The holiday season rates are set to disappoint, as per shipping analysis. Furthermore, the economy is more dire than the majority’s perception. Refrain from early sales, or better yet, refuse to engage in extravagant Christmas celebrations.Thank you for reading this post, don't forget to subscribe!
The holiday sales prospects for this year, as analyzed partly on imports and rail traffic, are elucidated well in The Wall Street Journal.
Kindly take into account five economic indicators that validate your prudence in delaying your holiday purchases this year
Early indications – from the volume of shipments loaded onto railway cars to the escalating consumer debt – indicate a weaker holiday season compared to the past three years. During those years, demand was boosted due to the worst of the pandemic, which enhanced shoppers’ spending.
“This holiday season will hinge on last-minute and substantial bargains,” Chris Cox, CEO of Hasbro, the toy manufacturer behind popular products such as My Little Pony, Nerf Blasters, and Transformers, disclosed to analysts recently.
The National Retail Federation anticipates an overall sales growth to be on par with the decreasing pace observed in the decade before the pandemic, from 2010 to 2019, when the average annual growth over that period stood at 3.6%. It anticipates spending in November and December, excluding inflation, to increase by 3% to 4%. In contrast, sales witnessed growth of 5.4% in 2022, 12.7% in 2021, and 9.1% in 2020.
Some are even less optimistic. Certain economic and company projections foresee almost zero growth in holiday spending this year, particularly when adjusting for inflation. Consulting firm Bain foresees that inflation-adjusted retail sales for both stores and e-commerce will only increase by 1% in November and December, marking the slowest pace since the 2008 financial crisis holidays.
Jordan Voloshin, CEO of the high-end chain of kitchenware stores Sur la Table, foresees more discounts for shoppers as Christmas approaches. “October was highly lackluster,” he remarked. He anticipates that sales will be centered around a few major discount days such as Black Friday and the Saturday before Christmas.
Many businesses are strategizing for the holiday season by reducing their imports. According to the Census Bureau, imports of televisions and computer monitors, footwear, and toys – encompassing games and sports equipment – dropped by 20% or more in the nine months through September, in comparison to the same period from the previous year. Bicycle imports experienced a decline of 41%, while smartphone imports dipped by 16%.
The railroad’s burden seems lighter
Rail operators have reported a reduction in cargo from ports for overland transportation. United Parcel Service and FedEx also reported diminished revenues this year as consumers allocated more of their spending towards travel and services rather than goods. Executives at FedEx mentioned in a recent earnings call that they expect domestic parcel volume to decrease by 25% this year, which is lower than their previous estimation.
The decline in imports demonstrates a return of trade to pre-pandemic levels after the escalated purchases in 2021 and 2022.
- Railroads and imports appear subdued
- The warehouse shelves are still stocked
- Diminished job opportunities during the holidays
- Financial shortage for consumers
- Time available for deal seekers
Christmas falls on a Monday, providing a last-minute shopping weekend for belated gift buyers.
Scarce job opportunities over the holidays
WSJ’s third point captured my attention. I devised the following chart to confirm.
The three holiday-related categories are retail trade, business and professional services, and trucking/shipping
Regrettably, BLS does not have a separate category for trucking or shipping. It does, however, have a category for storage, albeit combined with utilities for some inexplicable reason. Hence, I disregarded it due to this inconsistency.
The current count of job openings in the retail business stands at 674,000. This indicates a decrease of 81,000 from the pre-pandemic total of 755,000.
Abundance of job opportunities
If you are seeking employment in eateries, hotel cleaning, or elderly and sick care, you are in luck.
On November 8, I addressed the financial strain caused by the surge in credit card delinquencies, with consumer debt surpassing $17 trillion.
“The sustained surge in credit card delinquency rates is widespread, varying based on income and industry, and is particularly pronounced among millennials and individuals with auto or student loans,” stated Donghoon Lee, an economic research advisor at the New York Fed.
Bonus Reason #6 Poor Sentiment
In spite of reports regarding the economy performing exceptionally well, American sentiment is unfavorable.
For further discussion, please refer to Why are Americans in such a bad mood? Biden blames the media
Is this a sixth reason or will individuals struggling to afford rent and meals embark on a significant shopping spree? We are about to discover.