The Consumer Metrics Institute, an organization that measures online sales, has posted its assessment of 2010:
The last of the BEA GDP reports issued during 2010 indicated that the “real final sales of domestic product” were growing at an anemic 0.9% rate during both the second and third quarters of 2010. This number is calculated by reducing the headline GDP number by the net amount of goods being added to manufacturing inventories (and therefore not being sold to end consumers). Their characterization of the number as the “real final sales” within the economy is telling, and a 0.9% annualized growth rate over the course of the six middle months of the year is statistically indistinguishable from a dead flat economy.
In addition they make the following observations:
- GDP growth rates can be significantly impacted by non-consumer line items
- This recession was not a shared experience
- At year-end 2010 consumers were still cautious about the long term
- Recession-fatigued consumers can self-medicate with holiday spending while still adhering to long term outlooks
- Infrastructure spending by governments is poor way to stimulate the economy
- Corporate earnings can be a misleading indication of the health of national commerce
- In time the unemployed simply disappear
- Rescuing banks does not stimulate the economy
- Ben Bernanke can’t force people to borrow money that they don’t want
- By “feeling the economic pain” among their constituents, politicians have promised results they don’t have the means to deliver
Read the whole thing. You’ll need to scan down towards the bottom of their clumsily designed web page to find the year end assessment.
It’s interesting that CMI appears to be saying that on-line sales are hurting worse than more general sales indexes because the people most likely to buy on-line (the young and highly educated) have been hit worse by the recession. I’ve just assumed that on-line sales were going to keep increasing as the population comfortable with buying on-line increases.
Internet bias = assuming people use and access the internet like you do.
A lot of shopping is therapy. Going into stores makes people feel better when they’re feeling bad. Shopping online is practical, lacking the emotional satisfaction. There’s probably some sort of index to be constructed there. The Macy’s/Amazon Shopper Depression Scale.
I was surprised this received so little comment. Usually economic comments get great attention. Some thoughts:
1. The final retail sales number is revealing. In addition, inventory growth was a big driver of the headline GDP. Don’t be fooled about recovery based upon headline GDP.
2. Continuing drags include housing (well advertised) but less well understood: taxes. The BEA notes that taxes to personal income actually rose 3.6% the past year, and with state and local financial financial difficulties inevitably driving more taxes the drag will increase.
3. What I’ll call a more structural problem is that GDP was driven in part by a drop in the savings rate. Not sustainable.
4. QE2 considerations: a) by driving down rates much income generation for individuals has dried up. 2) but by driving up inflation expectations commodities (esp food and energy) have risen. That’s a tax on consumers. I saw a quantitative estimate that noted it would entirely offset the temporary SS tax reduction. 3) has anyone stopped to think that easy credit (the same thing that caused the the last two bubble recoveries) is the policy action of choice for an overleveraged economy? Whatup with that?
5. Lastly, can the BRICS continue to drive the global economy at the same rate?
All in all, not a pretty picture for the next 12-24 months.