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Credit Card Data Reveals First Holiday Spending Decline Since The Recession

Tyler Durden's picture




 

It's official: the start to the holiday shopping has been a disaster, and it's not simply due to a shift to online spending.

Perhaps online stores are doing better than last year (we will find out soon how much of those soaring sales are at the expense of plunging margins during the Q4 earnings, or lack thereof, season) due to a migration of dollars spent from brick and mortar outlets online, but the easiest way to eliminate the confusion and find out how much spending is really going on, is to simply follow not the use of funds, but the source which these days means credit card spending.

Conveniently, there is a way to do just that courtesy of Bank of America's aggregated card spending data.

Even more conveniently, earlier today BofA released its latest card data holiday sales tracker. It is not pretty.

According to BofA, in order to keep tabs of Thanksgiving holiday spending, it is particularly useful to track BAC aggregated credit and debit card spending during the period from Black Friday to Cyber Monday to get an early read on consumer behavior.

However, it adds that simply examining sales during the Black Friday weekend is an incomplete way to gauge holiday traffic given the earlier start to promotions and the ease of shopping online.

The bank has therefore redefined its early holiday sales proxy from the BAC aggregated card data to “core control” (retail sales ex-food services, autos, gasoline stations and building materials) for the three weeks ending on Black Friday. Based on this definition, the bank finds that early holiday sales were down 1.2% from last year, the first decline since the recession.

Even Bank of America is at a loss how to sugarcoat this result: "while this is clearly a disappointing result, we suggest some caution. Most importantly, the BAC proxy of early holiday sales is not a perfect gauge. In particular, last year, the early BAC data showed an increase of only 1.4% yoy, while actual holiday sales were up 3.8% due to a big push right before the holidays."

Well, if this year the annual comps are solidly negative then applying the same delta, it would mean that the "seasonally adjusted" retail sales data will be about 1.2%, a 70% drop from last year. Not sure how one can spin that.

Where it gets even more confusing is that as BofA itself demonstrates, if only looking at the "consumer statistics" spending this holiday season should be through the roof, with higher earnings, lower unemployment, a higher savings rate, higher consumer sentiment and, most importantly, oil prices which are 25% lower.  Unless, of course, either the government's data is completely fabricated, or there is some unmentioned tax (coughobamacarecough) which is leading to a collapse in consumer spending.

The bottom line, as BofA grudgingly admits, is that "the BAC aggregated card data suggest a weak start to the holiday shopping season"... but don't despair "there is still time to see improvement as promotions keep rolling in."

We won't hold our breath.

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Wed, 12/02/2015 - 16:32 | 6867315 Rainman
Rainman's picture

Sorry, Mr. Retailer, ObamaScare fukked you too !!

Wed, 12/02/2015 - 16:51 | 6867417 EnglishMajor
EnglishMajor's picture

Hope and Charge, bitchez!

Wed, 12/02/2015 - 18:08 | 6867886 Upswaller
Upswaller's picture

Obamacare.  "Disposable Income" anyone?  When's the last time we heard that phrase bandied about?

Wed, 12/02/2015 - 18:44 | 6868058 inhibi
inhibi's picture

Like circa 1999.

 

As for that last chart, i call bullshit on every metric.

Wed, 12/02/2015 - 18:49 | 6868096 JRobby
JRobby's picture

They kicked the can for 8 years. The sheep believed the lies. They wanted to with all their might.

Now for the real crash, suspended since 2008.

The horror

The horror

It will be like being beaten in the face with a club with nails sticking out of it. Bloody, brutal and for most, final.

Wed, 12/02/2015 - 19:07 | 6868193 philipat
philipat's picture

To repeat, it isn't rocket science. The US economy comprises 70%+ consumption and so to grow requires increased consumption. That isn't goung to happen with declining real net disposable income with huge increases in major costs such as healthcare and education.

Seeems like the perfect time to increase rates.

Wed, 12/02/2015 - 17:09 | 6867539 Squid Viscous
Squid Viscous's picture

ahh the "holidays" what a Jew term... amazing mass brainwashing

Wed, 12/02/2015 - 18:15 | 6867924 BullyBearish
BullyBearish's picture

I'm too afraid to do ANY shopping, even online or go to any events or pretty much spend any money whatsoever...good thing I took all my money out of the bank, closed my credit cards and paid off my mortgage...just in case

Wed, 12/02/2015 - 16:33 | 6867316 LawsofPhysics
LawsofPhysics's picture

Speaking of credit cards, what are the average interest rates on those bank cards...

banks still getting free fucking money and yet they still cannot figure out how to be profitable...

interesting times...

 

Wed, 12/02/2015 - 16:42 | 6867373 Onan_the_Barbarian
Onan_the_Barbarian's picture

No, it's just that everyone is now using cash.  Or Bitcoin.  Would you believe Paypal?

