Holiday Retail Sales: Just What the Doctor Ordered?
Preliminary figures for holiday retail sales are in, and they are just what the doctor ordered—Dr. Bernanke, that is!
As any investor must know by now, the Fed is trying to restrain inflationary expectations in the interest of long-term economic strength and price stability. At the moment, this implies a period of small monetary constraint and below-trend economic growth. If this economic management is successful, as it has been repeatedly for nearly thirty years, we will hit The Glide Path.
In terms of holiday retail sales, we should hope to see growth rather than a decline. We should expect to see slower growth than last year’s.
So what did today’s reports show?
Electronics and high-end stores did well. Cold-weather clothing and
discounters did not do well. To the extent that the WSJ included data,
it showed that sales growth was less than last year’s. MasterCard’s
tracking service showed an increase in sales of 6.6% as opposed to the
8.7% from last year.
The media spin given to these reports is that the season was "tepid" (BusinessWeek) or "lackluster" according to a WSJ headline. The WSJ describes sales data as "disappointing" and quotes a research VP at MasterCard as saying that "People were expecting a lot more momentum.
Briefly put, some people in retail were hoping for and predicting a big year. This is nothing new, but it is an unrealistic expectation during a time of 2% (or so) economic growth.
Unless we start seeing absolute declines in spending, it is not support for the "tapped out, spent up" consumer thesis or an incipient recession.
Meanwhile, every time we see economic data that is a bit lower than last year’s, someone is going to call it a "canary in a coal mine." Perhaps it is a bird of a different feather– Chicken Little?