Anecdotal Evidence Blogging

I didn't want to irresponsibly speculate that the country is heading for a deep recession based on a single trip to the mall, but since Kevin Drum's the very model of sober-minded blogging, I'll quote him on holiday sales:

As for myself, I have no data to offer on holiday sales, but I do have an anecdote. I went out to a gigantic new local shopping center today and business was.....normal. I had no trouble parking, no trouble walking right into the movie theater (Charlie Wilson's War, flawed but still lots of fun), and the crowds at Borders, Best Buy, and Whole Foods seemed about like normal Saturday levels.

The Saturday before Christmas, I found myself through poor planning driving past a whole bunch of exurban Virginia shopping centers and, similar, things looked distinctly uncrowded. Not empty by any means, but very calm for a Saturday -- to say nothing of a pre-Christmas Saturday. There were also tons and tons and tons of half-sold new developments standing around along with a bunch of half-built ones that I suspect may not actually be completed for some time.

Comments

More and more people are doing their shopping online.

Posted by Peter | December 27, 2007 4:30 PM

I don't think anyone was trampled to death this year while trying to grab one of those extremely cheap limited-quantity laptops. Where's the spirit, the enthusiasm? Disappointing.

Posted by abb1 | December 27, 2007 4:38 PM

Oh, snap.

Posted by Dr. Manhattan | December 27, 2007 4:38 PM

I was in the North Face Outlet store in Berkeley on Christmas Eve afternoon, and it was jam-packed. Annoyingly so. But they were having a huge sale.

Posted by SoCalJustice | December 27, 2007 4:45 PM

To add, as mentioned above, I did the rest of my holiday shopping (the bulk of it) online.

Posted by SoCalJustice | December 27, 2007 4:46 PM

I did my shopping on a Saturday late afternoon and evening in Kansas City's Country Club Plaza. The Plaza, in addition to being a serious shopping area, is something of a socializing hot spot and is right next to the city's biggest socializing hot spot. The weather certainly contributed (winter storm warning all afternoon and evening), but I had no trouble parking, the traffic was minimal, and I didn't have to wait to check out in any store. On even the best of non-Holiday weekends, Plaza parking is a challenge, so it did give me pause.

Posted by jhupp | December 27, 2007 4:48 PM

Yes, I wonder how many people did their shopping online, or did as I did for my relatives this year and just gave gift cards?

Posted by JonF | December 27, 2007 4:49 PM

Most people I know had a 4-day weekend and decided to take it slow and have fun. There may be some cutting back going on but I think the extended period of time off had a lot to do with the lack of shop-til-you-drop attitude.

Cranky

Posted by Cranky Observer | December 27, 2007 4:53 PM

Indeed, as a stereotypical male, I left the bulk of my shopping 'til the last minute, but even on Christmas eve I was all wrapped up in an hour & 1/2... including the drive to the stores & back. I had expected the worst, but was pleasantly surprised.

In fact, the only holiday season inconvenience I've encountered is trying to get a cab in anything under 2 hours.

Posted by raff | December 27, 2007 4:53 PM

Another anecdote for the pile: I gave up trying to shop in a northern Virginia exurban mall (Tyson's) the afternoon after Christmas. Couldn't find a parking place. Gift cards, perhaps?

Posted by Anonymous | December 27, 2007 5:01 PM

"More and more people are doing their shopping online."-Posted by Peter

And more and more are living on-line now too, thus explaining the empty developments.

Posted by Njorl | December 27, 2007 5:04 PM

Christmas retail money flows were not a disaster. The top decile by assets (a better method of viewing wealth stats than income in my opinion) of course spent like pigs for the holidays. The next four deciles down to 50% probably held their own or better. The bottom half surely spent less. They are spending more at the gas pump and the grocery store and that is thrown into the retail sales too.

It is possible that the US economy can do OK with the bottom half falling back, and back and back. If current trends continue and there is no reason to think they won't then in a decade or two we should expect that the poverty rate will be double or triple from where it is now and the 'middle class, below the 50% of asset households, will have zero assets and be essentially bankrupt. Slaves to their monthly payments.

The health care system for instance could be quite profitable and 'healthy' if the bottom 50% were just lopped off from service and didn't have to be subsidized by everyone else; government and the insured. More and more radical rationing of health care will have to take place.

