Wednesday, December 26, 2007

A simpler explanation for a weak Christmas season

As Libby noted earlier, the retailers who did well in the past month are those who catered to the short head of the American income distribution as that group has received the vast majority of the wage and income gains in the past couple of years:
Who did well?Luxury good purveyors, who capitalized on the 'have mores' who benefited from the Bushenomic house of cards....
Shirah at Unbossed looks at everyone else and provides a simple explanation that sounds like it has good explanatory power for why retail sales are weak:
bad news on real average earnings. But perhaps you'd like to see the Bureau of Labor Statistics press release that those news stories are drawn on. You can find it here. This one figure captures the report for me. For November 2006 average real weekly earnings in constant 1982 dollars were $282.47. And for November 2007, they were 280.11.
Real incomes are flat or declining, fixed expenses are up with high gas prices and mortages resetting and there are actually credit standards that keep people away from tremendously dumb debt for the first time in years..... Amazing that discretionary purchases shrank in real terms, absolutely stunning

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