THE holiday shopping season started early, and with a roar. Whether that will help the sagging economy is another matter.
“Spending may well be strong, and that could help us get through another Christmas,” said William R. Emmons, an economist at the Federal Reserve Bank of St. Louis. “But the economy is unbalanced and we’re still in an enormous crisis.”
So, despite the early crowds at shopping malls, it’s worth noting that much of the consumption is being financed indirectly — through the expansive monetary policies of the Fed, and through deficit spending that has created an enormous budget gap. “At some point, we can’t go on like this,” Mr. Emmons said.
For now, the nation’s retailers are doing their best to infuse the holidays with the spirit of consuming. “Door-busting” bargains began on Thanksgiving Day instead of on Black Friday, as had been the custom. Online discounts started weeks ago, and Cyber Monday, formerly a one-day event, is morphing into a consumption extravaganza unbound by space or time.
“We’re keeping the Cyber Monday party going all week long,” Amazon.com said on its site on Thursday afternoon. Walmart declared that its site was “the only place to go” for Cyber Week. “Shop now while supplies last,” it said. And Target offered rapture: “Get online-only deals all week. Oh joy!”
Over all, the efforts have yielded a mixed harvest. Some reports suggest that the early shopping has been robust, if not extraordinary. A survey for the National Retail Federation found that 247 million people did some shopping in the four days starting on Thanksgiving, up 9.2 percent from last year. Total spending reached $59.1 billion, up nearly 13 percent.
But a report on Thursday showed that overall sales at 16 retailers — including chains like Macy’s, Nordstrom, Kohl’s and Target — increased only 1.6 percent in November for stores open at least a year. Those figures included early holiday sales.
Furthermore, the financial crisis, the recession and the anemic recovery have constrained the appetites of many voracious consumers.
“History shows that people only have so much money to spend during the holidays,” said Paul Dales, an economist at Capital Economics, a private forecasting group. “And if they spend more of it on Black Friday, they’ll probably spend less of it later in the season.”
In other words, while the hoopla of early sales may offer hints about the competitive advantages of specific retailers — Amazon.com or Walmart, for example — it may not mean much about consumer spending as a whole.
Real income is stagnating, and consumer spending dropped 0.2 percent in October, the Commerce Department reported on Friday. Even so, consumer spending accounts for 70.6 percent of gross domestic product, Mr. Emmons said — a higher proportion than before the recession. That suggests a predicament for policy makers, he said, because high levels of consumer spending are associated with a relatively low pace of economic growth.
The economy needs more exports and investment, and less consumer spending, he said. “We really could use a consumption tax to help increase household saving,” he said. But with the economy as weak as it is, he acknowledged, such a tax would not be very popular in Washington.
Consumption during the holidays should be curbed for ecological, cultural and ethical reasons, said Kalle Lasn, co-founder of the Adbusters Media Foundation. He advocates transforming Black Friday into Buy Nothing Day — “a day to return to the roots of the holiday, to the frugality — to living lightly — which is really the essence of Christianity and of all great religions.” Mr. Lasn, who helped start the Occupy Wall Street movement, called overconsumption a cause of climate change and other ills. “It needs to stop,” he said, “before we destroy this planet.”
But efforts to curb consumer spending, especially in the holiday season, may run counter to deep habits and traditions. American holidays have been defined by an uneasy alliance among business, religion and politics, said Leigh Eric Schmidt, author of “Consumer Rites: The Buying and Selling of American Holidays.”
“Commerce and religion and patriotism are all part of what we have come to know as the holidays,” said Mr. Schmidt, a professor of humanities at Washington University in St. Louis.
“Consumption during the holiday season has come to have a kind of patriotic quality in the United States,” he said. In fact, extending the holiday season, and exhorting people to spend, has sometimes been a matter of public policy.
IN 1939, during the Great Depression, President Franklin D. Roosevelt called Thanksgiving “a perfectly movable feast” — and he moved up the holiday by one week, from its traditional date on the last Thursday of November. He thus proclaimed that Thanksgiving would be on Nov. 23 that year, not Nov. 30.
His agenda was transparent. The economy needed help. As an experiment, he said, he would try to give retailers a boost by extending the holiday season. But public opinion was no more unified then than it is now, and his policy was not universally welcomed.
The New York Times of Aug. 15, 1939, captured the mood: “Roosevelt to Move Thanksgiving; Retailers for It, Plymouth Is Not. Football Schedule Makers Also Get a Headache, With Season Set to End With Fifth Thursday in November.”
The president’s home state, New York, went along with the change, but Connecticut was among many that didn’t. Families were divided. Eleanor Lucy Blydenburgh, a student at the Pratt Institute in Brooklyn, said that while her school holiday would be Nov. 23, her parents would celebrate on Nov. 30. “Really, this situation makes my heart ache,” she wrote the president, in a letter held by the Franklin D. Roosevelt Presidential Library.
What’s more, as Roosevelt ruefully acknowledged in 1941, the extra days didn’t stimulate the economy. There was no net increase in sales. “The experiment had not worked,” The Times reported in May 1941. People shifted their shopping days but didn’t buy more.
Congress resolved the issue in time for Thanksgiving in 1942. It legislated that the holiday would henceforth be on November’s fourth Thursday, which isn’t always the last one.
That’s why Thanksgiving this year was on Nov. 22, not last Thursday. So, once again, there are extra shopping days, as well as endless consumption opportunities online — and reason to doubt that they will mean much for the economy.
Article source: http://www.nytimes.com/2012/12/02/your-money/a-holiday-shopping-stampede-but-maybe-no-economic-jolt.html?partner=rss&emc=rss