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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

November 14, 2012 at 10:12 AM

Understanding the holiday retail season

We’re heading into the time of year when we’ll be deluged with news about holiday retail. This is the most important season for most retailers, with stakes for Seattle’s Nordstrom and REI, Amazon and Bellevue-based Eddie Bauer, as well as countless locally owned shops and the downtown shopping district. Doing poorly can mean the death of a local store or the shuttering of a location by a chain.

One important caveat: We won’t really know much until January or even February. There will be many anecdotal stories and some limited data points on “how the season is going.” They are of limited use, if that. Usually, the Black Friday stories point to a “strong season,” followed by disappointment when the real numbers come out in January. November sales were disappointing, but it’s difficult to tell how much this has to do with Hurricane Sandy or a broader trend. Meanwhile, enjoy or recoil from the grotesque or tragic stories of USA Freak Show consumer-bots trying to murder each other or store employees when the doors open in the middle of the night.

Another thing to remember is the personal debt overhang facing many Americans. According to the Federal Reserve, household credit market debt rose from about $4 trillion in the early 1990s to nearly $14 trillion on the eve of the crash; since then, it has barely trailed off. In the second quarter of 2012, it was $12.9 trillion.

Americans have been making up for their stagnant or falling wages by spending on credit. It’s still happening: Personal spending has recovered from the Great Recession, even if per-capita GDP hasn’t. Also, the divide between the haves and have-nots is more stark than ever. Some are doing better than ever. Yet many households are reaching their limits, even on credit — or were ruined in the Great Recession.

Such musings keep retail executives up at night. Will enough people turn out and buy? Publicly traded companies also have Wall Street on their backs and razor-thin margins. Happy holidays.

And Don’t Miss: If ‘entitlement’ programs are your top priority, the fiscal cliff is your friend || Baseline Scenario

Today’s Econ Haiku:

Leaves blow on sidewalks

Seasons change, policies, too

Old normal falls down

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