The half-empty economy

The true meaning of Christmas, the steady drumbeat of news stories suggests, is the bottom line for retailers. The writers are running out of adjectives to describe the 5-8% drop in seasonal sales.

“Gloomy,” Marketwatch says today. “Rotten,” says the Canadian Press. Huffington Post says retailers are “desperate” to salvage the season with post-Christmas sales. “Retailers get coal in their stockings,” NPR says.

What if sales had equaled or exceeded last year’s? Would analysts and retailers still be so down?

Let’s hit the News Cut “Wayback Machine,” and set the date for “any Christmas but this one.”

So here we are in 2007, where the MPR story described things as “bleak.”


But big sales will mean lots of red ink for retailers. Many retailers have gone out of business or closed stores already. Analysts warn that deep price cuts could kill even more retailers or drive them to close stores.

Even back in 2005, the stories warned of the danger of people spending less. In 2002, we told you things were “grim.”

The end-is-near. Again.

  • http://erikhare.wordpress.com/ Erik Hare

    Actually, that is true. GDP growth less Federal deficits and home equity withdrawals has been negative since 2001. That means that manufacturing and retail have, indeed, been contracting slightly this whole time.

    So those stories were telling us something, but we didn’t pay attention to it. Things were bleak, but because of the real estate bubble and home equity were were able to party like it was 1999 … still.

  • Bob Collins

    One of the interesting aspect of these stories, actually, is what EXACTLY do you expect ME to do about it? Your retail business is off 5 percent? What do you want ME to do about it? Your real estate bubble has burst? What do you want ME to do about it.

    It isn’t that we didn’t *pay attention* to these stories. It’s that they didn’t offer any guidance for what a person is expected to do about it.

    Which, to me, makes their value in the first place questionable.

  • http://minnpics.blogspot.com sornie

    If retailers truly want to salvage their Christmas season, they should actually offer price cuts on something outside of the normal post-Christmas items. After just returning from a certain bullseye-adorned retail outlet, the place was packed but the only real discounts were on the usual suspects and I have plenty of bows and wrapping paper already.

  • http://erikhare.wordpress.com/ Erik Hare

    Oh, yes. Sorry I’m a bit slow on the post-Holiday uptake.

    I quite agree that any good story, news or otherwise, has something for the Heart and Arm and Brain (to quote the late, great Stan Rogers). That is, there is an appeal to intellect, compassion, and a clear course of action.

    Not every news story can have that, what with deadlines and all, so I accept that we’re not always going to have great stories in our lives. But it does suggest that somewhere else someone has to put this all into context deep enough to suggest a real course of action. That is what I keep hearing is the use of professional journalists in opposition to citizen journalists.

    What I think we can see is that this context that binds all these bits off the wire together is rarely present. A rich analysis of all the options available would necessarily reach far beyond the usual talking heads and members of the pale middle class to people who have to deal with the consequences head on.

    In response to these stories, I could have given you people who advised a distinct course of action – stock up on ammo, junk silver and tuna.

    Ah, but that’s the problem. The people I’m talking about are very much on the margins of our world. The middle class has been very passive for a long time, trusting in ex machina to work things out. What should we do? Nothing. Only wackos try to work things out for themselves in the belief that the whole system could fail, yes?

    What should we have done in response? Think how many stories told us about what to do with our 401(k) during the same period, and I think you’ll see the disconnect. What could we do about retail? Not much. The consumer society is dying, and will continue to die off – it was unsustainable. What does that mean to our own money? That requires a higher level of honesty that has never been particularly popular. I don’t expect that in a wire story, but I would have loved to have seen it somewhere.

  • Paul

    What “you” can do? Three things.

    First, take care of yourself. Go back and look at those set it and forget it IRAs and annuities and learn how to move your money, and when to move your money. Don’t listen to anyone who tells you not to move your money, panic, or stick to your strategy if the don’t even bother to ask what your strategy is. Those so-called personal financial advisers and market-watch people are paid to get your money into the private sector stock market- they are not to be trusted. A lesson many have now learned the hard way.

    Second, look at your wages and salary. Live on what you make instead of what you can borrow. For almost twenty years now American wages and salaries have been practically flat. A never ending parade of market cheerleaders and market reporters told Americans how wealthy they were based on illusory calculations. Remember when we all wealthy because 80% of our wealth was in our home equity? Yes, this is a recession, but Americans have got to start building a sustainable economy based on living wages and salaries. It isn’t just about trimming your spending, and investing your money, it’s also about how much you make. Hint: the reason those CEOs and executives get, got, and will get nice wages and benefits… they have a contract.

    Third, start paying attention to public policy. Policy matters. If we’d built a rational health care system five, ten, fifteen, twenty years ago, we’d a saved trillions of dollars on health care which would have translated into more disposable income for everyone and a more competitive business environment for employers. If we’d regulated the financial sector the energy, housing, and financial bubbles could have been prevented or at least manageable. If we’d done something with the peace dividend and moved trillions from defense spending into infrastructure and manufacturing we wold have created three times as many stable and good paying jobs. If we’d factored inflation into the state budget, and maintained or increased revenue we wouldn’t be looking at the huge deficits we’re looking at now. In other words- vote intelligently, it makes a difference. Do the math, your city just lost a million dollars in state aid. That million dollars used to cost you twenty five cents, now it’s gonna cost you twenty five dollars. This is how your three hundred dollar tax cut ends up costing you thousands. Stop buying into bait and switch magic plan economic schemes.

  • Mike R

    I distinctly remember having a conversation with a friend in the 2007 holiday season about this type of “retail is dropping, it’s the end of the world” news stories. It’s manipulation, pure and simple. The retail industry wants us all to be afraid that the economy will collapse if we don’t spend our money on a bunch of crap (and line their pockets in the process). It’s not news, it’s just propaganda on the part of the industry organizations that represent retailers.

  • Paul

    Actually, there may well be a marketing strategy behind some of these retail “alarms” we’ve seen around this time over the past few years. Retailers are always anxious this time of year, way back in the 80s every retailer I worked for complained about the lack of traffic at the malls. Many years I remember the result wasn’t that sales were actually down, they just didn’t grow as much as investors had hoped they would. Investor disappointment is yet another trap of the financialized economy. The drive to take everything public in 90s created unrealistic expectations as far as returns are concerned. Business models came to depend on investor capital instead of revenue. The problem with that model hits you between the eyes when sales are up 4% instead of 5% and your investors sell off like they just been robbed.

    I do think sales are actually down this year. But the investor effect multiplies the damage in a lot of ways.