The entire economy could follow this pattern. The economic numbers won't soar but the gross stats like GDP could easily limp along in mostly positive territory as the top half takes an ever larger percentage of wealth.

Corporations are now weaning themselves from dependence on the growth of US consumption. It's worldwide consumption that counts. In turn it is corporations and the value of financial assets which is the only thing of importance into todays political economy.

Posted by rapier | December 27, 2007 5:21 PM

On-line shopping is up again this year (in the range of 12% to 15% after adjusting for inflation), but that's the smallest increase in the past 5 years. And, apparently, on-line shopping now accounts for something between 5% and 10% of all US retail spending. If Kevin's and Matt's experiences do in fact reflect reality, that's not all driven by on-line shopping.

Posted by Donald A. Coffin | December 27, 2007 5:21 PM

Gee, all of the people who already think the economy is bad just coincidentally find evidence confirming to them that the economy is bad. How conveeeeeeenient.

Confirmation bias anyone?

Posted by Al | December 27, 2007 5:23 PM

Njorl,

Everyone knows that the real estate industry is in a bust. The question is about the health of the retail industry.

I'm curious about one retail company in particular did this season, Heelys. On the last quarterly earnings call, management estimated that they'd about break even this quarter, due to an inventory glut, but a couple models of their wheeled shoes have been consistently on Amazon's best sellers list. Anyone have any anecdotal info to add?

Posted by Fred | December 27, 2007 5:27 PM

Re: . If Kevin's and Matt's experiences do in fact reflect reality, that's not all driven by on-line shopping.

Two years ago I stopped at a popular department store on Black Friday in order to visit a bank branch there, inside the store. I was shocked to find the store scarcely busy at all. In fact it was so slow that after I finished my bank business I picked up a couple things in the store and got right in and out.
Where was the Great Recession of 2005?

Posted by Jonf | December 27, 2007 5:28 PM

I think that we are seeing more and more people changing their shopping and buying habits. But I also think the 4-day weekend allowed people to spread out their last minute shopping.

In addition, I have a hunch that due to e-mail as well as people having less and less time to spend meandering through stores, more and more people are using lists. I know my family does, and this means, that I know exactly what to get my family. It means less time shopping, which could account for the fact that stores seemed emptier.

Additionally, I am not sure if people realize this, but there are MORE and MORE shopping centers for people to go shop at. Here in Denver alone, there are 3 major new malls/shopping centers which have come on-line in the last 2 years. How many thousands of shoppers does this siphon off?

Posted by Brad | December 27, 2007 5:33 PM

"If current trends continue and there is no reason to think they won't then in a decade or two we should expect that the poverty rate will be double or triple from where it is now"

You have to take unskilled immigration into account here. What percentage of poverty growth has come from importing more poor people?

"In turn it is corporations and the value of financial assets which is the only thing of importance into todays political economy."

An overstatement, of course, but it is true that the wealth effect of rising financial assets can ameliorate the decline in home prices (similar to how the increase in home prices helped ameliorate the decline in stocks after the 2000-2002 bear market. When consumers feel wealthier -- whether because their international stock funds are up or because they think their house is worth more -- they spend more.

Posted by Fred | December 27, 2007 5:35 PM

It's worldwide consumption that counts.

I bet it's true, especially with the dollar being as cheap as it is now.

Posted by abb1 | December 27, 2007 5:35 PM

Does this mean the terrorists have won?

Posted by rickhavoc | December 27, 2007 5:40 PM

You're right, Matt. It's the end of the world as we know it.

Posted by Robert Powell | December 27, 2007 5:53 PM

If there is a recession, it will be because of Americans' lack of resolve in listening to their Godly leader who instructed them to "go shopping." Should a recession occur because of our lack of faith and fealty to Dear Leader, we will deserve all the suffering that results. Heck, take out a HELOC if you have to! Wait... you already did that? Well, darn, we're screwed then.

Posted by Tyro | December 27, 2007 5:57 PM

Quick, beside something made by Apple, what is the hottest item this Christmas made in America?

Long pause?

I'm still paused.

R.

Posted by Ryan Lanham | December 27, 2007 6:22 PM

Apple may be an American company, but its products are not made in America. My understanding if that Apple is essentially a design house, like almost all electronics component makers.

