FROM ‘HO-HO’ TO ‘UH-OH’ TO ‘OH-NO’…. I remember about a year ago, during one of the debates for the Republican presidential candidates, Mike Huckabee was defending the notion of replacing the income tax with a national sales tax. Asked whether that might discourage consumption, Huckabee told Fox News’ Chris Wallace, “Chris, you know Americans better than that. Nothing’s going to discourage them from spending money.” At the time, the audience found that hilarious.
We now know, of course, that something can discourage Americans from spending money: an economic crisis and deep recession.
A decrease in holiday shopping was widely expected this year, and retailers knew the season was going to be rough. But the Wall Street Journal reports that sales were “much worse than the already-dire picture painted by industry forecasts.”
[C]onsidering individual sectors, “This will go down as the one of the worst holiday sales seasons on record,” said Mary Delk, a director in the retail practice at consulting firm Deloitte LLP. “Retailers went from ‘Ho-ho’ to ‘Uh-oh’ to ‘Oh-no.'”
The holiday retail-sales decline was much worse than the already-dire picture painted by industry forecasts, which had predicted sales ranging from a 1% drop to a more optimistic increase of 2.2%.
The prediction of a 1% drop wasn’t close. Excluding car sales and gasoline, which would otherwise make the numbers look even worse, retail sales dropped 2.5% in November, and 4% through Christmas Eve in December. Widespread bankruptcies among retailers in the new year are likely.
Even the rich aren’t spending: “Luxury goods, once considered immune from economic turmoil, were hardest hit, with sales falling 21.2%, compared with a jump of 7.5% a year ago, when the economy had just begun to sputter. Including jewelry sales, the luxury sector plunged by a whopping 34.5%.”
Online shopping did better than every other sector of the retail landscape, but it still slipped 2%. Last year, online sales posted a 22.4% gain in the period.
In other words, there was no good news.