Monday, December 01, 2008

Consumer Spending Online Drops

There is much ballyhoo and hoopla about the 3% increase in year over year spending from last year's Black Friday weekend. "Perma-bulls," analysts who forever think stock markets always go up no matter what, are heralding this as proof the recession is not as bad as most think and is reason to start buying stocks and get that perma-bull market going again.

I ask stupid, elementary questions like "does that 3% even exceed inflation?"


"Well who cares about sales if they had to discount their products so much they weren't making any profit anyway?"

But I found this chart interesting in that it's the first chart showing a decrease in consumer spending online.

The problem I have with Black Friday (aside from soccer moms causing traffic jams as they stop in the middle of road to contemplate which way to turn) is that it is more of a holiday event than a genuine economic event. That shopping is "just what you do" after Thanksgiving, not to mention you need to get out as your family is driving you crazy. Ergo, yes, traditional sales may be up 3%, but that is due to a social phenomenon, whereas online sales are down and online purchases are purely more of one of an economic nature.

I will say it before, and I'll say it again, the stock market was accurately valued around 7,500-8,000. And this does NOT consider the potential drop in corporate earnings in the future which may be well worse than I expect.

So enjoy the sucker's rally. I'm saving up a little bit o' cash.


Hot Sam said...

You're absolutely right, as usual. Inflation and profit margins were the first thoughts on my mind too.

Journalists are statistics whores. They get excited over superlatives, 'record highs', nominal increases and decreases, regardless of whether data support their headline.

Today, Bloomberg reporters declared this the second Bush recession as if he had anything to do with the first one in 2001. The second is even arguably not his fault. Blank newsprint doesn't sell. Unfortunately for them, filled newsprint doesn't sell either.

With families visiting infrequently, the question of what to do the day after gorging on turkey was answered: let's go shopping. Retailers responded to that demand and then they all entered a vicious cycle. But what does one good sales day mean?

I'm going put more into my matching retirement funds. There's nothing on sale now I can't live without.

Matt said...

Were online sales down for "cyber monday" too or just "black friday"?