The Christmas bust
The Associated Press brings us glum holiday tidings about the consumer spending that has largely propped up the teetering Obama economy for the past few years:
U.S. holiday retail sales this year were the weakest since 2008, when the nation was in a deep recession. In 2012, the shopping season was disrupted by bad weather and consumers’ rising uncertainty about the economy.
A report that tracks spending on popular holiday goods, the MasterCard Advisors SpendingPulse, said Tuesday that sales in the two months before Christmas increased 0.7 percent, compared with last year. Many analysts had expected holiday sales to grow 3 to 4 percent.
In 2008, sales declined by between 2 percent and 4 percent as the financial crisis that crested that fall dragged the economy into recession. Last year, by contrast, retail sales in November and December rose between 4 percent and 5 percent, according to ShopperTrak, a separate market research firm. A 4 percent increase is considered a healthy season.
This is puzzling, because the core theory of Obamanomics is that showering some people with other people’s money leads to robust job creation and economic growth. The recipients of all that government-redistributed cash rush out to spend it; small businesses and corporate expansions blossom eagerly to take their money. It’s “trickle-up” economics, and all of the money spigots Obama has opened over the past four years remain open. Why is consumer spending dropping off to recessionary levels? The AP offers a few theories:
Shoppers were buffeted this year by a string of events that made them less likely to spend: Superstorm Sandy and other bad weather, the distraction of the presidential election and grief about the massacre of schoolchildren in Newtown, Connecticut. The numbers also show how Washington’s current budget impasse is trickling down to Main Street and unsettling consumers. If Americans remain reluctant to spend, analysts say, economic growth could falter next year.
We’re back to blaming “super storm” Sandy again, are we? Show of hands: how many of you were “distracted” from Christmas shopping in early November by the presidential election? How many people, beyond local people directly affected by the heartbreaking outrage, were dissuaded from shopping by the Newtown massacre?
The largely incoherent public angst over the “fiscal cliff” – whose exact nature is not widely understood by the public – is a deliberate political/media creation. It’s fair enough to say that people are worried about their taxes going up, so they spent less money… but if the trickle-up nature of Obamanomic theory is accepted, isn’t that a powerful, even irresistible argument in favor of tax cuts?
Cut business taxes so that more people get jobs, and paychecks; cut taxes on every citizen to immediately put money in their pockets – there is literally no faster, more efficient way to do so – and we should get more consumer spending. Nobody on the Left objected to Obama spending a trillion dollars on a wholly ineffective “stimulus” filled with pork… so why not forego some government revenue in order to give the largest possible number of people more money to spend… in accordance with Obama’s job-creation theories, which hold that even unemployment insurance is a powerful form of employment stimulus?
It’s hard to escape the notion that Democrats believe money is somehow sanctified by passing through the hands of government bureaucrats. Letting you keep a dollar of your own money is evil, but if a bureaucrat takes that dollar away from someone else and drops thirty cents in your pocket, it’s the highest form of civic virtue. And only if a bureaucrat handles the money first does it acquire the special “job-creating” mojo that has so conspicuously failed to create sufficient jobs over the last four years.
The AP notes that “spending by consumers accounts for 70 percent of overall economic activity,” so a bad Christmas season spells rough times ahead for “manufacturers, wholesalers, and companies at every other point along the supply chain.” This illustrates the folly of trickle-up wealth redistribution as an economic model. It all ends up with a Yuletide crap shoot, in which a two-month orgy of spending determines the course of the following year. Spending is, therefore, clearly no substitute for investment. Investment is what produces constant, healthy growth throughout the course of the year, along the way filling the wallets of consumers with money they earned, by generating value for their employers. Government taking and giving, by contrast, destroys value. It’s as simple, and dreadful, as that.
Consumers aren’t the only ones feeling nervous as 2012 grinds to a close, according to the National Federation of Independent Business. They found one of the lowest levels of small business optimism in the history of their survey, and it has a lot more to do with the outcome of the presidential election than its “distracting” conduct. The NFIB controlled for the effects of Hurricane Sandy (which they declined to call “Super Storm Sandy”) and learned small business owners are depressed because of what they see coming, not what lies behind them:
“Something bad happened in November—and based on the NFIB survey data, it wasn’t merely Hurricane Sandy. The storm had a significant impact on the economy, no doubt, but it is very clear that a stunning number of owners who expect worse business conditions in six months had far more to do with the decline in small-business confidence,” said NFIB chief economist Bill Dunkelberg. “Nearly half of owners are now certain that things will be worse next year than they are now. Washington does not have the needs of small business in mind. Between the looming ‘fiscal cliff,’ the promise of higher health-care costs and the endless onslaught of new regulations, owners have found themselves in a state of pessimism. We are forced to ask: is this the new normal?”
The most significant factor impacting the decline in optimism is the expectation that future business conditions will be worse than current ones. The net percent of owners expecting better business conditions in six months fell 37 points to a net negative 35 percent. In October, the percent of owners who said they were uncertain as to whether business conditions would be better or worse in six months hit a record low of 23 percent. Many of those who were uncertain about the economy in October became decidedly negative in November; 49 percent of the owners now expect business conditions to be worse in six months, while 11 percent still express uncertainty about the future.
There’s a “super storm” coming, all right, and hatches are being battened down.