We May See 2% Holiday Shopping Growth

The consumer will probably weaken in the next few weeks as the spread of COVID-19 is coming at the worst time for the economy. Some thought the expectation for 3.6% to 5.2% growth was too high. There will be low single-digit growth. 

That will specifically call for 2% growth just so we can see how accurate that turns out when the data is finalized in January. Final predictions must be made now. Black Friday will likely be weak, but Cyber Monday will be solid. That depends on how internet retailers decide to time their sales. 

It’s obviously a lock that internet sales growth will dramatically outpace in person sales. Medical workers at some hospitals will be taking Pfizer’s vaccine next week, but broad distribution is still a few weeks away.

Redbook same store sales growth rose from 1.7% to 2.8% in the week of November 21^st which is the week before the holiday shopping season starts. We can’t take that increase to mean much because it has been hovering in the low single digits for weeks. 

If growth was to stay above 3% for 2 weeks, we would take notice, it's doubtful it will this year. Consumers are worried about the virus spreading even though vaccines should save the day by the spring.

Consumer Confidence Falls

November consumer confidence report showed weakness and missed estimates which makes sense given the pandemic. It was far from a disaster though. This won’t alarm traders. It certainly didn’t hurt stocks on Tuesday as the retail industry rose 1.8%. It is up an enormous 22% month to date. And it’s at a record high. Somehow, we are seeing euphoria in retail stocks, while consumers are getting more concerned. This is all because of vaccine optimism.

Vaccines will be fully priced in by the time they are administered. Look for more gains in the reopening stocks in the next 2 months. More importantly, look for more losses in the work from home stocks. They aren’t down much. Zoom is only down 24.8% from its peak despite the fact that the economy has a strong chance of going back to normal next year. The firm will have tough comps and less demand. That is a disaster for the stock.