Posted 11:30 p.m. Nov. 30
By Patrick W. Higgins
U-WIRE Washington Bureau
The holiday shopping season is off to a sluggish start, according to early reports that the consumer confidence index fell for the fifth straight month.
Consumer confidence dropped once again in November marking a seven-year low of 82 percent, down from 85 percent in October, according to a report released this week by The Conference Board, a New York-based private business research group.
Economists believe mediocre “black Friday” holiday shopping statistics are a culprit in the continual decline of consumer confidence. The numbers indicate a 2.4 percent increase in same-store sales, nearly half of the 4.6 percent increase of last year’s post-Thanksgiving shopping according to TeleCheck Services Inc.
“The reason sales figures are increasing but not as fast as we might like is because unemployment is a bit higher and people don’t have as much income to spend,” Dan Mitchell, an economist with The Heritage Foundation told U-WIRE.
Shopping mall traffic was down 8.1 percent from last year, yet up 0.8 percent from 1999, an important comparison due to 2000’s unusually high numbers.
“A comparison with last year might offer too pessimistic a picture of the whole industry,” Michael Niemira, a retail analyst for the Bank of Tokyo-Mitsubishi Ltd., told The Washington Post.
Major mall department store traffic decreased by 12.5 percent from last year and 5.2 percent from 1999, representing a shift to large discount stores.
While shopping malls nationwide witnessed the lethargic numbers in traffic in sales, major one-stop shopping discount stores reported record breaking sales figures, with Wal-Mart Stores Inc. sales in excess of $1.25 billion on Friday alone.
In related economic news, a Commerce Department economic indicators report listed the retail and food services sector to be up 7.1 percent in October from September and up 7.5 percent from October 2000.The report also listed unemployment rates for October as 5.4 percent, up from 4.9 percent in September.
The latest retail figures come in the wake of The National Bureau of Economic Research’s announcement this week that the economy has officially entered a recession which began in March of this year, ending the longest period of economic expansion in United States history.
“The committee is satisfied that the total contraction in the economy is sufficient to merit the determination that a recession is under way,” the committee said, as reported by The New York Times.
With the insufficient holiday shopping sales and the still faltering economy, economists have turned their attention to President Bush’s pending economic stimulus package.
Economists like Mitchell adamantly support tax cut rates across the board as a focal point of the package.
“The underlying issue that we should be looking for is for national income to grow,” Mitchell said.
History proves that the balance of economic affairs and foreign policy is a tricky road for the Bush family, as many believe former President George Bush lost the 1992 election for his lack of economic attention despite his Gulf War acclaim.
Oil prices are continuing to drop as speculation indicates that Russia will refuse to decrease their crude oil output below the 50,000 barrels per day they had already planned to cut this year.
According to OPEC President Chakib Khelil, crude oil prices “will collapse” without aid from Russia.
Industry analysts cite decreasing demand coupled with unaltered supply as the driving force of falling oil prices.
“The real horse is the fact that the industrialized world has reduced its demand for oil and the oil producers are fighting over a smaller pie,” Mitchell said.