Retail Falls Short of Projections

[jswordy]

Retail Falls Short of Projections
High-End Chains Post Holiday Gains

By Michael Barbaro
Washington Post Staff Writer
Friday, January 7, 2005; Page E01


Best Buy customers snatched up $2,000 flat-screen TVs, Neiman Marcus shoppers made a run on $1,000 handbags and Costco members tracked down every last $100 cashmere sweater, but the luxury buying binge did not spare the retail industry a weaker-than-expected holiday shopping season.

For most consumers, the splurges appeared to be just that, analysts said. Mid-priced chains such as Sears, Roebuck and Co., May Department Stores Co. and Gap Inc. reported same-store sales declines, as U.S. consumers generally held on tightly to their pocketbooks.

"The luxury buying is a tiny segment of the retail industry -- it's peanuts," said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting firm. "The average shopper bought less this year, and only bought when prices were slashed."

Sales at chain stores open for more than a year rose 2.3 percent for the two-month holiday period beginning in November, compared with the comparable period a year earlier. That's far short of the 4 percent gain reported in 2003, according to the International Council of Shopping Centers, a trade group that keeps a tally of 77 chains' performance.

December sales rose just 2.7 percent, missing the council's forecast of a 3 to 3.5 percent gain. The trade group's chief economist, Michael P. Niemira, said last-minute shoppers failed to turn things around for retailers. "The season," he said, "ended on a weak note."


MORE:

http://www.washingtonpost.com/wp-dyn/articles/A54923-2005Jan6.html

[underpants]

1. I blame the Americans for this

If the Americans had been GOOD Americans they would have gone out and spent their American dollars in American stores and America would be stronger.

[durablend]

8. They should've maxed out those credit cards

How DARE those Amerukins claim that they have a "budget" or (even more heinous), claiming that the economy isn't so good and that they just don't have the money to spend. Why, it even sounds like they're aiding TERRORISTS with this kind of talk.

The economy is STRONG and getting STRONGER!!!!

Tsk tsk tsk... :eyes:

[Chipper Chat]

11. Dont forget "freedom is on the march"

because the Lord Our Bush said so.

[Cassandra]

23. Is that the Lord Our....

Burning Bush or merely a smoldering shrub?

[Chipper Chat]

41. hee hee

nt

[underpants]

13. If the loved America they would have

They need to understand that it is our nation collectively that we must support and to do that..........hold it wait a minute that kind of thinking laps the political spectrum......uh I'll get back to you when the blastfax tells me what to think. Hannity usually starts his show with it.

[Tandalayo_Scheisskopf]

2. Boom. There it is.

This is gonna cause real damage in a lot of ways. Trickle-down my ass.

[UpInArms]

6. when you put gold on the top of a pile, very

freakin' little leaches down.

That's because all of the leaches are at the top :evilgrin:

[heidler1]

39. Trickle Down fear of an up coming disaster is working well.

The Republicans can not get it through their heads that the rewards of fear mongering have unintended consequences.

[PA Democrat]

3. Is anyone surprised by this?

The middle class is hurting. Median income has declined by $1,535 or 3.4% since Bush took office. Stagnant and declining wages, combined with rising costs of gasoline, heating fuel, and health care are squeezing the middle class to death.

[PA Democrat]

5. And here is a good link to support claims of shrinking middle class

http://www.factcheck.org/article249.html

[TahitiNut]

4. The bright side is that we didn't send as much money to sweat shops.

"Retail" in AmeriKa has become little more than a factory outlet for overseas sweat shops. Shopping is an even more detestible experience for me, seeing so few goods that reflect American labor.

[PA Democrat]

7. I know TahitiNut

Last year I tried to buy a shower curtain that was made in America. There was NOTHING made domestically in all of the 10 plus retail stores I checked. Almost all were made in China, and I think I saw one made in Turkey.

It's hard to find fabric as well that isn't made overseas.:(

[TahitiNut]

16. Even the Kodak 3.1MP camera I got ...

... was "Made in China and Designed in Japan." It's disgusting.

[trogdor]

45. It is disgusting.

"Made in China and Designed Somewhere Else." I fucking hate when they have to spin it like that. There has to be some catchy nickname for shit like that.

[NYC]

9. I agree. They outsourced the jobs. Let them outsource the shopping.

Sell the cheap Chinese stuff to Chinese customers.

