Consider this a prognostication on the future. Translated: my best guess with a bit of intelligence thrown in for good luck.
I’m taking what is actually happening in the economy and going to the logical conclusion for this holiday season (to be more politically correct). Here’s a few key data points to start the discussion:
- The percentage of the population that is unemployed is now at a 38 year high
- Inventories are very high
- Wages are not growing
- Consumer spending is weak at best
All in all, I think we’re shaping up for a tough Christmas season. The combination of high unemployment and low wage growth typically results in lower consumer spending. Add in high inventories at companies and I think you’ll see a brutal season of markdowns and less-than-ideal margins on the retail side of things. This will add to the downward pressure on spending (people are saving the extra money, not splurging at this point) and creates a downward cycle.
How are you planning your 2015 holiday sales? Heavy on discounts? Big sales gains expected? I’m curious where business are planning because they have the best intelligence on what is happening now. But my economic look into the future seems to indicate heavy discounts and less spending.
Reuters has an interesting article on retail sales projections here.