June 12, 2024

The Good News About Retail Sales

Business Week reports bad news that is actually good news.

The Economy That Stole Christmas

It was just as bad as experts had feared—and maybe even worse. Retail sales for the Nov. 1-Dec. 24 season sagged between 5.5% and 8% from 2007, according to MasterCard (MA) SpendingPulse, which tracks credit-card, cash, and check outlays. Wintry weather on the weekend before Christmas added insult to injury. E-commerce suffered least, down only 2.3%, boosted by healthy sales at Amazon’s (AMZN), Apple’s (AAPL), and Wal-Mart’s (WMT) sites. Now, get set for the fallout: The International Council of Shopping Centers projects 73,000 stores will shut their doors in the next six months. On Dec. 28th, Parent Co. (KIDS), a baby products company, filed for Chapter 11.

Reasons Why The Bad News Is Good News: Consumers Become Frugal

The American consumer may finally be starting to spend less than he earns.

The easy credit that made many of us big spenders and big debtors is over.

The savings rate is starting to increase as less is spent and more is saved.

The realization that our financial security will not rest on eternally appreciating stock and home values.

The downside of excessive leverage and debt can be devastating.

The ridiculous fact that many of our purchases wind up in our closets unused.

The American consumer is adjusting to reality by spending less, being frugal and saving more for an uncertain future.  Now if only our government would follow our example, everything would work out fine.