[PA Democrat]

12. But that would require paying the Chinese workers more

because at their current wages, most can't afford even the cheap stuff they make.

[NYC]

18. I know. But let that become the seller's problem.

They shouldn't expect us to buy.

[koopie57]

10. This really should not be surprising to the economists

IMO it is indicative of the rich getting richer and the middle class getting poorer.

[SlavesandBulldozers]

46. stop that negativity. up is down.

why do you hate capitalism? people are poor because they are lazy and the rich are rich because they work hard. goddamn man. ;)

[leesa]

14. "The luxury buying is a tiny segment of the retail industry -- it's peanut

Do you think it has finally dawned on the short-sighted idiots in big business that if people don't have jobs they can't buy their shit???

[durablend]

19. Nope...

This month's issue of "Alternate RW Reality" hasn't been delivered yet...give it another week and they'll be patting themselves on the back over yet another stellar (and almost unprecedented) holiday season.

[Florida_Geek]

15. When you factor in inflation and the

major sales cuts, they lost big time and what sales they made they made less profit on.

More layoff coming.

[PA Democrat]

17. Good point Florida Geek

I hadn't considered the fact that retailers were forced into giving deep discounts BEFORE Christmas and still fell short of their goals. Bet that didn't do much for their bottom lines.

[liberalmike27]

20. Well

Protectionism is good. It protects American workers. When you take it away, the boon goes to the rich. The poor workers don't profit, and barely exist, the prices don't drop as rapidly as they should, until the company is desperate. It is kind of like oil, the price of gasoline.stays the same when the per barrel price goes down for longer than when it goes up. Who helped with all of this? Clinton.

Democratic Socialism is good, and we need to find a new way of doing things in this country. We need to go back to local production of goods, not only to employ ourselves again, but to strengthen our country. When we can produce goods ourselves we also lower the risk to our country, and help our environment.

But, our politicos no longer care, they are fully paid for. They have no interest in how they are viewed. There was a good article at the end of the January Newsweek, about Wellstone (partly). At least he went to his grave without selling out the American people, without compromising, he went down fighting. Perhaps he even died because of the fight. That too, we'll never likely know.

[midnight armadillo]

22. Local production will have to make a comeback

Outsourcing manufacturing overseas is a side effect of the wide availability of cheap fuel. Bunker fuel, the stuff they use in freighters, is cheap & nasty stuff. We pay a high environmental price for buying Chinese plastic widgets.

As oil becomes scarcer and prices rise, the attraction of going overseas for commodity items will rapidly disappear, and local manufacturing will return. Or at least it'll try, but by then all our machinists and other specialists will be retired or dead. We'll have to import them from China and India.

[xchrom]

21. and that's the punchline

to what was an unfunny joke.
i agree with tahitinut and others -- you cannot underestimate the value of products made wthin the country -- you can't.

sure you may pay less for an imported widget for a while -- but when it becomes widets, gidgets, tchachkies, and on up the line and across the line -- what worker is going to have the money to buy?

and now we discover much to the surprise of some very highly educated college graduates -- that managerial positions can jobed out for less over seas.

there's no end to the ways you can sell a country's economy down the hole if you only listen to those whose wealth isn't impacted by any up turn or down turn in an economy.

[jswordy]

28. It's kind of illusory to assume we pay less...

...when you consider that, by shipping the production of that widget overseas, we lose:

1.) The widget workforce and its expertise on how to make them.
2.) The equipment in the factory used to make them (it frequently is bought by and shipped to overseas companies).
3.) The factory plant itself, often converted to other uses.
4.) The company management and financial structure that supported the factory.

So...to start making widgets again, we would have to...

1.) Finance and managerially support the process and infrastructure.
2.) Build a factory.
3.) Manufacture and/or purchase the equipment to produce the item.
4.) Hire the workforce, train it and go through a costly learning curve to regain efficiencies in the process.

We lose a lot when we offshore production, on many more layers than just the making of the actual product. And it is extremely hard and time-consuming to rebuild it all, should we ever need to do so.

[nodictators]

40. And they hold their profits offshore, so they pay no taxes here

And when it comes time to build a new factory, they'll build it offshore too.

