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10 Clues About 2013 Holiday Spending

Tyler Durden's picture




 

From consumer and retailer surveys to quantitative data such as household spending and private jet bookings, ConvergEx's Nick Colas has amassed a collection of 10 clues about this year's holiday shopping season. On the plus side, disposable personal income and consumer spending on discretionary items are rising, and travel to Palm Beach via private jet is quite popular this Christmas season. However, consumer confidence surveys are particularly weak, and consumer debt has ballooned to a 5-year high. Roughly equal parts good and bad, Colas' collection of holiday spending indicators points to a mediocre (at best) 2013 shopping season (as we noted earlier).

Via ConvergEX's Nick Colas,

There are conflicting projections out there, so it's hard to know on which to rely, but when in doubt go with the National Federation of Retailers (NRF) gauge. They have the season pegged for a 3.9% positive comp to last year. While the NRF has been overly conservative in prior years, our indicators actually point to a weaker Holiday 2013: something closer to a 1-2% seems more realistic. Even a negative reading wouldn't be a surprise.

Note from Nick: Only 30 days until Christmas Day, and some of the most important for the U.S. economy. Today Beth goes through the key drivers of consumer spending to baseline how much holiday shoppers will spend versus last year. Bottom line: it may not be the 'Most wonderful time of the year.' Read on for the Top 10 reasons why...

So far the only person I've checked off my Christmas shopping list is my dog, Floyd. He's got a candy cane collar and a monogrammed blue whale collar for after the holidays coming his way. I always intend to finish my shopping by now - as I've gotten older I've grown to resent Black Friday and the holiday shopping crowds, an activity for which I used to giddily set a 3am alarm - but it never seems to happen. f you're in the same boat, here's an useful list of some top gift ideas for 2013 from a variety of retailers (just in case you need another gift guide):   

  • Amazon: Cards Against Humanity, Twisted Bandz Rainbow Loom, Kindle Fire HD 7"
  • The Discovery Store: 1-Rex Slippers, Shark Week bottle opener
  • Macy's: Starbucks gift box, Jean Paul Gaultier "LE MALE" cologne, Michael Kors Hamilton tote
  • Audubon Institute: Adoption of an animal, tour of the elephant barn
  • Toys "R" Us: Sofia the First Royal Talking Vanity, "Despicable Me 2" Minions, Flutterbye Flying Fairy

I'm not sure what most of these are, but thankfully Best Buy has some more traditional suggestions: the PS4, the Xbox One and the iPhone. For the first time in 11 years, Thanksgiving fall as late as the calendar possibly allows, reducing this year's holiday season by 6 full days - and retailers are clearly taking note. You can't use the internet at the moment without being bombarded by gift ideas and promotional announcements. Huge retailers such as Wal-Mart, K-Mart and Macy's are under fire for cutting into family time by opening on Thanksgiving Day just to extend the shopping season by a few more hours. And consumers are responding as expected: 23.5% (or 33 million) of those who plan on shopping during Thanksgiving weekend will hit the stores Thursday before the turkey is even off the table, according to a survey by the National Retail Federation (NRF).

So how much will they spend? The most crucial question isn't who or when or where, after all - it's how much. And to answer it, we've compiled a top 10 list of clues for 2013's holiday shopping season. From consumer and retailer surveys to quantitative data such as personal spending/income and household debt, our collection encompasses the economics behind this year's shopping season. Read on for the details.

1) Disposable personal income is on the rise. According to the Bureau of Economic Analysis (BEA), real disposable personal income increased 4.5% in the 3rd quarter from the prior period, for the biggest Q3 jump since 2006. This compares to gains of 1.7% and 3.9% in the quarter immediately preceding the holiday shopping season in 2012 and 2011, respectively. So consumers theoretically have more to spend, but are they spending it?

 

2) The answer is yes - spending is also up. The BEA's data on personal consumption expenditures shows that core expenditures (excluding the food and energy components) were 2.1% higher in Q3 2013 versus Q3 2012 and 4.6% greater in Q3 2013 compared with Q3 2011. More importantly for the holiday shopping season, spending on discretionary items such as recreational goods and vehicles (a category that includes video, audio, and photographic equipment; sporting goods; and information processing equipment and media) was up 10.5% versus 2012 and 22.9% versus 2011. Strong spending patterns during the quarter immediately prior to the Christmas shopping season certainly bodes well for holiday spending.