Posted by Brad | December 27, 2007 6:38 PM

MasterCard SpendingPulse said U.S. retail sales increased 3.6% from the day after Thanksgiving through midnight Christmas Eve, excluding auto sales. Excluding rising gasoline prices, sales rose only 2.4%.

Interesting how the sales numbers drop when gasoline is excluded. Not great numbers, but no implosion either. Time will tell how much impact housing problems will have on retail sales.

Posted by EruditeHillbilly | December 27, 2007 6:48 PM

Anecdotal evidence blogging sucks. If you want evidence of this, read the aforementioned blog entry.

Posted by Krister | December 27, 2007 6:54 PM

Erudite:

Matt posted on this very topic earlier. The 3.6% is in nominal percentage increases versus the real percentage increase. After stripping out inflation, sales likely declined.

Posted by Brad | December 27, 2007 6:55 PM

And, apparently, on-line shopping now accounts for something between 5% and 10% of all US retail spending. If Kevin's and Matt's experiences do in fact reflect reality, that's not all driven by on-line shopping.

Does the "all retail shopping" figure include food (very little purchased online) and gasoline (none purchased online, duh)?

Posted by Peter | December 27, 2007 6:56 PM

Confirmation bias anyone?

The same confirmation bias of those who think Al is a hack through exposure to his comments?

I think that we are seeing more and more people changing their shopping and buying habits.

Yep. Lists, online, upscale discount (Tarzhay) over mall flagships, and gift cards for post-Christmas purchases. I'll give it just a few years before people start campaigning for a Boxing Day holiday, or at leat treat the day after Christmas as a de facto Shopping Holiday.

Posted by pseudonymous in nc | December 27, 2007 7:51 PM

An overstatement, of course, but it is true that the wealth effect of rising financial assets can ameliorate the decline in home prices (similar to how the increase in home prices helped ameliorate the decline in stocks after the 2000-2002 bear market. When consumers feel wealthier -- whether because their international stock funds are up or because they think their house is worth more -- they spend more.

=============

The creation of 'wealth' by the rise of asset prices was never mentioned by Adam Smith. All such 'wealth' is not wealth at all but rather inflation. From the day Greenspan took over till the day he left the S&P rose at a 9.7% annual rate. During the same period M3 rose at a 9.7% rate. The rise in asset prices was and is a monetary phenomenon.

None of which has anything to do with hard work or honest work or genius or any of those things that free market ideology tells us are the basis all things good.

The skewing of income and asset distribution is based upon the inflation of asset prices. . Every rise in asset prices is called an increase in 'value'. Every rise in wages is called inflation. Every call for better wages, benefits or services is called socialism. Every call for interference in the financial markets and the credit market is called stablizing the free market.

Posted by rapier | December 27, 2007 8:05 PM

FWIW, I had the same reaction when I went shopping with the gf the afternoon of Sat the 8th at the largest shopping mall in the heart of San Francisco (the Westfield, an upscale mall with a Bloomingdale's and a Nordstrom). The mall was surprisingly quiet, we had no problem being helped (lots of idle staff around), and we were done in a flash. We thought that wasn't a good sign, considering that Sat afternoons are prime shopping time and this was the heart of the shopping season.

So, one more anecdote for the pile.

Posted by Ivan | December 27, 2007 8:29 PM

Matt, you'll never make it to the coveted Friedman position like this. There's a proud anecdotal tradition you have to follow. You have to talk to a cab driver. Then a woman in a sewing factory, who for the first time can afford Bisquick and poison ivy medicine, due to knocking flat the regulations that used to tie her and her kind down in our flat flat flat flat world. And lastly, you have to talk to somebody from a non-partisan think tank, like AEI.

My god, do your commentors have to tell you everything?

Posted by roger | December 27, 2007 9:08 PM

this article in today's Post indicates that the holiday shopping season is actually expected to last well after Christmas. For some reason gift cards can't be booked as revenue until they're actually spent, and people almost always spend more than the card is worth, so since gift cards have seen much more use lately we should see a big revenue boost in the next few days. Post-Christmas sales are driving people to the mall too. So I don't think it's time to declare the holiday season a bust yet.

