Futures Outlook - An Excerpt from CRB'S Futures Market Service
Retailers nervously await the official beginning of the holiday shopping season
Retailers and the markets are nervously awaiting the U.S. holiday shopping season, which traditionally starts with Black Friday, the day after Thanksgiving. Black Friday usually has the most foot traffic in stores, but the heaviest shopping day in terms of sales volume is usually the Saturday before Christmas. The markets will also be watching sales volume this coming Monday on Cyber Monday, which is the unofficial kick-off of the online shopping season.
A lackluster holiday shopping season appears likely this year. Shoppers so far in 2009 have focused on finding bargains and shopping in discount stores such as Wal-Mart and that trend is likely to continue through the holiday season. The U.S. recession may be officially over in terms of the economic statistics,but many U.S. consumers are in worse shape now than they were earlier this year when the economy hit bottom. The U.S. unemployment rate in October rose to a 26-year high of 10.2%, which is only 0.6 points below the post-war record high of 10.8% posted in 1982. Home prices have stabilized but they are still sharply below peak levels, which means that consumers have considerably less wealth than they had before the housing crisis. Moreover, First American CoreLogic reported earlier this week than one in four homeowners is now underwater on their mortgage, which means one in four homeowners can’t borrow any more money on their home and can’t even sell the house without producing the difference in cash or defaulting on the mortgage in a short sale. Credit card defaults are running near record highs and the majority of shoppers are not going to want to run up their credit cards any higher during the holiday shopping season. US real household wealth is down 19.3% from the Q2-2007 peak.
The sour consumer situation suggests a poor holiday shopping season that will do little to help along the nascent U.S. economic recovery. Holiday sales this year can certainly beat last year’s sales, which occurred in the midst of the worst banking crisis since the Great Depression. However, the International Council of Shopping Centers is predicting a holiday shopping sales increase of only 1-2% over last year, which is not particularly impressive given that sales last year fell by about 5%, causing an easy-to-beat year-earlier base.
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