Monday, November 21, 2011

Gobble Gobble

November is coming and going faster than Kim Kardashian’s marriage (sorry, had to go there).  It’s coming and going faster than Lindsay Lohan’s jail time (4 hours for a 30 day sentence, blink and you missed it).  But don’t worry if you missed these great cultural events, another opportunity to hem and haw over marriages and prison sentences for these fine citizens will be here soon enough.  They haven’t let us down so far!  And just as fast: Thanksgiving and Christmas will be here again.  Apparently, according to retailers, Thanksgiving already came and went and we’ve already moved on to Christmas.  If retailers had it there way, Christmas would be a year-round celebration (and for some, it is!).
And if Christmas was year round?  We would oblige.  We love this time of year, although “the most wonderful time of year” gets awarded to back to school, a retailer designated holiday in early September (Labor Day wasn’t cutting it).   We love any excuse to celebrate and are always preparing for the next event.  Thanks to Halloween, retail sales in October were up 0.5% over September.  Year over year, sales are up over 7% - well done America.   And in other helpful news, as we ramp up for the big 3 (Thanksgiving-Hanukah-Christmas), the prices we paid for stuff in October – not including food and energy – remained relatively flat (up 0.1% over September, and up a mild 2.1% over last year).  Extra stocking stuffers for everyone!
If only food and energy prices could get the message and shape up.  After all, Thanksgiving is a time to feast on Turkey, Ham, potatoes, cranberry, stuffing, biscuits, pumpkin pie, and whatever else can fit on the table.  Food is the centerpiece of this holiday.  Yet prices on food are up almost 5% over last year (that’s not something to be very thankful for).   Worse, digging in to individual food prices, we find some numbers that might just give us indigestion.
After a three year hiatus on increases in the cost of our Thanksgiving dinner, prices of some important feasting necessities have taken a considerable hike.  Turkey prices are up 10% over last year, canned fruits and vegetables are up 7%, and biscuits and rolls are up 11%.  Worse, potato prices are up 36% over last year.  Dessert isn’t looking much better:  cakes and cookie prices are up 11% while pies, tarts and turnover prices jumped by 13% last year.  Hopefully we didn’t go so overboard for Halloween that our Thanksgiving feast will not require breaking the piggy bank.
A word of advice:  if traveling to another household for the big dinner, offer to bring a bottle of wine or some beer.  Not only will your hosts be happy to drown their sorry grocery bill away, but you will come out ahead.  Why?  Because the savvy consumer you are knew that while food prices skyrocketed, alcohol prices were the only ingredient of the feast that remained relatively flat (not even up by 1%).  Now that’s something to be thankful for.  Happy Thanksgiving!
(Census Bureau, Bureau of Labor Statistics)

Tuesday, November 1, 2011

That is “Scary”

Boo!  Okay, that didn’t scare you.  But hopefully you got your fright on this Halloween – be it haunted houses, creepy costumes, creepy people, or just watching Scream.  That Northeastern snowstorm was pretty scary – the movie “The Day After Tomorrow” comes to mind.  Global warming be damned.  Apparently everything around us is just now suddenly “scary”: the news is running stories about the “scary” economy, “scary” houses (though that should be saved for the “scary” drop in home prices), and even “scary” celebrity Halloween costumes (Heidi Klum has outdone herself yet again, what a “scary” surprise).  If we believed everything we saw and read, we would be right to stay inside, lock our doors, and hope November is a little less “scary”.
But that’s not how we roll.  Good for you for not letting the attempts to spook you get you down.  We went out in full force for Halloween, witches, pirates, “slutty” pumpkins (or anything really) and all.  We may have even outdone ourselves, which is impressive considering last year’s numbers.  According to some fun (yes, fun) statistics, last Halloween there were 41 million trick-or-treaters covering 116.7 million eligible trick-or-treating stops (homes).  And we love getting into the seasonal spirit: last year we ate an average of 24.7 pounds of candy per person (during the course of the year) and pumpkin production totaled 1.1 billion pounds!  We are serious – go big or go home (and lock your doors). 
Certainly we aren’t going to let the economic naysayers tell us what to do either.  In what turned out to be fairly good news in econoworld last week, our economic output increased in July-August-September by 2.5% over the previous 3 month period, after very weak gains earlier in the year.  While still quite lackluster compared to other post-recession “recoveries”, this news was good in that our output – after adjusting for prices –finally passed pre-recession levels (yes, it actually took this long).  You have yourselves to thank: consumer spending led the growth spurt (hey, we have a lot of candy to consume this year).  Congratulations, the economy is growing again.  It’s easy to conclude our wallets will soon join our stomachs in the happy parade.
Not to be a debbie-downer (or a villain, or goblin, or whatever name Halloween gives this role), but this might be a bit optimistic.  Growth fueled by our consumption, given the reality of our finances, really isn’t sustainable long-term.  On Friday, other data showed our spending in September was up and away: after adjusting for prices, our spending was up 0.5%.  Meanwhile, for the third month in a row, our “real” spending money (disposable income after adjusting for prices) was negative – our available funds are decreasing!  Where is this spending money coming from?  If we aren’t making it, we are borrowing it from somewhere.  For many of us, it’s our savings.  In a worrisome trend, savings continued to dwindle away, down $60 billion in September, to $419 billion, just 3.6% of our income.  Last year we had almost $600 billion in savings.
Low savings, high spending, and high debt is a risky combination.  We’ve been using this formula for a long time, but it also dug the big economic hole we can’t seem to fully get out of.  If anything is going to “scare” us this year, that seems as good (if not better) a candidate as anything else.  Boo!  
(Census Bureau, Bureau of Economic Analysis)