Late Holiday Sales Surge, Perhaps On Bush Tax Cut Extension

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It is official now, or as official as anything gets. The last week of the holiday shopping season salvaged what might have been mediocre results and turned them into something just short of spectacular. It may be that people have decided to open their wallets because 2011’s tax burden will be less than expected

“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.”

2010 Holiday Season To Date vs. Corresponding Days* in 2009
Non-Travel (Retail) Spending
Excludes Auctions and Large Corporate Purchases
Total U.S. – Home/Work/University Locations
Source: comScore, Inc.
 

Millions ($)
2009 2010 Percent Change
November 1 – December 19 $25,270 $28,360 12%
Thanksgiving Day (Nov. 25) $318 $407 28%
Black Friday (Nov. 26) $595 $648 9%
Cyber Monday (Nov. 29) $887 $1,028 16%
Green Monday (Dec. 13) $854 $954 12%
Free Shipping Day (Dec. 17) $586 $942 61%
Final Shopping Weekend (Dec. 18-19) $767 $900 17%
Week Ending Dec. 19 (Dec. 13-19) $4,803 $5,499 14%

*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