Breakout

Sponsored by

Are Consumers Wobbling or Just Waiting for Deals?

Breakout

Like a hard holiday snowball to the face, the Wall Street Journal kicks off the new week with a top headline that pours cold water all over Christmas. "Consumer Spending Wobbles" blares the headline, an homage to Friday's weaker than expected consumer sentiment reading, as well as the generally high (albeit improving) level of unemployment, and of course, the impact of the Cliff Who Stole Christmas based on the tax-and-spend impasse in Washington.

While factually correct, there are a few questionable issues raised, particularly how the story makes the leap from consumer confidence to consumer spending.

"It's balderdash," says my co-host Jeff Macke in the attached video, adding "it's this annual game of chicken we play on the consumer side, that for 2,011 consecutive Christmases the retailers have been worried that things just aren't going to be as good as last year."

Even financial websites, such as briefing.com downplay the correlation between how we feel and how we spend, noting that "consumer confidence has little influence on consumption, as long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady."

And yet, the coverage of the economy and ongoing fiscal cliff negotiations is everywhere and bound to impact some people. Even though many observers still expect an 11th hour deal to be struck in the final days before Christmas, the resulting ''good news'' would be a month too late, leaving no real room for a relief rally to take hold.

So while we take exception with the premise of the WSJ's story, we are also aware of the facts and don't want our relative optimism to be misconstrued as a call for a booming holiday season. As Macke predicts, sales will come in a lot like last year. "Gang busters? No. But, okay and on the happy or negative side of 1%? Yeah."

View Comments