Christmas Tree Sales, A Leading Economic Indicator, Are Strong

The theory seems plausible. People who can afford to pay $20, $40, or $100 for a tree also probably are buying some ornaments and other decorations. More important, they probably are buying gifts to put under their tree.

According to The Wall Street Journal, “Christmas tree sellers surveyed by ISI Group, a New York research firm, said sales the weekend after Thanksgiving were up 6% from a year earlier, and that the following weekend they were up 3%.” Those sales would be a little bit better than most estimates of e-commerce sales growth from online research firms like comScore and better than most estimates of bricks-and-mortar store activity.

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Government figures on retail sales for November released by the Commerce Department were unexpectedly strong, posting a 1.3% increase over the same month last year. That cheered the market on to a rally on Friday the 11th. The seasonally adjusted November increase put total sales at $352.1 billion  for the period. Analysts had expected the number to be flat.

After a period of pessimism due to weak retail numbers for Black Friday and early December, economists and retail analysts are becoming more optimistic about how the entire season will turn out. Part of that may be due to the expectation that people are shopping closer to the end of the year because of nervousness about the economy. Part may be due to the expectation that retailers will make further cuts in prices to bring in customers in the week before Christmas and will use low pricing to clear out inventory that is not likely to be sold after New Years.

Christmas tree sales as a leading indicator of holiday sales. Who would have expected it?

Douglas A. McIntyre

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