Christmas Retail Cheer Bigger Than Ever in 2007

The U.S. Census Bureau released an advanced estimate of November retail sales and so far they blow past the projected 4% increase from 2006.  Here is the money quote.

U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $385.8 billion, an increase of 1.2 percent (±0.7%) from the previous month and 6.3 percent (±0.8%) above November 2006. Total sales for the September through November 2007 period were up 5.4 percent (±0.5%) from the same period a year ago. The September to October 2007 percent change was unrevised from +0.2 percent (± 0.2%).

If you have been reading this blog, you may recall I predicted that Christmas sales would exceed the 4% forecast back in early December, see here. At that time, it had been reported that GDP was up 4.9% in the third quarter, productivity was up 6.3%, employment was way up in October and November, wages were up, day after Thanksgiving shopping was up 8.5% over 2006, and ShopperTrak put November sales at 6.5% over the year before period. Those facts, weighted against reports of "negative consumer sentiment," and the rising cost of gas and food, seemed to clearly favor a Christmas season that would exceed previous expectations. Still, many pundits did not want to move off the idea the economy was slowing and that this Christmas would be a bad one in terms of retail sales. Television stations reported that the " the holiday cheer's missing at retail stores." In the face of the positive data, so-called experts such as Peter Morici, an economics professor at the University of Maryland, gave us sound bites such as the following:

The numbers don't tell the whole story, ... Retailers are trying to put a positive spin on things. People are very pessimistic about what things will be like this winter. ... they're buying less expensive items. So it all fits together. It indicates a slowing economy.

As per usual, the doom sayers have not been vindicated.  Get the U.S. Census Bureau report here.