The government propaganda machine has been particularly busy as Christmas approaches. Retails sales were said to be up 0.8% in November, which yields a year-over-year increase of 7.7%. These sales are not inflation-adjusted, so they're up "only" 6.9% excluding gasoline sales. (Average national gas prices have gone up about 10 cents per gallon over the last month, and now stand at $2.984.) And if we "deflate" retail sales using the price producer index (PPI) instead of the consumer price index (CPI), sales are actually falling.
The official "good news" has led some commentators to debunk the "myth" of deleveraging, whereby it is now said that American "consumers" are actually re-leveraging, not shedding debt. If you really want to understand the debt issues, read my posts The Worst Is Yet To Come In Housing and Descending The Household Debt Mountain.
Even if spending is not rising at nearly the rate the official propaganda suggests, and may actually be falling, the natural question which arises is who is doing all this spending? Both anecdotal evidence and polling data suggest that the well-off are doing most of it. Consider Economic recovery leaving some behind this Christmas by a staff reporter at the Washington Post. I hope you have a strong stomach, or lacking that, a handy place nearby where you can throw up.
A new division is emerging in America between those who have moved on from the recession and those still caught in its grip.
This holiday season, those two worlds have been thrown into stark relief: At Tiffany's, executives report that sales of their most expensive merchandise have grown by double digits. At Wal-Mart, executives point to shoppers flooding the stores at midnight every two weeks to buy baby formula the minute their unemployment checks hit their accounts. Neiman Marcus brought back $1.5 million fantasy gifts in its annual Christmas Wish Book. Family Dollar is making more room on its shelves for staples like groceries, the one category its customers reliably shop.
"When you start to line up all the pieces, you see a story that starts to emerge," said James Russo, vice president of global consumer insights for The Nielsen Co. "You kind of see this polarized Christmas."
This tale of two Christmases is being played out from the shopping mall to the kitchen table. At Towson Town Center outside Baltimore, sales are exceeding expectations in the mall's new wing of luxury retailers such as Burberry, Louis Vuitton and Tiffany's, executives said...
The divide is evident in retailers' sales. Sales at luxury stores open at least a year - a key measure of retail health - plunged by a monthly average of 9 percent last year, [but have] skyrocketed 7 percent so far this year, according to industry analysis. Discount stores eked out a 0.5 percent gain a year ago and are up just 2.6 percent this year.
OK, here's my favorite part, keep that bucket close by in case you start feeling queasy—
"During the recession, it was very unfashionable to be fashionable and that is slowly changing," said Stephanie Brager, vice president for asset management at General Growth, which owns the Towson mall and Tysons Galleria.
That is not to say that luxury consumers have abandoned the lessons of the recession. Coach, for example, reported that sales in North America grew by double digits during its most recent quarter - but only after it lowered prices of its signature handbags and leather goods by 10 percent. Still, the company said customers' plans to buy in the future were at the highest level in two years.
"I honestly think people are tired of the recession," said Paula Reynolds, 56, a photographer who was holiday shopping at Towson on a recent afternoon. "I think people are ready to move on, but I think they're being cautious."
Reynolds bought clothes for her son at the Gap, two skirts for herself at Ann Taylor and nosed around Tiffany's for a new wedding ring for her husband, who lost his while surfing in the Pacific Ocean. She said more people are calling to buy her high-end prints, which she takes as a hopeful sign. And as a retail industry veteran, Reynolds said, she understood that "the more we shop, the better it is."
I've always been an advocate of social and economic justice—what human being worth a damn is not?—but it's only been during the Great Recession and its aftermath that I finally understood at a gut level the outrage that early socialists must have felt during the late 19th and early 20th centuries. Those times have come again.
The Gallup polling data is very explicit about who's doing the spending.
Self-reported spending by those making less than $90,000/year. Lower- and middle-income Americans' self-reported spending averaged $56 per day during November, up from $51 in October and September's $48. Spending by this group — those making less than $90,000 a year — was running below the 2009-2010 "new normal" monthly spending range of $52 to $64 during September and October, but returned to that range in November. Still, their spending continues to trail 2009 comparables.
Self-reported spending by those making more than $90,000/year. Upper-income Americans' spending averaged $120 per day in November — not much different than the $123 and $118 of the previous two months, or the $117 of a year ago. Spending among this group making $90,000 or more annually remains at the upper end of the 2009-2010 "new normal" monthly spending range of $107 to $121 per day.
This is the tale of Two Christmases. Spending by those making $90,000 per year or more, which is about 11% of those with jobs, is twice that of the 89% of those making less than $90,000. As high-end print maker Paula Reynolds said as she nosed around Tiffany's for a new wedding ring for her husband, who lost his while surfing in the Pacific Ocean, "the more we shop, the better it is."
Hasn't this kind of thing come up before?
Marie Antoinette apparently didn't say "Let them eat cake" but they chopped her head off anyway
A bucket? More like strap on a pair of "Oops, I Crapped My Pants" when you're reading Paula Reynolds' comments.
http://www.hulu.com/watch/10308/saturday-night-live-oops-i-crapped-my-pants
This part made me crap my pants, I laughed so hard.
"""I honestly think people are tired of the recession," said Paula Reynolds, 56, a photographer who was holiday shopping at Towson on a recent afternoon. "I think people are ready to move on, but I think they're being cautious."""
First of all, who are the "people" to whom she refers? She's so self-absorbed, and so isolated and sheltered in her privileged little world, that she believes the people with whom she interacts and cavorts every day, are the only people in this country, or on this planet. She speaks as though the "recession" is purely a voluntary strategy....a mere state of mind. Sorry, I can only laugh at that because I prefer it to crying...or vomiting.
Posted by: Morocco Bama | 12/16/2010 at 11:36 AM