Wed, 12/02/2015 - 16:45 | 6867381 Francis Marx
Francis Marx's picture

O-bomba care has really destroyed christmas

Wed, 12/02/2015 - 16:46 | 6867395 besnook
besnook's picture

i am getting the feeling a lot of americans are a bit tired of the whole christmas thing. what is interesting is the frugality that the depression generation was famous for is afflicting the great recession generation with the same disease. the central bankers have no cure for it and will never acknowledge they killed the golden goose.

Fri, 12/25/2015 - 14:30 | 6963277 lasvegaspersona
lasvegaspersona's picture

ummm...where I come from frugality is a virtue  not a disease...Waste not want not....penny saved is a penny earned....a stitch, in time, saves nine...

Yes it does decrease over all economic activity but that should not be a problem. The fact that it is tells us about a big problem in our matrix...

Wed, 12/02/2015 - 16:49 | 6867406 BlindMonkey
BlindMonkey's picture

When are we going to get to that 'cash buyer is king' point?  I have a hot $1000 and I am looking to bargain!!  

Wed, 12/02/2015 - 20:32 | 6868578 Winston Churchill
Winston Churchill's picture

I just found  $10 k in small denominations, in my sock drawrer.

I'd completey forgotten putting it there after the Cyprus bail in.

I may move it to my underpants drawer for Xmas as a special treat.

Bah humbug.

Wed, 12/02/2015 - 16:59 | 6867472 ussa
ussa's picture

Healthcare breaking the economy....?

Wed, 12/02/2015 - 17:27 | 6867670 White Mountains
White Mountains's picture

Yep.  I know alot of people who are now paying health care premiums and deductibles that have caused them to be right on the edge financially.

Thank you, Obama.  I know your goal is to destroy America. 

Fri, 12/25/2015 - 14:36 | 6963286 lasvegaspersona
lasvegaspersona's picture

America was a wreck long before Obama came on the scene.

It is ironic that so many here understand the huge financial problems the entire world faces yet are surprised when those problems manifest in some observable way.

We knew health care costs were killing the economy. When a system was created to get more of those costs paid by users, only then do we all see how bad it really was. Then all the medical scams and corruption beome visible. When someone else was paying for them we did not even want to look at the problems.

Come on. ZH understands things are really bad. We disagree on the causes and solutions but I know every looney tick here at least knows we are on the verge of societal collapse due to problems in the monetary system. Try not to act too surprised when the things you believe start coming into reality.

Wed, 12/02/2015 - 17:26 | 6867661 White Mountains
White Mountains's picture

It's even worse than the credit card data shows - alot of these Christmas presents are going to be returned (via "free" return shipping) in exchange for cash by people who are living paycheck to paycheck.  This merchandise will be put back on the rack in stores that are already overstuffed with inventory.

Wed, 12/02/2015 - 17:33 | 6867707 Niall Of The Ni...
Niall Of The Nine Hostages's picture

Anybody else notice that the Census Bureau's growth for holiday sales have grown faster than BoA's every year in their sample period but one?

I detect some doube-triple seasonal adjustment going on in the Census data. Controlling for Kondratiev cycles or something.

Wed, 12/02/2015 - 17:40 | 6867751 PoasterToaster
PoasterToaster's picture

This is clearly the result of evil deflation.

Wed, 12/02/2015 - 17:40 | 6867755 Phillyguy
Phillyguy's picture

Current state of US economy

1. > 90% of “new” jobs are temp positions- read low pay, no benefits, no job security.

2. Unemployment is likely much higher than statistics from the Labor Department; the real unemployment rate > 20%; see: www.paulcraigroberts.org/2015/11/06/another-phony-payroll-jobs-number-pa...

3. Cost of rent and health care have gone up, taking more purchasing power out of the pockets of people with those great new temp jobs.

4. Insolvent banks, inflated assets- stocks and trendy real estate and car sales (subprime auto loans) have been held up with FEDs QE program, which has given Wall St banks $ trillions (supplied by taxpayers) at zero interest rates.

5. The average consumer is maxed out paying for rent, food, cable TV bill, cell phone bill, medical insurance, car and credit card payments.

6. Around 25% of Americans have no savings. Links: www.zerohedge.com/news/2015-10-21/just-10-youre-wealthier-25-americans; www.usatoday.com/story/money/personalfinance/2015/03/31/millions-of-americans-have-no-money-saved/70680904/

 

Given these realities, how much remaining purchasing power does the average working person have to spend on holiday gifts?

Wed, 12/02/2015 - 18:03 | 6867867 Barrack Chavez
Barrack Chavez's picture

Quantitative easing and zero interest rates...

MISSION ACCOMPLISHED

Wed, 12/02/2015 - 18:25 | 6867972 bigkahuna
bigkahuna's picture

This credit card data will be ignored as soon as rosy scenario releases her stats. Rosy's data will be what is traded by the algos.

Wed, 12/02/2015 - 19:04 | 6868180 Dragon HAwk
Dragon HAwk's picture

The Rate of Increase Has Declined.... OMG

 is that the opposite of the Plane is crashing Less Slowly

Wait till the Terrists start shooting up the Malls one week before Christmas. ( God Forbid ) no Sarc

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