 

3) The latest retail sales figures also support the case for increased spending habits. We combined sales figures from the government's most recent retail sales report for all of the retailers from which people are likely to purchase discretionary gifts (clothing, sporting, book, music, hobby and department stores). The total came to $42.3 billion, which is a post-Fnandal Oisis recovery peak and 1.3% higher than the year-ago month, as well as 4.0% higher than in October 2011.

 

4) As for the 1%, it seems they're doing just fine too. Private jet travel bookings are up more than 70% for the November 2013 and December 2013 holiday travel season, according to Sentient It (a Directional Aviation G3pital firm). The most popular holiday vacation destinations include Palm Beach, FL; Aspen, OD; and New York, NY.

 

5) An NRF survey predicts that total holiday spending will be up 3.9% this year. Americans reported plans to spend an average of $737 on gifts this year, or a total of $602 billion. Something to note, however. This survey occurred in early October, before the psychological headwind that was the partial government shutdown. Caution aside, however, the NRF has underestimated holiday spending for the past two years. In 2011 it projected per person spending at $704, but the actual number result was much higher - $741. Last year was a little closer - $749.50 projected versus $752 actual. This year's estimate of $737 is likely a safe bet.

 

6) A separate, more recent, survey noted that Americans plan to trim their spending habits this year. Gallup's most recent poll from November shows that consumer intend to shell out an average of $704 on holiday presents, down from $786 in the October poll and $770 in the November 2012 poll. Even the "20 percent" seem to be affected by economic uncertainty: For those earnings more than $75,000 per year, the average gift budget is $1,035 versus $1,122 a year ago.

 

7) Another study concurs. Morgan Stanley anticipates this will be the worst holiday season since 2008, with total gift spending per person down 2.5% from last year to $537, marking the first forecasted per capita spending decline in five years. The research predicts total holiday sales to rise 1.6% versus last year and attributes the increase to a greater number of shoppers in 2013.

 

8) Meanwhile, consumer debt is at a 5-year high. The Federal Reserve Bank of New York reported that debt expanded 1.1% in the 3rd quarter to $11.28 trillion, the biggest quarterly jump since Q1 2008. Though this is below the peak of $12.68 trillion in the 3r1 quarter of 2008, it indicates that the near 5-year deleveraging pattern has perhaps come to an end. People are purchasing houses and cars in greater numbers, which runs the risk of crowding out spending on other items, such as gifts. Plus, additional debt isn't exactly a psychological "plus" for Christmas shopping.

 

9) Consumer confidence surveys support the notion of a psychologically-damaged consumer. The University of Michigan's consumer confidence index fell for a 4th consecutive month in November. Its current reading of 72.0 is well below the year-ago mark of 82.7, and its current expectations component stands at 62.3 versus the July peak of 76.5. Meanwhile, the Conference Board's consumer sentiment index currently stands at 71.2, compared with 72.2 in the year-ago month. f there is a bright spot here, it is gasoline prices. These can push confidence numbers higher or lower pretty quickly, and the trend is our friend on this count. Nationwide, gas prices currently average $3.24 versus $3.44 a year ago.

 

10) Lastly, the NRF projects seasonal hires to be roughly in line with 2012. A survey found that retailers plan to hire somewhere between 720,000 and 780,000 seasonal workers this year, compared with the incremental 720,500 hired last year (which was a 13% year-over-year increase from 2011). We'll call this our sole neutral indicator.

With five indicators on the positive side, four on the negative and one in the middle, we can't help but call for a lukewarm holiday shopping season. Logically, the length of the shopping season shouldn't have any effect on comps, but this year does have a 6-day disadvantage. The macro economy is still shaky, and heightened promotional activity among retailers is likely to harm the 203 gift-buying season. Hanukkah actually falls quite early this year, so perhaps sales next week will give some indication about the overall strength of this holiday shopping season.

