“Overall self-reported consumer spending in stores, restaurants, gas stations, and online jumped to an average of $99 per day from Dec. 19-21, suggesting there could be a last-minute spending surge during the week before Christmas,” Gallup reports.

Prior to this week, Gallup found spending during recent weeks trailing that of a year ago. While spending did  jump  during the week ending Dec. 19, consumers’ self-reported outlays only matched those during the same week a year ago. In fact, even with what might be a last-minute spending spree, consumers’ December 2010 expenditures are not likely to greatly exceed the average spending last year the research agency adds.

Research firm comScore reports that the late activity of consumers who shop online also made a sharp move up recently. “The most recent week (week ending Dec. 19) reached $5.5 billion in spending, an increase of 14 percent versus the corresponding week last year,” the researcher says. “The final shopping weekend before Christmas reached $900 million in retail e-commerce spending, representing a strong 17-percent growth rate versus last year.”

*Corresponding days based on corresponding shopping days
(November 2 thru December 20, 2009)

Congress and the President may have given shoppers a boost. In doing so, the impact of the extension of Bush-era tax cuts is having its desired effect.  Many economists feared consumers would pocket the money that the benefits will give them, or use the cash to pay down credit card balances. Instead, some of the money is probably moving back into the economy before the tax benefits actually take place. That is certainly a sign of optimism, and perhaps the start of the resurgence of consumer spending that the economy needs for a full recovery.

It is still uncertain whether the consumer spending of the 2010 holidays will put Americans back into a credit hole which would slow their activity in early 2011. Whether that happens or not,  things are going fine for now.

Douglas A. McIntyre

The real news from the data, however, was that Facebook is on its way to becoming the No.1 site in the US based on unique visitors. The top spot is now held by Yahoo! (NASDAQ: YHOO). It had 181 million unique visitors for the period. That was followed by Google (NASDAQ: GOOG) at 179 million, and Microsoft (NASDAQ: MSFT) sites which had 176 million.

Facebook’s number, which put it in the No.4 spot, was 152 million unique visitors. That figure has grown at a rate of more than 25% for the last two years. That would bring it into the top spot sometime in the middle of next year.

Raw numbers do not mean much in the rankings. Google gets most money from its pageviews from search. Yahoo! gets a great deal of its money from display ads.

The growth in Facebook’s popularity has begun to give it a great deal more power, however. It currently services over 25% of all the online display ads in the US. Facebook charges less for these ads than its major competitors, which has driven down rates at sites like Yahoo! at a time when they can least afford it.

Online advertisers are tapping in to the power of social networks. The millions of people on Facebook can recommend products and services to their friends.  That means Facebooks’s influence in the e-commerce market will grow even stronger.

Facebook becoming the top website may do more to being down the revenue of other large Internet media companies than years of competition among themselves and the recession ever did.

Douglas A. McIntyre

ComScore, the online research trends company, predicts e-commerce sales for the year-end retail season will be up 14%. It has also seen a pick up in sales in the last several days.

One issue that has not been explained yet is whether these improvements are due to sharp discounts. That would greatly harm the margins of retailers, but consumer spending would be higher nonetheless.

Te holiday activity may undermine GDP growth in the first quarter. Consumer spending is still over two-thirds of American GDP. One of the reasons the economic slowdown has lasted so long is that fear about employment and high leverage have kept people from buying anything but essentials. Consumers have also made more effort to save. What may have once been spent on a credit card now is applied to pay credit card balances down.

The consumer may have become overextended again.  They have no access to home equity loans because of the housing crisis. Banks are much more careful about extending credit than they once were. People are still losing jobs, and the economy barely creates new ones.

The hope that the economy has improved and pent-up demand due to very slow holiday sales in 2008 and 2009 may be pushing shoppers back into stores. They have not had much of a Christmas the last two years. It may be time to be more generous with gifts.

The problem with the surge in shopping activity is that credit cars balances are likely to balloon again. That means consumers will be expected to make significant payments in the first quarter of 2011. The last two years may have been ones in which the consumer “deleveraged”, but outstanding American household debt is still near historic highs.

The optimism about 2011 may be well-placed. New tax programs will allow people to keep more money than they expected. But, that cash may be used simply to pay off what people have accumulated to have a good holiday. If so, the economy will hit another rough patch after the first of the year.

Douglas A. McIntyre

The company just posted revenues of $25.3 million, compared to its $25.0 to $25.3 million prior range and compared to First Call estimates of $25.18 million.  Its GAAP EPS was $0.42 at $12.7 million, but this included an income tax benefit of $8.1 million and included a $392,000 charge from its IPO.  Its non-GAAP earnings were were $0.21 based upon $6.4 million.  It had previously guided $6.2 to $6.5 million in non-GAAP earnings and First Call had estimates at $0.19 non-GAAP EPS.

comScore also noted that deferred revenue was $33.0 million and it added 58 new customers to total 895 customers.

ComScore is putting next quarter guidance at $0.10 to $0.11 non-GAAP EPS on $25.9 to $26.2 million in revenues, while First Call has estimates at $0.16 EPS on $25.3+ million in revenues.  comScore is also putting guidance for 2008 at $0.55 to $0.58 non-GAAP EPS on $112.2 to $113.2 million in annual revenues, while First Call has estimates at $0.79 non-GAAP EPS on $112.6 million in revenues.  We would note that this guidance for 2008 may be impacted by a deferred tax item.  We’d also note that the company noted it has a seasonally high burden in the first quarter due to payroll taxes and vacation accruals, and it even noted a ramp up in sales and technology groups.

Shares closed up over 6% today at $27.45.  But as the market is in a show-me mode, shares  are trading down 11% from its closing price at $24.40 in after-hours trading.  The 52-week trading range is $19.70 to $42.00.

Jon C. Ogg
February 7, 2008