Bubbles

A clueless commentator (is there any other kind) was on CNBC yesterday wondering why mall retail sales haven't improved since gas prices have dropped and "that's just like getting a tax refund!"


Really? Let's break it down and think about it all.


First, just because pump prices have dropped, it doesn't suddenly mean you have an extra $500.00 to put into the mall. Sure, gas prices have been trending down for several weeks, but they are only down a bit each week. And you buy gas each week. So while you might have an extra $500.00 in your pocket if you only buy gas once a month and you bought $1,000.00 last month and you only spend $500.00 this month...on a week-by-week basis you're only ending up (each week) with enough for a extra cup of coffee or two and put it towards that, or upgrading some of your food purchases, or maybe splurging on a meal out rather than $500.00 worth of stuff from the mall.


Second, I could point towards the proximity of the biggest annual spending spree of the year, Christmas. It's only January. Everybody spent to buy gifts. Maybe they don't need anything, Mr. Commentator?


Third, I would point towards the permanent sale mentality that chains such as WalMart or Target have instilled in the consumer. Unless those retail mall stores advertise big (and let's not forget about all those Christmas sales where people bought a lot of stuff, see previous point), people are not going to go to the malls to spend that extra $500.00 they probably don't have (see other previous points).


Fourth, let's think about costs and wages. Despite claims that the cost of living has been rising "slowly or has been "stable" if you look closely you'll see that the government likes to jigger such things by looking at prices ex ____ where ____ = things that have gone up in price (like food). Also, there's a ton of data that shows that wages have mostly been stagnant (frozen) for several years...if you're lucky. More than likely, your wages have fallen because you were laid off, cut back, etc. Toss in that CPI that really has gone up because we hide things, well then, I think that extra $500.00 you have might go towards upgrading food or getting an extra meal out rather than going to the mall (because, see previous points).


Fifth, the internet. Seriously. When was the last time you went to the mall for shopping? Notice how out of touch they're becoming (especially the "anchor stores")? I haven't shopped in a mall (other than a big box bookstore) in at least ten years. My wife has been more recently, but more often she'll go to a standalone store or a big box. And then there's the internet. Other than one suit, all my clothing for the past ten years has been purchased online. There's just so much less stress. (I don't like shopping!)


Finally, stuff. Maybe we just have too much stuff? How many big screen T.V.'s do you need to buy every year? How many pairs of shoes? Maybe people are taking that $500.00 and putting it towards..savings?


Conclusion: Clueless Commentator on CNBC has to get off of Wall Street and into the Real World and take a look around. Not everybody lives the way you do!