Will this Christmas be the canary in the coal mine for our economy?

[lunatica]

Full of Doubts, U.S. Shoppers Cut Spending
By LOUIS UCHITELLE, ANDREW MARTIN and STEPHANIE ROSENBLOOM
Published: October 5, 2008


Recent figures from companies, and interviews across the country, show that automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores.

When the final tally is in, consumer spending for the quarter just ended will almost certainly shrink, the first quarterly decline in nearly two decades. Many economists, who began the third quarter expecting modest growth, now believe the cutbacks are so severe that the overall economy did not expand either, and they warn that a consumer-led recession could be more severe than the relatively mild one earlier this decade.

“The last few days have devastated the American consumer,” said Walter Loeb, president of Loeb Associates, a consultancy, who said he worried that the constant drumbeat of negative news about the economy was becoming a self-fulfilling prophecy. “They all feel poor.”

For some Americans, the pain is already acute: jobs disappeared at a faster clip in September. For many others, day-to-day finances are fine for now, but the financial outlook is uncertain: 401(k) accounts are dwindling, loans are hard to get and house prices continue to fall.

http://www.nytimes.com/2008/10/06/business/06econ.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1223381459-Yyglx47bmQgj1tPylLTRuw

So how many of us will be able to spend any money on gifts this year? The only way is to charge it, but I think most people are hanging on to their credit cards to make sure they use them for survival necessities. If companies are getting nervous now, they will surely find Christmas a disaster economy.

[tavalon]

1. Wouldn't the canary be the first sign?

Christmas and that vaunted "Christmas Buying Season" is dead in the water. We already know that.

[lunatica]

4. Not everyone knows that, just those who've been paying attention

I know plenty of people who are damn good at ignoring the signs. For them, Christmas will be an eye opener

[tavalon]

6. My kid is autistic so I won't be completely holding back but it will be sparse

but really, except for him, I opted out of that game about a decade ago.

[lunatica]

8. I have no children to give gifts to, so it's not so hard to bypass Christmas

I really feel sympathy for people who have children. Maybe home made gifts will begin to make a comeback.

[zagging]

2. The canary died about four years ago

The miners are dropping like flies.

[Lint Head]

3. The canary is dead.

Maybe Palin's Witch Doctor can revive it.
:dem:

[shadowknows69]

5. Santa's taking the year off

Reindeer feed is becoming too expensive.

[KharmaTrain]

7. Truth Is Many Don't Have Money This Year...

Maybe you lost a job or have seen your investments shrink by 20% or more...along with rising prices on virtually everything, where are the dollars to travel or buy a wide screen or new set of wheels coming from? Almost everyone I know has battened down hatches, cutting costs and feeling the pinch of a sinking economy...we're not in the mood to head to the mall.

This wasn't some surprise either. I saw this slowdown coming months ago...the credit crunch that Atrios so aptly calls "big shitpile" was certain to squeeze the economy...along with the price of oil nearly doubling in the past year (which is passed along with higher costs on nearly everything). A large amount of capital is now locked away in CDs and T-Bills...the squeeze will get worse as the more the market is drained of capital, the more that is put into these modern mattresses...and thus the credit crisis will get worse.

For many companies, 4th quarter is their lifeblood...they make a lion's share of their revenues during this time and if this holiday season falls flat, it's gonna make for a bleak first quarter of next year. I expect to see companies either merge or close as both their ability to get credit to survive and their operating revenues vanish. Until the bad mortgages and junk is passed through the system, this mess will continue and with it will be continuing downward spiral of our economy. My hopes are that not too many people get hurt in the process, but we're all gonna feel this mess for some time to come.

[Missy Vixen]

16. The big retailers are going to get hurt, but the ones that will be wiped out

are the small businesses. They rely on those holiday revenues to keep their doors open most of the rest of the year.

This won't be Target or Macy's or Home Depot. This is going to be your neighbor with the small business he or she has poured their heart and soul into, and it's not going to survive.

Julie

[stray cat]

9. There may be no inventory to buy since stores take out loans to stock their shelves for holidays

[dysfunctional press]

10. if obama wins, it may give people a sense of hope about the future...

and many people will find a way to have some xmas cheer.

[shadowknows69]

14. True, people defintiely spend according to a political climate

Probably the bigger ticket items. I think credit markets will gain more confidence just on an Obama win too.

[Indenturedebtor]

11. How about food and used books this holiday season? n/t

[jtrockville]

12. LAST year's holiday season should have been one of the warnings.

[shadowknows69]

13. With congress bailing on a bill that would have extended UE insurance for 800K

They have no right to be surprised when no one can spend money this holdiay season. Many stores will fail. The consolidation of power will continue.

[Chan790]

15. I'm hoping no. (Why I think our current economic crisis is a panic, not a problem.)

I'm kind of figuring that the "need" to Christmas shop will be the thing that finally slams the brakes on the downspiral...otherwise we're going to be riding this wave for a while and really there isn't a need to be...this economy is the simple result of non-spending out of fear. Sorry it is...it's not declining home values or credit markets or failing banks. Those are signs of the deeper malaise. I personally am sitting on several thousands of $ that I'm not spending because I have no idea what's going to happen next and if I'm going to need that money to live on if I lose my job (I'm in the retail sector). I'm not the only one in that boat, I'm sure. That's money that isn't in the economy...it's sitting in my safe.

The Dow has people spooked...and that's gamesmanship on Wall Street's part. I had a friend who works on the exchange floor admit that the big post-bailout falls have been the result of large investors (CEOs, stock-compensated board members, etc.) getting pissy over the regulations in the rescue bill. It's not the economy, it's the assholes at the top of the economy. They're profit taking while they can since once they have to start asking for $ from Mr. Paulson, they can count on a heavy Treasury thumb and no nice parting gifts when they get the boot. Worse, they have no idea what kind of draconian rule will be coming after the election, but they know whomever wins...they're going to get hammered in new oversight and an end to Reagan-era unregulated free trade for the foreseeable future.

Also, oil's dropping. I think when it bottoms out and starts to rise slightly...we should massively grow the strategic reserve so we use the threat of dumping oil into the market to bully OPEC and foreign oil companies on price restraint. That should get us back on a healthy ground faster. Once our economy turns around...the first thing that's going shooting back up is oil. This is why we need a large initiative in energy technology and infrastructure now, not when the economy recovers...Now. It could be our New Deal or Space Program that puts America back to work and back on top. The thing that goes unspoken when we talk about that technology is that both the technological equipment and the energy it produces are a market commodity at a significantly better ROI than oil. In 30 years we could have the Chinese and Saudis $10T in the red to us.