‘Twas The Day After Christmas, And Gloom’s On The Plate
Well, it’s nearly the day after Christmas and gosh the MSM can’t wait to ramp up the economic gloom and doom. The Washington Post carries the dour headline, “Holiday Spending Growth at 5-Year Low” and touts as its figure a mere 3.6 growth in spending this Christmas season over last year (and since when is 3.6 percent growth in an economy a bad thing? I mean, in years when we have a President not named Bush). That’s packaged with a couple other numbers and some quotes designed to make us think that we’re heading toward the recession the MSM has promised us is coming for the past three years or so.
On the other hand, buried about halfway into the story is this little nugget.
Shoppers buying online led the growth in spending, with Internet sales gaining 22 percent from Nov. 23 though Dec. 24, said Michael McNamara, vice president for research and analysis at MasterCard Advisors.
That’s quite a lot, isn’t it? Maybe that little stat should have appeared a bit earlier in the story, but if it did it would have put a big hole in the doom and gloom the Post is peddling.
More, including some numbers yet to come that will be worth watching, after the jump.
Time for some personal observations. I’d estimate that this year, I only did about 15 percent of my Christmas shopping in a store. The rest I did online. Of the few things I did buy in stores were three gift cards I bought at my local Safeway grocery store, which I’m pretty sure isn’t tracked in these retail sales numbers. I got three gift cards myself and I know that two of them weren’t bought in a retail outlet like Wal-Mart or Target. Here’s something else to consider. I heard through a very reliable source that one of our local Safeway stories sold $52,000 in just gift cards in three days before Christmas. The Safeway stores have been really pushing the gift cards and the stores in my area have been running a contest to see which store can sell the most. That one store may be the exception but based on the traffic I’ve seen around my store’s displays, I really don’t think so. It makes me wonder how many other grocery stores and other places that don’t generally show up in these sales stats were selling gift cards like they were on fire.
I think it would be a wise idea to watch the post-holiday sales numbers, especially the online sales, to see the numbers there. That’s where the gift card purchases are likely to be seen.
I can’t help but see this story as a bit of “the economy stinks” narrative-pushing by the MSM, who has invested years in making us thing things are very bad indeed.
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Category: Featured, Oh, THAT liberal media., The Economy and Your Money
Jimmie — take a look at what Barry Ritzholtz is saying about the retail sales data that you claim is being spun as by negative natabobs; most of your objections have been accounted for:
"This sales data also includes Food & Energy. The 3.6% is before we make adjustments for inflation. The specifics of MasterCard’s data includes purchases made by more than 300 million MasterCard debit and credit card users; it covers not just store purchases, internet buys and gift cards: It also includes gasoline and meals at restaurants, both of which had seen significant price increases this year.
Next remember that you as a blogger are a little bit unusual in how much you use and how comfortable you are with technology and the internet. Online sales is a small but rapidly growing segment, it is not the dominant segment that walking into a store, looking at three different shirt styles and waiting in line for eight minutes at the register is. Anectdote is not data.
The 22% increase in online shopping is factored in to the 3.6% growth figure – it's not "good news" or "bad news", simply a shift in spending patterns.
But hey, it's a big number, and it's halfway through the article, ergo…liberal media bias!
fester, I'm not sure that covers gift cards purchased in the way I described.
And please. I understand that anecdote is not data. I would not have mentioned it if my experience were unusual. It certainly is not. I am far from the only person who has done much of my shopping online. One of my co-workers who had not ever made a purchase on the internet until this year did a good bit of her shopping on the internet also, according to her. Her story is fairly typical of he stories I've heard this year.
One anecdote is not data. Many anecdotes should at least make you consider which way the anecdotes are running.
If you paid for your three gift cards at Safeway with a MasterCard affiliated card (debit or credit) it is in the data set that is being discussed above.
The point of confusion is when Wal-Mart or Saks 5th Avenue is allowed to book the gift card as a sale. Right now you buying a hypothetical $100 gift card on say Dec. 15th to give on Dec. 25th and not spent until Jan. 11, 2008 for instance means that the gift card issuer has a liability of $100 on Dec. 26, 2007, and can only book the revenue of $100 on Jan. 11. Different set of accounting rules, as the Mastercard data set seems to be reasonably simple cash accounting while the retailers have to use accrual accounting for the giftcards.
Jimmie — on your last point, I agree with you that internet shopping is a growing business segment, I have no dispute with you there; personally I did at least half of my dollar volume there this year, but compared to bricks and mortar, it is still a niche within the larger universe of retail. I think we both agree in 10 years that this discussion will be very different, but we are not there yet.
Oh no doubt. Internet sales really are growing more quickly than I think either or us think, or the conventional methods can even reckon at this point.
I wonder about places like Safeway that are getting more into the Christmas sales market (and even the non-grocery markets). How large a slice of the sale are they likely to carve out for themselves and will the conventional means of tracking consumer spending account for the non-grocery stuff bought in grocery stores? I mean, that $52,000 number is not necessarily a tiny number. If other stores have done even close to that in the general area, that's an appreciable amount. If those sales are cash sales (which mine were, for instance), it's worth keeping in mind.
Good point about the accrual accounting as well.
Jim — on "Oh no doubt. Internet sales really are growing more quickly than I think either or us think, or the conventional methods can even reckon at this point" I think you're wrong here as the following are means of payment on internet purchases:
PayPal or paypal like services (very trackable)
Bank Drafts/Electronic checks (very trackable)
Credit/Debit Cards (easily trackable and included in this dataset)
Cash is the pain in the ass residual in figuring out overt white market spending patterns as cash is what fuels the gray and black markets both on income (working under the table) and expenditures
As far as Safeway selling non-grocery items, in this dataset it is irrelevant whether you bought white onions or a replica Voltron lunchbox at Safeway, Mastercard is just seeing the dollar figure — in other reporting such as the BEA retail sales report, you can compensate for it, but it is a little bit tougher.