 

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Mon, 11/25/2013 - 19:06 | 4189138 Flakmeister
Flakmeister's picture

Mindless consumption....to infinity!

Mon, 11/25/2013 - 20:50 | 4189362 WayBehind
WayBehind's picture

The economy is great. Gold, guns and ammo are flying off the shelves.

Mon, 11/25/2013 - 21:41 | 4189457 RafterManFMJ
RafterManFMJ's picture

I no one thing, mah baby need shoos!!

Tue, 11/26/2013 - 02:46 | 4189955 asteroids
asteroids's picture

Not for the 50 million of food stamps eh?

Mon, 11/25/2013 - 19:07 | 4189141 Rainman
Rainman's picture

Put it on the card until you credit score is zero ! I love Amurika !

Mon, 11/25/2013 - 19:08 | 4189145 I am Jobe
I am Jobe's picture

Pay fianance charge for something that costs 1.99, priceless. Amerika at it's best

Mon, 11/25/2013 - 20:01 | 4189252 Say What Again
Say What Again's picture

The thesis for this article is very bullish for SP500, RUT, etc.  The holiday spending will be mediocre, so the sales number will indicate a "slowing economy," which will lead to more QE -- perhaps even larger QE.  The QE dollars (from whatever Central Bank you watch) will pour into the primary dealers who will, in turn, pour it into the "market."

Q.E.D.

Mon, 11/25/2013 - 20:16 | 4189298 The Alarmist
The Alarmist's picture

IOW, the Ultra-rich get richer, and the rest of us become evermore indentured.  Not much interest in that, so cue the pics of cute furry seals (just before they are clubbed).

Mon, 11/25/2013 - 20:00 | 4189256 Skateboarder
Skateboarder's picture

I remember when I was little people felt embarrased to swipe their card for little purchases, i.e. you would get the stink eye. How the tides have turned.

Mon, 11/25/2013 - 20:05 | 4189278 bonin006
bonin006's picture

It used to take longer to pay with a credit card, now it takes longer to pay with cash.

Tue, 11/26/2013 - 00:07 | 4189749 Angus McHugepenis
Angus McHugepenis's picture

bonin006: WRONG. I use nothing but cash to pay for items I need. I have actually dropped stuff at the check out counter when I encounter the idiots who seem to be using their cards for the first time and can't remember their PIN number. It gets worse when they don't have sufficient funds to pay.

And the always memorable card payment systems crashing. I had about $300 worth of groceries in a cart and when the announcement came over the intercom that the card payment system was down, well, I had cash on me. The line up was incredible but do you think I'm going to butt into the line saying I've got cash and can pay right away? People were pissed and their cards were worthless. I left my $300 cart in an aisle and walked out, went to another store that wasn't so busy, and got what I needed... with cash!

Tue, 11/26/2013 - 00:56 | 4189821 Bro of the Sorr...
Bro of the Sorrowful Figure's picture

just wait until we get our implantable RFID chips. HOOOOOOOO-EY, we'll be able to pay faster than a bernanke hitting the enter button to create a trillion.

Mon, 11/25/2013 - 19:09 | 4189149 Zero Point
Zero Point's picture

Yes Rainman, just be sure and spend those cards on shit bought online from China to complete the picture.

Mon, 11/25/2013 - 19:23 | 4189176 Pure Evil
Pure Evil's picture

And pay finance charges on shipping to your door.

I'm proud to be a Merxican.

Mon, 11/25/2013 - 19:07 | 4189143 I am Jobe
I am Jobe's picture

I just finished my T Giving And Christman shopping

20 pound bag of Basmati Rice 

Done with shopping. 

Mon, 11/25/2013 - 19:09 | 4189148 1835jackson
1835jackson's picture

You can buy endless shit on credit or you can be debt free. I know which one I would rather have for Christmas.

Mon, 11/25/2013 - 19:15 | 4189161 MissCellany
MissCellany's picture

Um...

"1) Disposable personal income is on the rise."

...Say wha? Not for anyone I know. ('Course, they don't work for the gummint or its hangers-on.)

