Friday, September 30, 2005

Black Christmas II

In my book a 'Black Christmas' is when spending growth during the holiday shopping season is less then the rate of inflation. Back on July 11, I posted that a 'Black Christmas is a real possibility.' Consumer spending fell sharply in August:

On the consumer front, spending fell an unexpectedly steep 0.5 percent in August, the biggest drop since November 2001, the Commerce Department in a report on Friday ( Reuters 9/30/05)
Will consumer spending continue to fall through the end of the year? Will there be a 'Black Christmas'? A Black Christmas is looking likely now. The negative savings rate of July and August are not sustainable. Given the soaring home heating costs this winter coupled with the end of the housing bubble a Black Christmas is looking likely. An economic storm is brewing.

2 comments:

  1. I agree completely. Even if you ignored the negative psychology of a downturning real estate market, too many other factors will depress shoppers and shopping: higher credit card minimum payments, boogyman stories about bankruptcies under the new law, gasoline bills that now are on the credit card because they're so high and, finally, just in time for Christmas, much higher heating bills. Cash flow is going to take a beating and when cash is tight, Christmas shopping is the easiest to cut waaay back on.

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  2. I just do not see how people can continue to spend like they have. Many boomers are getting close to retirement- how can they buy buy and buy? As housing slows and goes down- later in the year, how can this current phenom go on? Its going to get ugly next year- and the retail receipts for this holiday season will be less then expected. The times are a changin' and not for the better......

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