Despite ECRI’s prediction that the US is now in recession, Bloomsberg thinks it’s the weather that slowed the economy. Bloomberg is riffing on the report from MasterCard Advisors SpendingPulse which said that retail sales from October 28th through Christmas Eve rose less than half what it did a year ago: up just 0.7 percent. A year ago sales in the same period rose 2.0 percent. Said SpendingPulse spokesman Michael McNamara:
You are looking at modest to marginal growth from a year ago. Weather events and the fiscal debate both anchored the season in terms of growth.
It’s the media that did it:
The media coverage, which did a good job of explaining the negative consequences of the fiscal cliff, created this negative trend in consumer confidence and spending.
The slowdown was confirmed by another outfit that predicted sales would increase by 3 percent but now says that the real boost will come from post-holiday discounting, clearance sales and gift card redemptions.
Consumer confidence is a pretty reliable indicator. And the Thomson Reuters/University of Michigan consumer sentiment indicator dropped 10 full percentage points in just one month: from 82.7 in November to 72.9 in December.
It’s also the Newton, Connecticut shooting:
The Newtown massacre, psychologically, I think, spread throughout the country [said a retail consultant]. This event was not isolated in the Northeast. It slammed the consumer with a lot of sobriety and made us think about what is happening in the world we live in, particularly around the holidays, when things are supposed to be wonderful and peaceful.
It’s also that retailers weren’t giving enough discounts early enough, said another “consultant.” And the internet is siphoning sales away from retailers. And so on.
Nothing was said in the article about the recession that started back in July, according to Lakshman Achuthan, of ECRI, whose track record in predicting recessions is flawless. Denial isn’t just a river in Egypt.