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By Dennis Byrne
Chicago Tribune
The dismal retail sales figures are in for Black Friday and the news is . . . good?
Wait a minute, the news was supposed to be bad, awful, ghastly, dreadful, etc. Analysts, almost to the person, were predicting that retail sales would decline from last year's level, if not plummet. Some forecast economic calamity, because so much depends on consumer spending.
Not to pick on anyone in particular, but here are a few examples of pre-Black Friday conjectures:
• Marshal Cohen, chief retail analyst with NPD Group, said "this could be the worst holiday [shopping season] ever."
• ABI Research analyst Michael Wolf said Black Friday could end with consumers spending less than usual.
• A Wall Street Journal headline predicted a "Bleak Friday for retailers."
But as I write this, the weekend sales figures are starting to trickle in and the sages look like they're turning out to be all wet. Chicago-based ShopperTrak RCT Corp. said sales not only didn't fall, but actually increased 3 percent over a year ago, to $10.6 billion. PayPal saw almost 34 percent more transactions and a 26 percent increase in sales online over last year's Black Friday. The National Retail Federation's 2008 Black Friday Weekend survey found shoppers spent an average of $372.57 over the weekend, a 7.2 percent increase over last year's $347.55. Fourteen percent more shoppers spent $41 billion, it said. In short, the analysts and many of my media colleagues who delight in amplifying any negative prediction—the worse, the louder—blew it. Too bad; maybe if they had been right, there would have been no crowd of idiots at a Wal-Mart store to trample an employee to death.
This wouldn't be worth writing about if the sages weren't so universally wrong, if we didn't give them so much weight and if so much of the economy didn't turn sour every time they opened their mouths. The fact is, despite their golden credentials, the initials after their names and affiliations with the high-end financial institutions, they don't know any more about the future than you or I. Yet, they and their grim prognostications appear as an endless parade on the business television network CNBC and on the financial pages. "The market hasn't bottomed out yet." "The recession will be deeper than anything we've seen since the Great Depression." "We're in for another three years of economic reversals."
"Baloney. Bushwa. How do you know?" I shout at the TV screen. They don't. Michael Lewis told us that from personal experience in his book, "Liar's Poker." He explains it again in Conde Nast's December Portfolio.com: "To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grown-ups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall."
He went on: "I'd never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable."
I dare that his predictions then were just as good as the predictions we hear today. Lewis said this nonsense was unsustainable, yet here it is, more than 20 years later, and we continue to see the same kind of specious advice flowing out of Wall Street and the media. Upon this, Americans continue to make decisions on how much to spend and invest, and the more we listen, the worse the economy becomes.
When oil was hovering around $150 a barrel, the same folks guaranteed us that the price would go even higher and that high energy costs were a permanent condition that would fundamentally change our society. I'm not saying that that day won't come. But now that oil is about $50 a barrel, can't we be equally glad? Gasoline and home prices have dropped precipitously; that's bad for some, but great for others.
As the start of the Christmas shopping season tells us, there are bargains everywhere and, since when are low-priced homes, cars, electronics and other goods really horrible things? Can't we at least pretend that there's some good news to be heard?
8 comments:
A postscript to today's column:
ShopperTrak reports this morning that retail sales for Black Friday and Saturday combined were up 1.9 percent from the same period last year. There was a slight decline on Saturday.
Link to story: http://www.shoppertrak.com/news_retail_sales_120108.php
I can only imagine what would happen if we had "financial" prognosticators proclaim around the clock that the economy is set to explode in prosperity. For years I have been amused by the psychology associated with economic indicators and talking head predictions. People - don't you know that by sitting on your wallets you are creating a "recession"! There is no mystical black force out there causing the econmy to slow and people lose jobs! Get out and spend and save your job!
If you scream "recession" every day for 10 years, one day you are bound to be correct. The media has been screaming recession since 2005. Much of it is anti Bush sentiment and they cannot fathom that his tax cuts of 2003 actually worked. Much of it is that bad news sells. Dennis, I loved your column today. It strikes me that if one did not read the Trib, watch crap on TV or look at the Internet, they would never know how supposedly awful it all is. The malls have parking lots that are full. 98% of Americans are not in foreclosure and they are at home with family. College (which is terribly expensive) applications are at all time highs, despite warnings that jobs will not be available.
I "came of age" in the 70s. There was double digit unemployment, double digit inflation. Gasoline lines were a block long. When I graduated college in 1980, interest rates on mortgages were 12% and they went much higher. Yet no one compared the 70s to the great depression. Today unemployment is 6.5%, mortgage rates are 5.5%, inflation is around 2%, depending on the latest oil spikes. Oh by the way, gasoline today is far cheaper than it was in 1980. We had a 6 week spike, Boo Hoo. So, we are nowhere near as bad as the Carter years and everyone is screaming great depression. Give me a break, get a job, stop wasting money on cable and eating out and save some $$ for the future.
Mr. Byrne:
Sales last weekend increased at the expense of profits, which are, of course, what business is all about. Corporate earnings are headed downward, which is the reason for all the layoffs. And 1.9% is less than inflation, so stores have indeed done worse than last year.
Unemployment did not reach double digits until the early '80s under Reagan. Moreover, job creation under Carter was greater than during Reagan's administration. And the housing market is the worst it has been since the Great Depression, which prompts the comparison.
Thank you, thank you, thank you! It's about time someone put into print what many of us have been thinking. . .and you're right about CNBC. I got so tired of hearing negative stories about the economy that I stopped watching that station. It's been said that if you tell someone he's bad often enough, he'll begin to believe it, and act accordingly, which is exactly what's happening. "Glass Always Full" has the right idea. . .the way to grow the economy is to invest in it. I'd like to take it a step further by suggesting that people stop allowing themselves to be manipulated by the so-called "Experts" and start thinking for themselves.
thank you dennis, now, how do we get the rest of the media to report likewise. reports of black friday being up were followed by negative comments alluding to what a fluke that was.
for one year i have been writing to all major news outlets pleading to stop the negativity, it breeds fear. my mentioning that as a small business (retail) owner my business was soaring was of no interest. i am now feeling the pinch. speaking with customers they all report the fear spread by news source's and are holding back due to their predictions.
that said the "chicken little scenario is being fulfilled"
have to run, i have a business to run, and yes, we are very busy, at the moment
Thanks for this column -- I hope that Tribune editors read it. By constantly printing front page headlines about how bad everything is -- the October "PANIC" headline was the worst -- even people who are not touched by financial problems think they should be worried too. This has created the circular cycle of non-spending and job loss that really drives a recession. As Anonymous said 98% of Americans are not in foreclosure and 94%+ have jobs. I wish that the media could start focusing on the good financial news that's out there, like numbers of people who are now avoiding foreclosure thanks to actions of banks and non profit agencies. Or articles on great deals in real estate in the home section. I was in Cedarburg, WI last weekend where all of the locally-owned shops and restaurants were full of customers -- apparently the media wasn't looking there for good retail news...
Looking back on the Christmas seaon that has just past, we can say that you were completely wrong. You said that the experts wer all wet. The periaod that lead up to Christmas 2008 was the worst in, I think the experts said, the last 40 years. Again you wre wrong.
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