Holiday Season Sales

As all know, sales for the holiday season are avidly watched
by many. Business and investment people enjoy debating the
prospects for the season when it comes to hand, and this time
will be no different, especially since the Fed's FOMC is to
meet on monetary policy on 12/11.

The fundamentals are far more somber this year than last.
Yr/yr, employment is up only 0.5% and the real wage is up by
only 0.5% as well. That yields a base case for a 1.0% gain
in sales before inflation and maybe 4.0% in current $ terms.
But beyond that, it is hard to say how consumers will do at
the register. From my perspective, much depends upon whether
there's an interesting cross-section of newer stuff to buy and
also the weather will play an important role. A good cold snap
with some snow around the US can do wonders at the malls as
folks stock up on easy stuff -- hats, gloves, boots, coats etc.
Another interesting issue is how tough it is to stick to
a modest budget. That requires shoppers have a plan and that
they carry it through with ruthless precision. If you head out
to shop with a vague idea of cutting back, you may find yourself
in trouble when Christmas Eve comes, and the same old large
pile of goodies is under the tree. Debate the outlook if you
wish, but do not fail to miss the magic of the season, for
magic it is.