.
    I have been saying for years that an economy built on crap was doomed to end up flushed as soon as people realized they didn’t actually need or really want all that stuff.

  5. Keith - Hermosa

    Does anyone look at these numbers and think about them? The most positive figure given here is a 2.3% decline for all internet sales. The rest are double digit declines. But then the guy predicts retail sales down 2 to 4%. How can the average be equal to the lowest number in the list? What went through the roof to make up for all the negatives? I can’t find it anywhere.


    I’m not buying anything this Season. Just putting away my money for next year when prices will be much less and investing will be less risky. Am I part of the problem?

  7. Ken Stremsky

    If the federal government is serious about growing the economy and creating jobs, it should stop taxing interest from savings accounts, dividends, capital gains, and estates. Businesses would have an easier time obtaining loans and investments. Middle class people and union members that have mutual funds would benefit from dividends and capital gains not being taxed. People and businesses would have more money to spend.

    Many states may obtain more revenues from smokers if they allow smoking in many restaurants. If many restaurants get busier and employ more people, the need for food stamps and Medicaid may decrease.

    The federal government and state governments should legalize, regulate, and tax marijuana, heroin, and cocaine for people who are at least 18 years old. Most non violent drug offenders should be released from prison to make room for violent criminals. If States are able to spend less money on prisons, they may have more money to spend on education and other things.

    If the United States of America and Mexico legalize, regulate, and tax marijuana, heroin, and cocaine for people who are at least 18 years old, the United States of America and Mexico may be able to spend less money fighting Mexican drug gangs. If Mexico is able to spend less money fighting drug gangs, it may have more money to spend on its economy. If Mexico’s economy significantly improves, fewer illegal immigrants may come to the United States of America, many illegal immigrants may decide to leave the United States of America, and many more Mexicans may be able to buy products and services from the United States of America.

    I graduated from the University of New Hampshire in 1992 with a BA Degree in Political Science and a minor in Economics.

    I ran for United States Senate from New Hampshire in 2002.

    My website is

  8. Anonymous

    Luxury goods? Please. Do you think the growth in that category was from traditional “high net worth” consumers, or do you think it was from what I like to call the “aspirational” set? You know, the ones that think that you really are wealthy and exhibit great taste for buying vulgar LV luggage, overpaying for jewelery at Tiffany, and ponying up for a country club membership? The only way the growth in that segment was possible was by those that really couldn’t afford those items to be paying for them with money they didn’t have or by borrowing against the HELOC on the house. These are not high net worth people at all.

    This segment is going to be decimated in the next year, along with the golf and country clubs and those sort of things. After all, when the portfolio loses 45% of its value, the house is worth 50% less, the bonuses stop, and jobs are lost, who can keep paying for these things? The answer is a very small percentage of the population.

    This segment was a phony as Madoff’s investments…propped up by those people that had no business spending $500 for a pair of shoes, $2000 for a purse, and $800 for a pair of pants. And, while I’m on a roll, there are very few people that can honestly spend 45k for an SUV too without a home ATM. These things aren’t coming back soon, if ever, for that set. We all need to get a grip on the actual value of purchased items in relation to earnings. The party is well over.

  9. Anonymous

    The real Xmas buying never really started until after the Holidays during the clearance sales, for me anyway.

  10. Anonymous

    There is a shortage of dollars and until the bailout monies filter into the monetary system in about six months to a year (maybe less, since everything seems to be compressing on time lines), you will get anomalies in the dollar chart.

    Remember this banking system is not compatible with deflation. So inflate they will as Congress promises to cover all losses.

    Bernanke (the expert on the Depression past) is recommending to pour money into the system unlike the Depression where there was a 2 or 3 year lag time before adding.

    At least banks accounts are stable because of it…….for now.

  11. D G

    Wonder how this looks for France – higher priced exports due to a strong Euro and a market dominated by luxury goods from Chanel to LVMH.

  12. Moopheus

    The Mastercard/Spendingpulse website says they estimate cash and check payments, but I wonder if the can anticipate changes in card usage rates (I.e., more tapped-out consumers using cash rather than cards).

  13. SlowPuke

    Not to dispel too much of the doom and gloom around these sales figures, but let’s see:

    This is the 2008 data: “Excluding gasoline, total sales were down 2% to 4% this holiday season compared to the same period in 2007.” (

    This is “the 2007 Holiday shopping season. … for the period between Black Friday and December 24, retail grew by a seasonally adjusted 3.6% over the same period in 2006.” (

    Even if (as I imagine) the 2007 figures do NOT exclude gasoline, assuming a 3% drop in 2008, a simple calculation shows that compared to the same period in 2006, 2008 sales have have INCREASED by 0.49%!

    So if 2008 results are so disasterous, how bad was the 2006 depression and how come people didn’t notice it back then?

  14. mmckinl

    Jut a taste of what’s to come …

    The U.S. is heading into a Depression … these holiday sales figures are but the precursor to more bad news ahead.

    An economy that is 70% consumption and 30% production cannot survive … An aggregate debt of 50 trillion hangs over our economy … a debt that has now become unpayable. Huge write-offs are what is on the menu and with fractional reserve banking run by Zombie Banks and a corrupted Federal Reserve the future is dark indeed …

  15. Anonymous

    I predict that the market will crash soon after Obama takes office. The oligarchs are propping it up so it doesn’t tank under Shrub’s watch…plausable denial of complicity for the R’s.

    Einstein said, “We can’t solve problems by using the same kind of thinking we used when we
    created them.”

  16. Anonymous

    Retailers Want In on Stimulus Plan

    The country’s largest retail trade association asked President-elect Barack Obama Tuesday to add a series of sales tax-exempt shopping days to a coming economic stimulus package in an effort to revive consumer confidence and spur spending.

