Holiday Spending Is Down?

Weak Data From Chase

In this article, we will include a few tracking updates on how the economy looks in real-time as we end the year. There has been differing data on the consumer. We’ve seen some data points suggest consumer confidence is high and that they expect to spend a lot more in 2021. The BAC card data showed promise. Plus, retail stocks have been spiking, but that might be because of an anticipated rebound in 2021, not because holiday shopping looks good.

The retail sales report was disappointing. When you pair that weakness with the spike in jobless claims, it’s logical to expect even worse results in December. We're all very interested to see how the retail stocks react to mostly bad earnings results. Target stock has recently underperformed the market. It’s down 5.2% since November 23rd, while the S&P 500 is up 3.7%. The retail sector is up 6.1% in that period.

This brings us to an updated data series by JP Morgan. As you can see from the chart above, since Black Friday, the 7 day average of consumer card spending has been consistently below last year. It adds up to a decline of 5.4%. That is very far from the projections for the holiday shopping season in November. However, you must keep in mind that they might not have considered added lockdowns in their projections. 

Europe Was Hit Hard

Europe was hit hard by the latest wave of COVID-19 which caused lockdowns. In a surprise to no one, lockdowns hurt their economy. Many people argued America would never do lockdowns again, but there have been added restrictions and some lockdowns are here. There is no perfect way to handle this pandemic because no matter what policymakers do, people will die and the economy will be hurt. 

It’s worth noting that Europe’s activity tracker never got as bad as it did in the spring. Since America is going with less restrictions and we are closer to the vaccines going out at mass scale, America’s slowdown should be a little less bad than Europe’s. This is not a double-dip recession.

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