Seriously, when I saw this line, I had to check to see if this was a guest post from The Onion.

Mon, 11/25/2013 - 19:18 | 4189165 NOTaREALmerican
NOTaREALmerican's picture

Or a TBTF "institution".  

The top 10% is doing great, and as "disposable income" is an average of the winners and losers, it makes sense that it's going up.    All that QE loot has to go someplace.

Mon, 11/25/2013 - 19:25 | 4189180 NoDebt
NoDebt's picture

All the lowered healthcare premiums from Obamacare are unleashing a tidal wave of disposable income for millions across the country.  Or, more likely, they don't have a premium to pay anymore because they got cancelled.

Mon, 11/25/2013 - 20:44 | 4189353 MissCellany
MissCellany's picture

I love good snark.

Mon, 11/25/2013 - 19:23 | 4189177 Bobbyrib
Bobbyrib's picture

That's not from the Onion, that is actually either from our lying government, or our lying MSM.

Mon, 11/25/2013 - 19:52 | 4189244 Shizzmoney
Shizzmoney's picture

15-20% of this country is doing fine.  Which is why no one notices that it's already in the shitter, nvm being drowned in it

Mon, 11/25/2013 - 19:55 | 4189245 SDShack
SDShack's picture

I'm waiting to see that Disposable Personal Income data in 2014Q1, not 2013Q4. January is when the sheep get the credit card bills for the holiday purchases PLUS the 0zer0care sticker shock turns into Wallet Shock as the $100-$200 per month higher premiums kick in, along with their double higher copays and deductibles. Watch consumer discretionary income vanish in 2014Q1 and later as they are faced with the new reality.... Annnnd it's Gone!

Mon, 11/25/2013 - 19:16 | 4189162 NOTaREALmerican
NOTaREALmerican's picture

All that matters is the top 10% spend more.    The 20-10% people will strive to keep-up with their betters.   The bottom 80% are just food for the sociopaths.

Survival of the fittest, bitchez!

Mon, 11/25/2013 - 19:24 | 4189181 Bobbyrib
Bobbyrib's picture

"Survival of the fittest, bitchez!"

You mean survival of the best thieves.

Mon, 11/25/2013 - 19:34 | 4189200 NOTaREALmerican
NOTaREALmerican's picture

Re:  You mean survival of the best thieves.

Whatever it takes to win.   Morals are for the dumbasses,  duplicity is for the adults.

Mon, 11/25/2013 - 19:19 | 4189166 krispkritter
krispkritter's picture

On the 1st day of Christmas my true love gave to me, 1000 rounds of .223...

Mon, 11/25/2013 - 19:20 | 4189167 I am Jobe
I am Jobe's picture

Will have to wait and see how many spoilt brats will curse their parets for not having their shit IPHONE or XBOX crap. I say send them to FOXCONN to work for a year. 

Mon, 11/25/2013 - 19:21 | 4189174 NoDebt
NoDebt's picture

I'm giving everyone a lump of coal for Christmas AND the carbon tax on it.

Mon, 11/25/2013 - 19:37 | 4189186 krispkritter
krispkritter's picture

Barry? That you?  "Your Christmas costs will necessarily skyrocket..." 

Mon, 11/25/2013 - 19:24 | 4189179 Evil Bugeyes
Evil Bugeyes's picture

1) Disposable personal income is on the rise.

Thanks to the Affordable Care Act, many people have had their insurance policies cancelled. So they can now spend the money that they would have paid in premiums for Christmas gifts. Gifts like Glocks, bullets, and subscriptions to "Guns and Ammo" really help to capture the spirit of the holiday season!

Mon, 11/25/2013 - 19:25 | 4189187 buzzsaw99
buzzsaw99's picture

Never bet against the usa consumatrons.

Mon, 11/25/2013 - 19:33 | 4189199 Bobbyrib
Bobbyrib's picture

Companies will put expectations in the gutter, then their stock prices will skyrocket when they beat expectations.

Mon, 11/25/2013 - 19:42 | 4189207 JR
JR's picture

The true economic picture for the holiday season is clouded by the manipulation of government data and one wonders, for example, just how much of the holiday spending comes from Santa Obama and not from Joe Q.’s shrinking wallet.

