The AP story is using words like "plummet" and "plunge" for a 2.7% drop. 2.7% doesn't sound like a lot to me, but historically it's the worst Christmas for retailers since 1969. I suppose retail sales significantly increase at Christmas, so the overall loss for the month is likely huge (would have been nice for AP to tell us this information):
The 2.7 percent December plunge in sales, which followed a November drop revised upward to 2.1 percent, confirmed private sector reports that retailers had suffered their worst holiday shopping season since at least 1969.MarketWatch puts the drop in more context:
Since consumer spending accounts for about two-thirds of total economic activity, the weakness is a major factor depressing overall economic activity.
December's sales were down a record 9.8% compared with the previous December.Mind you, the previously December we were already in a recession, so even that doesn't give us a full picture of what a "normal" Christmas retail season should be like.
One other point that's interesting here. "Consumer spending accounts for about two-thirds of total economic activity." That's huge. And that's why it's so important that we have a leader and a government that instill confidence in the people. The stimulus package doesn't just need to work, it needs to make people THINK it will work. Everyone is understandably cutting back their spending, saving for a rainy day, but with consumer spending making up 2/3 of economic activity, when we all cut back our spending it has a huge negative impact on the economy. So in that vein, I'm making my own small contribution to economic activity with my own personal stimulus package - I'm finally joining the ranks of the grown ups and buying my first condo tomorrow.
