Black Friday's Consumers Didn't Exactly Come Roaring Back

We keep hearing that we cannot count the consumer out and that consumers will spend to support our robust 2.8% GDP growth we clocked in at last quarter. The experts all claim that same store sales are great, but they forget to tell you that most companies closed down tons of stores, and Best Buy (BBY) is benefiting from Circuit City’s failure. However, all the cheery news we are hearing does not jive with Black Friday’s relatively dismal sales.

According to the NRF, consumers spent 0.5% more this Black Friday than last year, which sounds great, right? Not really. Considering a year ago we were on the “brink,” or "abyss” (or any other term you want to use to describe "horrible"), sales were only up .5% when things were so good? I am sorry, but that does not fit with this strong recovery story being jammed down our throats like it is going out of style. If we were in a recovery or things were as good as we are being told, sales would have been estimated to have been a lot higher.

Not only that, but who believes you get the best deal on Black Friday any more? History has proven that the longer you wait, or buy online as most shipping is free, the better the prices get. On top of that, I did not hear one report of anyone getting trampled to death at Walmart, so I find it hard to believe sales were even up .5%. Not that I am rooting for anyone to get hurt or anything, but with a .5% print we should have seen some good pushing and shoving on the news, I got nothing up where I am.

While I do believe things are better, I do not think they are nearly as good as being reported. Even David Rosenberg, who may not be the best market forecaster but is one heck of an economist, is using the term depression to describe our current situation. I know, there are no soup lines, but here is what you need to remember about a modern day depression: we have unemployment, Social Security, food stamps, a whole variety of other public and private organizations dedicated to helping those less fortunate. In other words, this is not your grandparents' depression.

Do I think we are really in a depression? If we are not, it is very close to one, and denying that is crazy. What else would you call 10.2% official unemployment, 17.5% U-6 underemployment? Considering U-6 is how we measured unemployment during the 1930s, I think 17.5% qualifies as a depression, but hey, let’s not let facts or history get in the way of a great recovery story.

I am a whole lot more optimistic than I was as long as other countries keep printing money as well, but the minute they stop and we continue I will be extremely pessimistic, as that is when we head for real trouble. In fact, even with others printing money we are in trouble, but I digress. I believe in America and know we will get through this. However, if government does not get its act together and get out of the private sector's way, well, we will have soup lines again.

Comments

[uhuh]

Obviously we are in a depression. U want proof? imagine the mood of the people without Unemployment checks,foodstamps,social security,medicare and welfare. Did I miss any ? If the American people did not have these entitlements (like in 1929) There would be blood in the streets. The carnage would be like a third world African nation in revolution.Would anyone care to dispute this? Dont waste ur time-instead thank God for the safety nets the government provides.
Its not a perfect system but it seems to be working for those that really need the help . (at least for now!)

2009 Nov 29 11:39 PM

[Carlos Lam]

Ray, you seem to be lamenting the fact that consumer spending is flat to down (depending on the metric) this year. I, for one, am glad that we Americans aren't racking up even more consumer debt. Remember, household debt is at 100% of GDP (give or take a point), so we can't afford to borrow and spend to buy trinkets. We need savings to eventually fund entrepreneurs who want to re-industrialize America.

2009 Nov 30 04:42 AM

[damienhaas]

Ray,

If other countries and US continue to print money in a race to beggar thy neighbor tactics, we will going to have something that is worst than Depression.

2009 Nov 30 08:08 AM

[bottoms-up]

Why is anybody surprised? Unemploymenrt on its way to 11 percent, the president saying there is only "so much government can do [to help the unemployed -- not Goldman Sachs]," commercial real estate is starting to create a perfect storm, then there is the "extend and pretend" policies of the banks.

But wait... In a few weeks everything will be "better than expected." This is part of the con-game being run by the government and big business right now, beat things down so low that you have absolutely no expectations, then even slightly negative numbers look good.

2009 Nov 30 08:24 AM

[bottoms-up]

BTW,

I'm just curious about the statistics... Was the spending, year over year, 2008-2009, adjusted for the loss of the value of the US$$? Or did they forget to include that as a factor of spending this year?

2009 Nov 30 08:27 AM