Don't show them the Green
unless they are Blue

[yorkiemommie1]

43. Yes!! n/t

[mhr]

32. One Cannot Underestimate The Destruction In Ethos To Those

That are the builders in any society - people who design, manufacture, and plan the goods and services sold domestically.

In Bush's world, these folks are disenfranchised by society as their services are no longer needed.

And sadly, there are few places for them to go.

[jswordy]

24. I read through Post #21...alll fantastic...some funny...

What I want to know is, what happened to the predictions of 4.5 percent retail gains that were being made just before Thanksgiving? No one even cites those as background anymore.

Y'all keep yer eyes open and prepare. By third quarter this year, we're on track to see the birth of a new cycle. Stagflation. That's a recessionary economy coupled with rising interest rates and inflation. If some are old enough to remember 1978-1983, they know what stagflation is. It'll rip the fillings out of poor and middle class folks.

Real retail price inflation (not the weighted index) is double-digit at this time, and has been for about a year now. Fuel and basic materials costs are rising precipitously, and the dollar is weak.

Should be a fun ride ahead. The stock market ought to start signaling it no later than second quarter if my projections turn out to be correct.

[BiggJawn]

29. Stagflation damn near killed me last time.

Not-fucking-AGAIN!
Gawd-Damn ReTHUGlicans, alway screwing evrything over to favour themselves at the expense of the little guy when they get in power.

You think the Murkan Sheeple would remember what it was like last time these thugs were in power, but NO-O-O-O-O-O-O-O-O-O!

[jswordy]

33. Heh! Someone old enough to remember!

I had a 1981 new car...my loan interest rate was typical of the day...

IT WAS 16 PERCENT!

Yep...you read that right.

I saw farmland bought in 1979 for $5,000 an acre )cuz they were so sure the value would keep rising) sell at auction in 1982 for $2,500 an acre.

I saw people in my Midwest hometown just walk out of their homes, toss the keys on the porch, get in the car and drive away South, looking for work. They were so far behind in the payments, they could never catch up.

When I moved from Illinois, unemployment was 25 percent statewide. I moved to coastal Virginia, where Reagan was building the military, and unemployment was 4 percent! That much change in 2 days of moving travel.

And it is starting to look familiar again...but this time, it won't just be in the Rustbelt...

[BiggJawn]

38. Mortgages back then were what, 12, 13%?

I don't really recall, since I was stuck in a cycle of "entry-level" (minimum-wage) jobs and could not qualify for ANY kind of loan.

[PA Democrat]

44. Prime rate was more than 21% back in 1980

I was just out of college and was one of the lucky ones to get a decent managerial job with a large bank. I know that even with my employee discounted rate, I could not afford a car loan, let alone a mortgage loan. I remember complaining about getting a 7% raise when inflation was running at something like 13%.

Here's a link for prime rates over the past 50 plus years:

http://mortgage-x.com/general/indexes/prime.asp

[llmart]

42. I'm old enough to remember too!

My husband's 100 year old company that he worked for went belly up and we were forced to move South so he could get a job. Couldn't sell the house right away and mortgage rates were up about 5% from when we bought our first house. Reaganomics uprooted our entire lives. It was an eye opener for me as to how misguided the "trickle down" theory was. And yet people are still buying into it. Suckers.

Reagan tried to tell us all that we would all become millionaires because we could put our money into CD's that were then paying double-digit interest rates, but he failed to tell us where we were going to get the money from because you couldn't save anything.

Just like now, the rich got richer.

[mhr]

25. George's Missing 10.2 Million Jobs - This Might Explain Things!

Employment Picture Still Dreary
Comstock Funds
January 06, 2005

Whatever the December payroll employment report shows tomorrow, it can’t come close to making a dent in the serious jobs shortfall of the current economic expansion. Here’s why. The NBER officially designated November 2001 as the bottom of the last recession, meaning that the November report marked the third anniversary of the upturn. During this 36-month period total non-farm payroll employment increased only 0.9%, a number that pales in comparison to past cycles. Over the last seven economic expansions the average rise for a comparable period was 8.7%. If that were the case on the current cycle there would have been 10.2 million more jobs than the total number reported for November, and the average monthly increase for the 36-month period would have been 316,000 per month. Instead the average monthly rise was a paltry 33,000, and even over the past 12 months when employment picked up somewhat, the average monthly increase came to only 171,000, a far cry from the typical cyclical increase. In fact only three months of the 36 showed increases of more than 300,000 jobs.

