Politicians Play Scrooge

Initially it seemed like with the economy recovering and interest rates at record lows, consumers would respond by further loosening their purse strings this holiday shopping season.

In turn this would stimulate retail sales and provide a further boost in confidence for eonomic growth.

Well, that was before our sound bite indecisive blame it on the other guy politicians in Washington (and many cities and states, too) chose to play Scrooge, whether intentionally or not.

These poor excuses for public servants sure seem to like their self declared self importance and never ending ways of "serving" the American people.

My take is they manage to screw everything up almost all the time and thereby snatch defeat from the jaws of victory each time they "help" us.

We could use a whole lot less of their help as well as a whole lot less media coverage of their seemingly hourly antics before the TV cameras, too.

Politics sucks.

'Fiscal Cliff' Spooks U. S. Shoppers in Last Lap of Holiday Race describes the mood thusly:

"Fears about imminent tax hikes and cuts to government spending are taking a toll on U.S. shoppers and could deprive retailers of a strong finish to the 2012 holiday shopping season.

The acrimonious debate in Washington over how to avoid the so-called fiscal cliff has cast a pall over shopper sentiment, retail experts say, as consumers head to the malls on the last Saturday before Christmas - typically one of the busiest shopping days of the year.

 

Talks to avoid the fiscal cliff stalled on Thursday when Republican lawmakers rejected House Speaker John Boehner's proposal aimed at winning concessions from President Barack Obama.

 

"The longer Congress delays making a decision on the fiscal cliff and the more uncertainty people feel, as we go toward Christmas, they would start pulling back on their spending," said Ron Friedman, retail practice leader at consulting firm Marcum LLP. "I don't think we're going to get a great pickup in the last few days here."

 

About 17 percent of the 1,514 Americans who participated in a Reuters/Ipsos poll conducted December 17-20 said the impending "fiscal cliff" was making them spend less this season.

 

U.S. consumer sentiment also plummeted in December as Americans were unnerved by ongoing negotiations, data showed.

 

The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment tumbled to 72.9 from 82.7 in November, worse than forecasts for 74.7. It was the lowest level since July.

 

"What could have been a merry Christmas is going to turn to a ho-hum Christmas, and we can thank our, you know, politicians for getting in the middle of it all," NPD analyst Marshal Cohen said. "It is like this great unknown puts a big damper on the consumer feeling confident to go out and spend more."

 

More than 60 percent of U.S. consumers have already finished more than three-quarters of their holiday shopping, according to a Reuters/Ipsos poll released on Thursday. This means retailers will have to offer deeper discounts to force Americans to open their wallets in the last lap of the holiday season.

 

The holiday quarter can account for about 30 percent of annual sales and half of profit for many chains, and experts including Cohen and Friedman see retailers pulling out all the stops this weekend and the week ahead to woo last-minute shoppers.

 

"The only way retailers now are going to be able to get a boost is by creating their own stimulus package, and that stimulus package is going to be markdowns," Cohen said.

 

Earlier this week, research firm ShopperTrak lowered its sales forecast for November and December and now expects sales to be up 2.5 percent, rather than up 3.3 percent.

 

Many retailers reported record traffic at the beginning of the season, but several, including Macy's Inc and Saks Inc, lost a lot of business because of Hurricane Sandy.

 

Earlier this week, Redbook Research said chain-store same-store sales rose 2.2 percent so far in December, suggesting shoppers are indeed cooling their heels. Sales for the November-December holiday season look set to rise 4.1 percent to $586.1 billion this year after a 5.6 percent increase in 2011, according to a National Retail Federation forecast.

 

"Retailers are going to be pretty challenged this year in trying to get beyond all this," Cohen said, referring to a string of events this holiday season that have weighed on U.S. shoppers including the hurricane, gridlock in Washington and a recent shooting at an elementary school in Connecticut.

 

NRF sees 2013 retail sales rising about 2 to 2.5 percent if the fiscal cliff is averted. If not, sales would be essentially flat for the year, the trade group estimated in a study with Macroeconomic Advisers."

 

Summing Up 

Sandy and Newtown were tragedies that have had an impact on each of us, regardless of where we live. They were disasters.

The politicians are making their own disaster by the way they conduct "the people's business."

Even when they somehow and in some manner manage to kick the can down the proverbial road again, We the People will still know we're running out of road.

Unfortunately, we can look forward to more of the same political nonsense in 2013 as the fiscal cliff, the debt ceiling, tax increases, entitlement programs, budget deficits and government spending all will remind us on a daily basis just how dysfunctional our U.S. political system remains.

We sure do live in interesting times.

Thanks. Bob.