Merry Christmas or Bah Humbug?
I know, it's only September but it's time to start thinking about the Christmas shopping or sales season for 2009. Since our economy is so dependant on consumer spending, the Christmas sales season is an important time of the year for retailers and our economic engine, and given the weak economic environment, we should be focused on it soon.
August 27, 2009, www.gallup.com published, "Boomer Spending, Like Other Generations, Down Sharply". In fact, the following table reflects the results of their poll on how much each generation has curtailed spending year over year, and it's a pretty steep drop of 33.7-44.4% depending on the age group.
August 31, 2009, www.gallup.com published, "Consumers Adjust Attitudes Toward Spending". Their latest poll reflects consumer spending trends for the summer of 2009. Their study reflected 90% of Americans say they are cutting back on how much money they spend each week, and 71% of Americans are watching their spending very closely. This article went on to further state this is the new normalcy for most Americans.
A couple nights ago, I was listening to the local news in California, and the TV Anchor stated, "In the next month 60,000 Californians run out of unemployment benefits, and there is a large wave of people running out of benefits for the next several months". This is based off last year's layoffs reaching their anniversary date for benefits. I imagine the national number of people running out of unemployment benefits is quite large.
The goods news or at least my expectation is the government will extend those benefits. If we are willing to throw billions behind bad banks and insurance companies, and cash for clunkers, and incentives to buy homes, I fully expect Uncle Sam to get behind those running out of unemployment benefits. It seems like the American thing to do.
The bad news is an unemployment check doesn't empower someone to spend. In 2003 I was on unemployment for a few months, and the monthly check barely covered rent. So, those who have been on unemployment for an extended period have probably burned through their savings and maybe maxed out their credit cards already, and have become the age of frugality elite, and not out of choice.
So, with almost 10% of Americans unemployed, and 91% of Americans currently cutting back on their weekly expenditures, what kind of Christmas sales season should we expect? I know, I'm sorry to be Ebenezer so early in the seasonal cycle but we need to be thinking forward because our consumer spending is such a large part of our economy.
Personally, I think the Christmas season might start early this year, because lets face it, retailers need your money. I also expect the sales and discounts to be large and get larger the closer we get to Christmas.
I don't see how we get around having a tough Christmas sales season, and I'm talking about gross revenue or top line numbers, so I think its Bah Humbug for the most part. My other concern in this expectation is for those retailers that barely survived last years Christmas season and all of 2009 lack luster consumer spending. Another bad Christmas might just put more businesses out of business.
The good news is the deals for those with some cash to spend should be very nice. And if you make Christmas about the family experience it should be a far more enjoyable experience, anyways!
Hope all is well