Snip ......

http://www.comstockfunds.com/screenprint.cfm?newsletterid=1155

[Earth_First]

26. Retails sales, retail sales, stock market, retail sales...

nevermind that pesky war in Iraq...

did we forget to mention retail sales?

[jswordy]

34. We won't have time to worry about the war at all...

...if the economic collapse my projections say is coming does indeed visit us. We'll be too worried about how to feed ourselves and keep our houses. So please don't minimize the economic issues. They are vital to the national security. Thanks.

[ProfessorGAC]

27. I Know I've Said This Before, But . . .

. . .why was anyone expecting anything better than what actually happened?

I have been stating here for 30 months, that the economy's consumption component is falling, with "growth" supported by off-budget gov't spending.

Given that those are simple parameters, tracked regularly by almost all economists, (even theoreticians like me), i am baffled as to the basis of the expectations. There was absolutely no reason to suspect that this was going to be a good year at retail, during the holidays. None.

I understand that retailers would have a level of "wishful thinking". But, that is hardly the basis of an expectation. That's just hope!

I read this article. I've read economics journals. I don't understand why anyone thought the retailers were going to have a better year than last year by any significant degree.
The Professor

[jswordy]

30. I didn't!

But I can see how the con job or the sales job is performed every year in a predictable cycle that begins in late October and is designed to wrest every dollar possible from consumers by creating false hopes.

Personally, I discount all economic data from October through the end of December and wait then for the revises in January. Works every time. They revised again this year, and aren't done yet.

I'd add to your comment that most of the retail gain that did happen was financed by increased consumer debt load.

We are digging ourselves a hole, one shovelful at a time.

I take it seriously enough to be actively working to reduce my personal debt load, already very low, to zero as fast as I can. And last fall, I doubled the size of my garden plot.

[Rainscents]

35. You Know...

Bush administration has lied and cover up evrything... Actual number of people out of work, people filing bankruptcy and people with no health care. I can guarantee, there will be housing market burst soon. When this happen, all hell is going to break loose! We are heading to deep recession!!! This is coming soon! This is only direction this country is heading at the moment.

[ProfessorGAC]

36. Sorry. We Agree, But I Think You Misunderstood

The consumption numbers have actually slightly fallen, adjusted for CPI shift. The "growth" of the overall GDP is based upon a huge increase in gov't spending, a lot of which was off-budget, so it's underreported.

Consumer debt has not changed that much vs. last year. (It's higher, but at the same rate as last year, adjusted for CPI + DEE).

So, the real result is EXACTLY predictable, and where the higher expectation came from is a mystery, to me.
The Professor

[jswordy]

37. We're on the same page. No misunderstanding here.

Where did the expectation come from? As I said, it came from the con job done on consumers beginning in October every year. The con job is done because then people will hopefully think things are better, toss their inherent caution aside, and believe that everyone ELSE is spending, so they will too.

UNDER EDIT: Let me just add that the annual con job is largely spun out of Wall Street, which profits in stock movement resulting from it.

In virtually every statistic, there is padding and spin from October through December. That is why I look at the January revises, and heavily discount economic news from the fourth quarter of every year.

I absolutely agree that "economic growth" is currently funded by the deficit, and has been. We are having our cake now and putting it on the tab.

Did you note news today that Japan has refused debt relief to Indonesia, even in the face of the tsumani disaster and what that will do to that country's economy?

Who is the largest foreign holder of our national debt? Japan. And what did we do to Japan in the early '90s when their economy flopped and we owned a lot of their debt?

Oh yes, paybacks are indeed hell!

[BiggJawn]

31. Kilobuck handbags and $100 sweaters...

S'Yeah, I WISH! I was so happy that I had enough left in the budget to buy my sweety a $20 "Silpat" for her baking.

You know what still bugs me? It's how retailers are screaming their heads off because they "missed" the over-inflated 4-5-6% projections. "Ohmigawd, We're RUINED!!! Sales are up ONLY 3% over last year!".

Wish MY income was up "only 3% over last year"

[struggle4progress]

47. The Ownership Society goes shopping as a patriotic gesture. eom

[VegasWolf]

48. Outsource the shopping, then the numbers will pick up. n/t