Posted by Elliot Reed | December 27, 2007 10:11 PM

"The creation of 'wealth' by the rise of asset prices was never mentioned by Adam Smith."

Rapier,

I don't want to get off on a tangent unpacking the rest of your comment, but suffice it to say for the purposes of this thread that the "wealth effect" -- i.e., the tendency of consumers to spend more when they feel wealthier because they hold assets that have appreciated -- is fairly uncontroversial.

"For some reason gift cards can't be booked as revenue until they're actually spent..."

Elliot Reed,

Good point. A friend of mine who works at Credit Suisse mentioned this to me recently.

Posted by Fred | December 27, 2007 10:41 PM

So, two anecdotes equal data?

Posted by Cain | December 27, 2007 11:10 PM

"For some reason gift cards can't be booked as revenue until they're actually spent, and people almost always spend more than the card is worth"

According to generally accepted accounting principles (GAAP), revenue is recognized when it is earned. Money spent on gift cards is prepaid revenue, which means that it hasn't been earned yet; the money gets earned when an actual good is purchased using the gift card. Until a good is purchased using the gift card or until the gift card expires, the money collected from selling a gift card is a liability for the company that sold the card.

Posted by eltoro | December 28, 2007 12:27 AM

I don't want to get off on a tangent unpacking the rest of your comment, but suffice it to say for the purposes of this thread that the "wealth effect" -- i.e., the tendency of consumers to spend more when they feel wealthier because they hold assets that have appreciated -- is fairly uncontroversial.
=====================

The wealth effect is uncontroversial but sadly unexamined.
It's also minor when it comes to the bottom 70% and stocks because they don't have many and most of those are in tax deferred plans. 85% of stocks are owned by the top 10% of households.

When stocks go up Joe Six Pack looks at his $10,000 IRA he says" oh boy". During the late 90's stock mania the mainstream taught everyone that stocks were their savings. Now seven years later the S&P is around the previous peak. The speculative NASDAQ is far below it.

Then came the your home is your nestegg story. Stocks cannot possibly replace the late great real estate inflation because people borrowed against their new 'wealth'. Up to 14% of household cash flow in some quarters was from home equity loans during the boom. They didn't just feel wealthier, the borrowed against that wealth and went out and bought a Harley and a deck. They spent like they were wealthier with real money, that they borrowed.

Now that wealth effect is reversing. The wealth of the bottom 70% of households is now going in reverse as housing values drop. . This is going to be a gigantic headwind for the economy for a long time.

I fully expect DOW 36000 at some point in the teens, and a US poverty rate upwards of 20%. With the bottom 50% of households with negative assets, ie. more debt than assets. The ownship society perfected. The top 10% owing 90% of all assets. The top 2% owning half.

Posted by rapier | December 28, 2007 5:32 AM

FWIW, Kevin did not write the post linked to. His guest blogger, Steve Benen, did.

Just wanted to make sure proper attribution is given.

Posted by John | December 28, 2007 7:32 AM

My bad.

Kevin snuck it in. Apologies to MY and KD.

Posted by john | December 28, 2007 7:36 AM

Re: Interesting how the sales numbers drop when gasoline is excluded.

How are numbers tabulated? By dollar or by volume? If by volume, things I've read state the gasoline usage has been stagnant not increasing in this country due to the rise in the price. So how would that lead to higher sales figures? (By dollar spent I can see that it would because gasoline is about $.70/gal higher than it was a year ago).

Posted by Jonf | December 28, 2007 7:46 AM

My latest fundamentals have 21 measures of bad information compared to 4 measures of positive information. The unemployment report for December is important. An increase in non-farm payroll of less than 70K is bleh.

Posted by mikeVA | December 28, 2007 8:33 AM

"The unemployment report for December is important."

Nothing definitive, but I've noticed a change of sentiment recently in the share prices of a couple of HR/staffing firms, Barrett Business Services and Heidrick & Struggles. Barrett works in the PEO space and also provides staffing services for mainly blue collar jobs: construction, manufacturing, etc. Heidrick & Struggles does mainly high-end executive/professional staffing. Both stocks were pummeled for most of the year, but in the last month or so, both have trended up, out-pacing the S&P. Could be that the market is predicting that there won't be a recession or hiring slowdown next year.

Posted by Fred | December 28, 2007 8:54 AM