Retail Up for 2010 Christmas Season

Early returns are finding that retail sales were the highest in the 2010 Christmas season that they’ve been in five years:

A holiday spending resurgence led by strong online sales gave U.S. retailers a much-needed boost and helped improve the nation’s economic outlook heading into the new year.

Retail sales from Nov. 5 through Dec. 24 rose 5.5% to $584.3 billion over the same period last year, according to MasterCard Advisors’ SpendingPulse. The figures, which exclude auto sales, are ahead of industrywide projections for a 3.3% to 4% rise for the Christmas season and are the best since before the recession.

“The numbers verify what people have been talking about: a positive season and a good step forward,” said Michael McNamara, vice president for research and analysis at SpendingPulse, which estimates sales for all forms of payment. “Consumer confidence is a bit more improved as there has been stability in the system.”

As the proverb says one swallow doesn’t make a summer but an increase is better than no increase, no? It must be emphasized that these are early returns so we’ll need to wait a bit to see if they prove out.

This is particularly good news for state and local governments. These tend to be very dependent on sales tax and at least three-quarters of the retail sales are local, i.e. not online or mail order, and, consequently, they mean additional sales tax revenue. The sales tax revenue reports from state governments should be telling.

Barry Ritholtz says he knew it all along:

Leading into the holiday period, the data — I refer to actual sales numbers, and not surveys, gut feelings or proof of recency effect — strongly suggested that the 2010 orgy of consumerism known as the holiday shopping season was likely to be strong.

The first clue I had of this was the Amazon sales from TBP. The embedded code of each link allows me to track click-throughs and purchases. All year long, it has been running significantly higher than 2009. (I’ll post some charts later this week).

Of course, plenty of people were stuck looking backwards. They gave tortured reasons as why this was not going to be a decent season. Call it a classic case of confirmation bias, these were the folks who simply refuse to acknowledge any improvements in the economy. These analysts seem to be shell shocked from the collapse; you should feel free to to do what you like, but once I recognize someone is caught in a negative loop, I tend to avoid their work until they prove they have some objectivity.

Why were the improved sales not a surprise to those people paying attention to the data? The negatives — weak job gains, housing overhang, consumer deleveraging, terrible municipal finances — were already well known all year. Even Oil over $90 was a not a big deal — it seems to have been in the $75-85 range for so long that gasoline over $3 had little shock value.

Most people don’t buy aircraft or semiconductor manufacturing equipment as part of their Christmas shopping so the economic boost that the increased sales provides will be limited to the retail sector. Consumer good, e.g. apparel and electronics, are overwhelmingly made somewhere else. We’re not going to generate enough jobs through increasing retail sales to put many of the people who are unemployed back to work.

1 comment… add one
  • john personna Link

    Keep an eye on auto sales.

    The Consumer Metrics Institute number has improved, but still shows in contraction territory. I trust them less than I used to, but it still might reinforce that this is a slow, spotty, recovery.

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