How Much Is Too Much?

Any sports fan who has ever dashed to the kitchen to grab a beer just as their favorite team botched a play that flipped the score knows well the adage that the game isn’t over until it’s over. You can’t project the winner of a football game at halftime, or even in the final seconds if it’s a close one.

But that’s exactly what happens in the retail industry and never more so than leading up to and during the critical holiday quarter. Thanks to technology that has given us access to real-time data, companies in the business of forecasting trends crank out headline-grabbing reports based on the statistical equivalent of a snapshot.

But this is not just a game. Investors and stock traders pay close attention to these news reports and prices and react, often producing big swings in market indices and individual stock prices. All around the world, manufacturers, designers, and marketers sweat out the season looking for clues as to how to plan for the coming seasons.

The news that proliferates leading up to and through the Thanksgiving holiday weekend is a good example of the pointlessness of trying to hit a moving target.

As this year’s Black Friday wound down, Reuters ran a report that began with the sobering observation that, “Thin crowds of inflation-weary consumers hunted for Black Friday deals.” One imagines a Soviet-era scene of dispirited Russian women wearing babushkas staring at half-empty bakery shelves.

At almost the same time that same night, Adobe Analytics reported, “Black Friday online sales to hit record despite high inflation.” Adobe even provided hourly updates of e-commerce sales totals, and information of use to no one except the media outlets that hope to attract eyeballs with provocative headlines.

Three days later, the industry trade group, the National Retail Federation, reported that a record 197 million consumers shopped in stores and online between Thanksgiving Day and Cyber Monday, 17 million more than a year earlier, an increase of nearly 10%. Significantly, the NRF reported that the bricks-and-mortar visitor count was up a huge 17% from 2021, and shoppers spent on average 8% more than a year earlier.

Fast forward two weeks (Dec. 15) and we find this frightening CNN headline: “Retail sales have dropped significantly.” The item states, “The strong turnout at the start of the holiday shopping season last month wasn’t enough to counter a broader consumer pullback in spending.” The story was based on US Census Bureau data showing sales declined in November by 0.6% from a month earlier.

Now we are in the final minutes of the game and while you were getting that beer, according to Mastercard SpendingPulse, American retail sales rose more than expected, by 7.6% year-over-year (YOY) for the period Nov. 1 to Dec. 24. The National Retail Federation is projecting a similar increase when the tally is complete.

Lastly, a quick look at retail sales for the past few years, as measured by the US Census Bureau, shows that 2022 is on track to set a record. At the end of the third quarter, retail sales for the year had reached $5.3 trillion, just shy of total retail sales for the entire previous year (2021).

This data mania is one of the downsides of technology—too much information becomes meaningless noise.

After a pretty good holiday season, are we headed into a recession, as the experts continue to warn?

I think I’ll go get another beer.