What little remains of the economy's momentum appears to be riding on Christmas season consumer spending being perceived as strong. Unfortunately, it hasn't been.
Following up on her early Friday excuse-making for why things haven't gone too well at the malls so far — it's because the weather has just been too darned nice — Anne D'Innocenzio at the Associated Press worked over the available statistics to leave readers with the impression that it's not all that bad, and that there's plenty of time for a comeback. The linchpin of her effort is her claim that online sales continue to grow nicely. That's not so.
One never wants to rule out a strong finish to Christmas shopping and a frantic final week of the year, especially given last year's fast finish, which seems to have come out of nowhere. But a careful reading of the AP reporter's write-up, combined with references to information at the National Retail Federation she chose not to cite, indicates that it's going to be tough (bolds and numbered tags are mine):
HOLIDAY SALES PATTERN SKEWS ONLINE; MALLS LOSE SOME LUSTER
More often shoppers are making the decision to sit on their couches rather than head to stores this holiday season.
Online sales growth so far this holiday season is surpassing growth in sales at physical stores, according to First Data, which analyzed online and in-store payments from Oct. 31 through Monday.
Sales growth for stores is up 2 percent, while online sales rose 4.6 percent, according to First Data, which declined to give dollar figures, [1] citing proprietary reasons.
Total spending, including sales in both physical stores and online, climbed 2.4 percent, stronger than the 1.8 percent growth during the same period last year. [2]
While physical stores still account for the majority of spending, the uneven growth between buying at locations and on websites signals the continuation of a big shift [3] in how U.S. consumers are shopping.
Notes:
[1] — Astute readers may wonder why we should be so impressed with year-over-year online sales growth of 4.6 percent. We shouldn't be. That figure seriously trails the National Retail Federation's 2015 prediction:
NRF expects online sales to increase between 6 and 8 percent this year. Using expected sales in the months of November and December and economic data derived from the U.S. Department of Commerce, NRF’s chief economist expects online retailers will see solid growth this holiday season.
Using the 7 percent midpoint of NRF's prediction, through the first 46 days (Oct. 31 to Dec. 14) of the total measurement period (Oct. 31 to Dec. 31), the 4.6 percent in reported Christmas season online sales growth so far is only two-thirds of what the NRF expects. It's also only about two-thirds of the 6.8 percent year-over-increase in online sales reported in 2014.
[2] — Desperate to put a good face on a serious and potentially ugly situation, D'innocenzio compared this year's growth so far vs. 2014 (2.4 percent) to last year's growth compared to 2013 (1.8 percent). That's not much to celebrate in the first place, and the fundamental problem with the comparison is that the early stages of the 2014 Christmas shopping season were hit by legitimately problematic weather in several parts of the country — something which hasn't happened this year.
[3] — As seen earlier, this "big shift" to online buying is nowhere near as big as it has been in prior years. Combined with comparatively flat brick-and-mortar sales, the shopping season is not shaping up well, despite the stat D'innocenzio cited in Item [2].
The points made above make one wonder what in what alternative universe D'Innocenzio and the "analysts" she cited are living, as seen in these two subsequent paragraphs:
This season, Mother Nature appeared to provide an extra lift to online sales, analysts said. While unseasonably warm weather has hurt overall sales of cold-weather items, it appears to be driving more shopping to buy on their PCs or mobile phones since they don't want to waste a pleasant day inside a mall.
"Store traffic is down everywhere, and it's compounded by the weather," said Steven Barr, U.S. retail and consumer sector leader for PwC. "We do believe that warm weather is driving consumers online."
Seriously, they want us to believe that consumers are saying, "Aw, the weather is so swell that I would rather stay indoors and buy stuff online than go to the malls and enjoy the nice day." But online sales growth has also been disappointing so far, so the incurable optimists have nowhere to hide.
Meanwhile, D'Innocenzio insists that all is well, and there's nothing to worry about:
First Data doesn't make predictions for holiday sales. But the National Retail Federation, the nation's largest retail trade group, expects sales for November and December to rise 3.7 percent to $630.5 billion. There's still plenty of time for that estimate to come true: Christmas is a week away, and there are some of the biggest shopping days left.
The 2.4 percent overall increase D'Innocenzio cited earlier is also only two-thirds of the NRF's expectation, meaning that results are trailing expectations by one-third across-the-board.
It would appear that no one at the Associated Press, aka the Administration's Press, is allowed to say that the season is not going well. Because it isn't, and they won't admit it.
Cross-posted at BizzyBlog.com.
