Justin Sullivan
The dash for Christmas gifts and Boxing Day bargains saw Americans spend more than expected in December, some major U.S. retailers say. But economists caution the news isn't necessarily a sign the once-shopaholic U.S. consumer is back to revive the economy.
"The fundamental question is, is this a sign that there's more life in the consumer than we thought? … Or did the American consumer enjoy a holiday and is now going to hibernate for the winter?" Ken Goldstein, an economist with the Conference Board in New York, said in a phone interview. "And the answer is: It's going to be one or the other."
Major U.S. retailers, including department-store giant Macy's Inc. and Limited Brands Inc. - owner of lingerie-seller Victoria's Secret - now say they expect higher earnings in the fourth quarter. The more hopeful forecasts came as many retailers in the U.S. tallied up increased, or at least better-than-expected, sales numbers in December.
Meanwhile, in a trend some analysts call "frugality fatigue," affluent consumers tired of penny-pinching boosted the sales of high-end retailers such as Nordstrom Inc. and Saks Inc. , which reported a 9.9 per cent increase sales over 2008.
Suggesting that even in a recession there are some things well-heeled female customers cannot go without, Neiman Marcus, which touts the Gucci Icon Bit Medium Hobo handbag on its website for $950 (U.S.), reported that its purses were strong sellers, as did rival Saks.
But major discounters did better as well, with Costco Wholesale Corp. reporting a 9 per cent sales increase.
Over all, according to sales numbers from 30 top U.S. retailers tracked by Thomson Reuters Data, 71 per cent reported better-than expected sales for stores open more than a year, sending December sales up 2.9 per cent, higher than the 2 per cent increase Wall Street had expected.
The Conference Board's Mr. Goldstein said U.S. job numbers to be released Friday will shed more light on the economic situation. If they are better than expected, it will back up the theory that Americans may have some money to spend. If not, then U.S. retailers could be in for a long winter.
"I think we're going to see more hibernation than an up-trend," Mr. Goldstein said. "But my final point is: I hope I'm wrong."
Paul Dales, who watches the U.S. economy for Capital Economics research consultancy in Toronto, cautioned against reading too much into holiday sales numbers that beat expectations.
"The thing that you probably need to consider is that expectations have been pretty low," Mr. Dales said. "If you compare retail sales, the performance this season to last season, it's obviously going to be much better because last year was a complete disaster."
Indeed, according the International Council of Shopping Centres, same-store sales for all of 2009 were the worst on record, down 2 per cent. It predicts flat or 1 per cent sales this month, but a full-year increase of 3 per cent to 3.5 per cent by the end of 2010.
Macy's, considered the sector's bellwether, saw its December sales rise 1 per cent, slight better than what analysts had expected. Industry observers say the moves to increase quarterly earnings forecasts suggest retailers were careful not to overstock their shelves this year, avoiding the steep discounting panic that set in for 2008's holiday shopping season.
Jeff Gray