    The National Retail Federation called for three periods of sales tax-free shopping that would last 10 days each in March, July and October 2009. The trade group estimates that it would save consumers about $20 billion, or $175 per family.

    Under the industry group’s proposal, which would exclude alcohol and tobacco sales, the federal government would reimburse states for the lost tax revenue. State sales tax rates range from 2.9% to 7.25%, the group said. The five states without a sales tax — Alaska, Delaware, Montana, New Hampshire and Oregon — would also receive monies.

    Bet they get it since the whole scam now by the FED ant the treasury is going to be based on dollar devaluation.

  17. Anonymous

    Sales taxes feed a hungry state at the expense of low wage workers who are barely surviving. The state should cut salaries of overpaid employees and lay off those that are not needed. But it is easier to bully the poor and weak by using the sales tax. According to a leading Sex prevention Service U.S. singular condom sales are running at one trillion rubbers annually. This data suggest that Americans are using more condoms in response to higher child raising costs and AIDS education. That news will be a golden opportunity for states that are searching to find the right sin tax to erase high budget deficits. 5 bucks a condom would be a fair sin tax. If combined with a higher tax for those that use motel rooms for illicit sex it would be the largest state tax increase since the civil war. Not only would it solve the state budget deficits but it would also make religious leaders happy—family values would once again become holy and pre-marital sex curtailed.

    States must have money to pay their operating costs. Most of those expenses are paid by workers who send in a part of their wages to the state annually. But there are many low income wage earners that cannot afford state payroll taxes and they are given an exemption.

    It is outrageous to have a minimum wage worker being forced to pay a sales tax on soap and toilet paper. Having to go to work smelly and dirty unless that tax is paid sounds like extortion. This law must be abolished at once. The state claims that they cannot provide proper services without taxes on detergents and paper goods. They say that billions of dollars in sales taxes are collected on toilet paper alone. This issue should be taken up by the new administration in Washington. A large part of the trillion dollar stimulus package should be given to the states that lift this filthy sales tax—it smells.

  18. 42

    The so-called “sales” post-xmas are bullshit. All I’ve seen so far are discounts on clothing and other huge-markup stuff like mattresses. I’m in the market for a new camera, but I haven’t seen any decent deals on those.

  19. Michael

    At least a couple of possibilities, neither one of which excludes the other:

    a. People aren’t buying because they don’t have money or credit (duh)

    b. If we’re truly in a deflationary period, people are waiting for prices to drop even further.

  20. Lune

    Pet peeve time (not directed at you, Yves, but at the original sources):

    I can’t stand reports that include/exclude various items with the sole purpose of finessing their final results.

    Why exclude autos and gas this year, when last year’s numbers included them? Yes, I understand that this year auto sales cratered, and gas prices are lower. But last year, everyone could see that auto sales were unnaturally front-loaded due to all the zero down/zero financing offers around, and gas prices were skyrocketing. But since that helps consumption numbers, they were left in.

    Similarly, Bernanke always liked to use “core” inflation excluding food and energy. The ostensible reason is because food / energy prices are volatile. Except that for the last several years, until now, they weren’t the least bit volatile, only going up, up, and up. But nevermind, Bernanke still excluded them. Now that commodity prices are easing, everyone talks about how this is relieving inflationary pressures. Where’s “core” inflation now?

    I say, live by the sword, die by the sword. If we’re to have meaningful discussions of statistics, their definitions can’t be changed year-to-year to fit the narrative of the day.

    In this case, what reason is there to exclude autos and gas? Auto purchases are a significant portion of our consumption, and have a huge impact on our economy. Why exclude them? Similarly, while spending on gas has declined, the fact that families didn’t take the extra couple hundred dollars from gas savings and spend them elsewhere is an important fact.

    At any rate, what this means is that consumption is actually worse off than even these statistics make them seem. But of course, we can’t have accurate numbers out there lest the natives get a real idea of just how bad things are and start those bloody uprisings that they’re wont to do from time to time. Nope, can’t do that.

  21. viv

    Nope, all good here in Fortress Ozz. Spend away, nothing see, spend on.

    Oz is about 6-8 months behind America in terms of the crisis and it was only in july that commodities tanked and China started entering a recession in this quarter. No way is OZ escaping the worst of this.

  22. Anonymous

    Retailers have suffered their worst Christmas sales in years and many are forced to declare bankruptcy. Some are asking the states to declare sales tax holidays so they can bring back customers and stay in business. But billions of those sales taxes help support the state. The states claim they cannot provide proper services without the help of sales taxes. The U.S. government is now being asked to reimburse the states if sales taxes are temporarily lifted. A large part of the trillion dollar stimulus package can be used for that purpose. Once again the public sector is coming to the aid of a private sector that is in trouble. It is like the tail wagging the dog or the cart carrying the mule. The dog and mule must be restored to their proper position if sanity can be maintained.

  23. Glen

    Well aware of that viv – pulling the p**s. By reading and listening to MSM, one would think that we’re somehow immune to world events even though our commodity life support system has been shut down by Dr China. We’ve heading a record Christmas spend but these will be the same people looking to the government for yet another hand out next year when the bill comes in – old habits die hard. Even in today’s SMH, local economists are predicting a rebound by June 09 even though unemployment will be on the up! Apparently all of these government infrastructure projects designed to save the economy will be underway by June 09 creating jobs jobs and more jobs. If anyone has had anything to do with Australian governments at any level will know that they’ll still be navel gazing these project in June 10. So yes, there is a tenuous grip on reality by MSM’s at best – just because the impact is not immediate doesn’t mean it won’t happen. By June 09, we’ll be well and truly feeling the crunch.

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