Already, Daily Kos is complaining that the $36 cut to food stamp “supplemental” benefits for a family of four, which was $668 a month October 2012 through September 2013, is going to hurt  those “struggling to put healthy food on their tables” this Christmas.

Frankly, there’s no doubt there are going to be many people receiving government largesse this Christmas who don’t deserve welfare; and if you’re compassionate about people really in need , this should make you angry. It isn’t that people are cheating; it’s that the Administration cheats by handing out bribes to people who will vote for them.

In fact, it’s official that t axpayers are no longer simply helping the poor, they're subsidizing the lives of welfare recipients at a better rate than their own:

A Senate Budget Committee report shows that households below the poverty line receive welfare payments the equivalent of $61,320, tax free, while the median household wage for non-welfare recipients is $50,054, or $43,680 after taxes. Townhall.com has the story.

This wealth transfer is creating tremendous anger among people who are not receiving welfare but who are working on the edge to supply food and shelter for their own families. And this anger is unfortunate because it can lead to anger against people who really are hurting this Christmas.

Mon, 11/25/2013 - 19:47 | 4189232 Colonel Klink
Colonel Klink's picture

Just waiting for the actual numbers out of the holidays.

AND THE SURVEY SAYS?!

Mon, 11/25/2013 - 21:30 | 4189437 NoDebt
NoDebt's picture

Bad, but narrowly exceeding lowered expectations.  S&P rallies 50 handles from here.  Same as it's been for years now.

Mon, 11/25/2013 - 22:09 | 4189496 Colonel Klink
Colonel Klink's picture

I'm hoping for total collapse in spending.  We'll see how much debt people rack up living the high life.

Mon, 11/25/2013 - 20:03 | 4189272 Tenshin Headache
Tenshin Headache's picture

Traffic at the local national coffee chain franchise seems to have fallen sharply over the last couple of weeks. Perhaps people are saving their latte money for gifts?

Mon, 11/25/2013 - 21:06 | 4189391 Big Boss Man
Big Boss Man's picture

I don't believe that anyone over 16 deserves a gift for any reason.

Adults? Maybe a bottle of single malt, but I feel no pressure to give, 

no desire to receive. If I want it, I buy it, July or December.

My friend's 5 year old son, who has more toys than I had in a lifetime, got a fishing pole and some

flannel lined cammo bib overalls. 

The toys he got are already forgotten, the pants fit and it's just getting cold.

When Spring comes, we'll go fishing, maybe he'll like it.

Mon, 11/25/2013 - 22:40 | 4189561 Dave Thomas
Dave Thomas's picture

I actually look forward to a pair of socks and some underwear now.

Mon, 11/25/2013 - 21:34 | 4189446 Iam_Silverman
Iam_Silverman's picture

From this weeks Barron's:

"The U.S. economy might be limping along, but many consumers have broken into a sprint.  That bodes well for holiday sales, and could spell nice gains for retail shares, particularly some that have lagged behind the group's powerful rally this year."

The article goes on to mention the better than expected sales in October (wow 0.4% rise - to the moon!) and mentions that the National Retail Federation is forecasting a 3.9% gain on this years holiday sales season - despite a shorter overall window for seasonal shopping.

What planet do they live on?  The local TV news ran a segment tonight showing a line SEVEN BLOCKS LONG for a food bank in Dallas.  They ran out of turkey and then ham before resorting to ground beef and other "replacement" proteins, so I guess net inflation would be zero as calculated by the FedGov...

Mon, 11/25/2013 - 22:16 | 4189511 Colonel Klink
Colonel Klink's picture

It's ok.  I've heard they're going to be serving left over iPads.

Tue, 11/26/2013 - 00:17 | 4189765 CharmaChameleon
CharmaChameleon's picture

Six Hundred Two Billion$$ to be spent by Americans this year, at an average of $737 each?

Can anyone on here do arithmetic? Or use a calculator (I guarantee your computer has one right there)?

So there are Eight Hundred Million plus change Americans?

Bull, and the rest of it.

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