Why I'm Bullish on Retail Sales
Someone asked me how I can believe Holiday sales increases can be in the 3 to 4% range when I don't buy the NRF data. The answer is twofold -- I am interested in correcting their horrific statistical error, and returning expectations back to baseline (rather than saying Xmas will be lousy this year).
But the main reason for this respectable increase over last year's robust 6% gains is this chart from Econbrowser:
click for larger chart
courtesy of Econbrowser
Gasoline at $3.10 is fatal to low and middle income consumer spending; Now lower that by 30%. You cannot be too Bearish on the holiday shopping revenue numbers with this decrease in consumer energy costs.
As to retail margins amidst all the discounting -- thats a different story, one that's too early to predict on December 1.
UPDATE December 1, 2005 10:28 am
Jeff Macke of Macke Asset Management published on Minyanville the following roundup of same store sales performance in November; There ain't a whole lot of firms reporting gains north of 22%:
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The drop in gas prices is most welcome, But what about the rise in Heating Oil and Natural Gas prices ?
It could well be a damping factor for late Christmas shoppers in the northern half of the country as winter settles in.
Posted by: Patrick (G) | Dec 1, 2005 1:06:29 PM
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