ShopperTrak RCT, the foremost company providing analysis of retail mall foot traffic, is reporting that retail sales for the Friday after Thanksgiving and the Saturday after Thanksgiving, traditionally the busiest and tenth busiest shopping days of the year respectively, have increased at roughly 3% over last year’s sales (which constituted an 8% increase over the sales of 2006):
CHICAGO – November 29, 2008 – Despite a lagging economy that has left the retail industry collectively holding its breath, ShopperTrak RCT today reported the holiday shopping season got off to a healthy start as GAFO retail sales increased 3.0 percent over 2007 – a day which increased more than 8.0 percent from Black Friday 2006. Preliminary sales estimated at a daily rate for Black Friday totaled $10.6 billion or $10,606 million.
While ShopperTrak warns that Black Friday isn’t always the best indicator for holiday season performance, retailers should be cautiously optimistic as deep discounts drove consumers en masse to various retail locations to spend – despite myriad economic pressures seen over the last two months.
“Retailers truly experienced what we’ve dubbed the ‘perfect storm’ over the last few weeks, with the financial markets melting down, the presidential election which typically slows retail traffic and relatively high gasoline prices – all of which slowed both retail traffic and spending,†said Bill Martin, co-founder of ShopperTrak. “Under these circumstances, to start off the season in this fashion is truly amazing and is a testament to the resiliency of the American consumer, and undeniably proves a willingness to spend.â€
Retail traffic was heavy throughout the country as shoppers responded to early openings and numerous door buster specials and sales promotions. Regionally, the South lead the way with a 3.4 percent rise over 2007, with the Midwest (+3.0 percent), West (+2.7 percent) and Northeast.
Despite this reasonable result I continue to read newspapers and hear television reports of flagging sales. Where are they getting their numbers? Are they actively trying to discourage people and, consequently, causing what they’re warning us of?
I’ll be interested in seeing how things develop over the next few days and what the figures look like in different parts of the country. If they follow the pattern we’ve been seeing, the national figures don’t really tell the story since the slowing of the economy is highly regionalized with the west coast having the poorest economic showing and the southeast (with the exception of Florida) the best.
Prudent policy needs to deal with the problems we have rather than the problems we’re afraid we might have. Right now at least to me it appears that our biggest problems remain in the financial system rather than the broader economy. If our leaders want to give a boost to the auto industry or any other segment of the economy that’s heavily dependent on borrowed money they might keep their focus on the financial system. That could be their best holiday present.
I’ve just moved to Orange County, CA, so I don’t have any historical perspective, but my subjective impression of 2 rather posh malls (South Coast and Irvine Spectrum) is that they were slow on Thursday and Friday. Plenty of bodies on Thursday, not so many shopping bags. And on Saturday it seemed way too easy to find parking and get into a restaurant.
I wonder if this is anecdotal evidence suggesting that your CA first theory of the housing collapse may be true.
According to the Case-Shiller index of housing prices, prices in LA have fallen more than 30% over the last year. Prices in Dallas have fallen about 5% over the same period, prices in Chicago about 10%.
An inconvenience in Dallas or Chicago but a disaster for many in Southern California. That’s why I think that we need to start treating the problems we have (which are local ones) rather than looking for national solutions.
I sold (we haven’t closed yet, but it looks done) a house in Chapel Hill, NC. After 3 years we’re selling it for our original purchase price. Not a drop, a loss given the upgrades we put in, but not a disaster, either.
But yes, everyone here in OC is talking a one third drop. A year from now I may buy, but I don’t want to try and catch a falling knife, so I’m a happy renter for the moment.
That’s an interesting point of itself, michael. Unless there’s a condition of increased demand through population increase of one kind of another or movement of population from one place to another, there’s no reason to expect houses to increase in value. They should depreciate like everything else.
I’ve wondered for some time if we aren’t entering into a period of rationalization of the housing market during which houses depreciate slowly rather than appreciating rapidly as they have for the last quarter century.
Perhaps it’s all about the bust…and we’ve most likely ain’t seen nothin’ yet…You want people to jump start the economy, pay them more..and they’ll spend it, but even that is most likely too late…is it more of the same, lies, and more lies…interesting read at, The End, by Michael Lewis..
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom#page1
There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,†Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.â€
Dave — wait for some hard data to come out as survey data is not as reliable as receipt level data. I would wait for the Mastercard data next week before making any strong conclusions. Even if the ShopperTrak data is valid at ~3% yoy, note that inflation was roughly 5% so in real terms, sales have declined and that is after some massive discounting.
And speaking ancetodally, as I posted at the ‘Hog, car traffic at a major big-box concentration in Pittsburgh was way too low on Saturday morning and even lower mid-day on Sunday before the Steelers game. It looked and felt like a typical mid-morning weekend shopping trip and not anything unusual.
fester:
I know how ShopperTrak gets its data (non-disclosure prohibits me from saying much more) and it’s pretty solid. My point is that this is absolutely not an economic collapse and, most importantly, writing as though it were is counter-productive. Turndown? Sure. Recession? Maybe—after all, NBER has just called it.
But I think that what’s going on needs a lot more scrutiny before we incur a lot of debt to solve a problem that incurring the debt may not do much to solve.