Wall St. has voted on how strong holiday sales will be this year. Shares of Best Buy (NYSE: BBY) and Target (NYSE: TGT) are down year to date. Walmart (NYSE: WMT) and Sears (NYSE: SHLD) are barely higher than the S&P 500, which is flat for the period. The stock price of Amazon.com (NASDAQ: AMZN) is an exception to the trend. It is up by 20% since the start of January, although it has sold off recently.
The National Retail Federation expects sales for November and December to be 2.8% higher. A number of industry observers believe that means some retailers will add jobs. Reuters recently reported that expectation is an illusion, fostered by hiring at several large retailers, including Toys ‘R’ Us and Macy’s (NYSE: M). Many smaller retailers may add no workers at all. The retail employment trend is a strong indication that a holiday sales recovery is already dead. The industry cannot afford that. There have been too many lean years over the past four.
Holiday sales and job additions are a good overall proxy for how the economy will fare in the first months of 2012. Consumers, worried that next year the U.S. economy will be like it was in 2011 will save what they can or pay down debt. GDP, up an unexpected 2.5% in the third quarter, will slow again.
Investor pessimism is built into the stocks of large retailers. If investors are right, early 2012 will be another hard period for America’s consumers.
Douglas A. McIntyre
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