Misguided emphasis on holiday sales

Granted, consumer spending is 70% of GDP and consumers do spend a lot of money during the holidays, but there is a grossly misguided emphasis on holiday retail sales as a purported proxy for overall consumer spending. There is no known hard and fast ratio between total GDP or consumer spending and retail sales that occur during some relatively narrow holiday shopping season. Put simply, consumer spending habits are constantly evolving so that the fraction of spending during some artificial holiday shopping season compared to total consumer spending is itself constantly evolving.

In truth, Wall Street and the media are enthralled with simple rules and simple ratios and rules of thumb and adages that "seem" to work "most" of the time and with extremes of booms and busts, with no significant interest in how spending really plays out, especially if the results are... well... kind of boring.

The real bottom line on consumer spending this holiday season is that it was not a total disaster, and that is all we really needed to assure that Q4 GDP was not going to fall off a cliff. Whether Q4 GDP comes in at 2.0%, 2.5%, 2.75%, 3.0%, 3.25%, or 3.50% is not as important as the fact that it is unlikely to come in below 1.5%.

So, relax. There is no need to worry about whether gift cards can "save" holiday consumer spending. Consumer spending is consumer spending regardless of which week or month or quarter it occurs in.

And there is no need to worry about the impact of high energy prices on consumer spending since that actually counts when consumer spending and GDP are calculated.

Besides, we already know that consumer spending was okay in October and strong in November. Even a mediocre December will give us a modestly decent Q4 for GDP.

-- Jack Krupansky