Expectations for holiday spending were so low that it would be nearly impossible for things to get much worse. But, they did.
According to a division of MasterCard (NYSE:MA), sales compared to last year may have been down as much as 4%. That would make it the worst holiday season "in modern times," according to Reuters. Sales at specialty retailers such as Gap (NYSE:GPS) fell nearly 20%. Sales at specialty electronics and appliance chains like Best Buy (NYSE:BBY) fell even more.
While the trend may put many weak retailers out of business and allow stronger ones to face less competition, it also means that even the companies that did relatively well will have more layoffs than expected. In most years, the holidays are followed by a period when shoppers look for bargains in January.
Employment in the retail industry could drive off a cliff as the economy moves into 2009. Part-time workers will almost certainly be let go in record numbers. Full-time job holders face extraordinary employment risks.
The retail industry has asked the government for "tax holidays," periods when shoppers could buy goods encouraged by the fact that prices would come down during times when items are not taxed. But, that could encourage consumers to run up more debt.
Providing federal aid to the retailers in the form of revolving credit lines would be a better idea. They need something to ride out the storm, and that should not come at the expense of getting consumers to further undermining.their credit.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
12-26-2008 @ 6:55AM
al coholic said...
Aren't sales volumes just year over year comarisons without adjustments for population increases?
If so, then the figures are even worse, since the population is constantly growing at an estimated rate of almost one percent a year.
12-26-2008 @ 9:16AM
dr. maxx dredmon said...
good point on population growth. We want consumers to spend, they sell stuff, we need more people to make more stuff. But when a tax break is mentioned it's,...oh nooo, that may encourage people to spend and get themselves into trouble. When the people HAVE more money to spend they will spend it, but lending money to billion dollar companies so they can "weather the storm" instead of lending it to consumers is congress paying back favors, pure and simple. Why would I buy a better GM car when I have no money?,..besides, that new car may encourage me to spend and get myself in trouble.
12-26-2008 @ 10:42AM
KENT said...
I don't dispute the sales data that holiday spending significantly dropped. No doubt it has. I question Mastercard data by virtue of the fact that spending habits are changing from credit to cold cash as we try to pare down our consumer debt. It is nevertheless troublesome for us about what is happening on the retail front.
12-26-2008 @ 10:46AM
Virgil Bierschwale said...
My latest article titled "Worlds Economy - A house of cards" pretty well sums it up.
http://keepamericaatwork.com/?p=496
According to this site
World GDP
The total GDP in 2007 for the World was 54,620,000 in millions
Now Europe and America accounted for over 30,000,000 of that (in millions)
According to this site
Worlds Population
The total population for the World in 2005 was 6,453,628 (in thousands)
Now Europe and America only account for a little over 1,000,000 (in thousands) of that.
So GDP wise, the combined countries of Europe and America account for about 60 % of the Worlds GDP
But population wise, the combined countries of Europe and America only account for 1/6th of the Worlds Population.
Now using the common sense approach, when you adopt a policy that will OFFSHORE 50% or more of the jobs in the two biggest producers of the Worlds GDP, well its only a matter of time until the House of Cards collapses.
We can still reverse it, but it means that we need to bring our jobs home NOW