Santa, Please Let This Be the Last Christmas in America That 'Saves' the U.S. Economy
by CHARLES HUGH SMITH December 21, 2012
My Christmas wish to Santa: please let this be the last Christmas in America that is dominated by the propaganda that holiday retail sales have any more impact on the $15.8 trillion U.S. economy than a moldy, half-eaten fruitcake left over from 2009.
Fact: the 2012 GDP of the U.S. is about $15.8 trillion. (BEA estimate) Gross Domestic Product, 3rd quarter 2012.
Fact: total holiday retail sales are expected to reach $586 billion this year. Holiday sales--National Retail Federation.
That means holiday retail sales are a mere 3.7% of the U.S. GDP.
Despite the Financial and Mainstream Media's pathological obsession with holiday retail sales numbers as proxies for the "health" of the entire U.S. economy, holiday sales don't really change much:
2007: (pre-recession) Holiday sales: $516 billion
Holiday sales as percentage of annual retail sales: 19.5%
2008: Holiday sales: $495.5 billion
Holiday sales as percentage of annual retail sales: 18.6%
2009: Holiday sales: $504.8 billion
Holiday sales as percentage of annual retail sales: 19.4%
So the start of the 2008-09 recession saw a drop of $21 billion in holiday sales: statistical noise in a $14.7 trillion economy (2009 GDP).
Now the propaganda machine is cranking up to announce that a 4% increase in holiday retail sales means the U.S. economy is off and running. Santa, please, please, please order your reindeer to stomp the life out of the idiotic fantasy that Americans buying a few billion dollars more needless junk from China is any sort of evidence that the U.S. economy is "growing at a healthy clip."
According the the BLS inflation calculator, $512 billion in 2007 is equivalent to $572 billion in 2012. Adjusted for inflation, the highly touted $586 billion in holiday sales expected in 2012 is within statistical-noise range of 2007 sales.
So sales returning to where they were five years ago is "strong growth"?
The entire retail sector is 7.9% of the GDP compared to a 21.4% share for the FIRE tranch (finance, insurance and real estate) of the economy.
Does anyone seriously believe that 3.7% of the economy can possibly leverage up the entire GDP with a razor-thin increase of a few billion dollars in holiday sales?
Santa, you have my deep gratitude if you could jam the propaganda machine so that this is the last Christmas in America where trivial retail sales are hyped as the savior of the $15.8 trillion U.S. economy.
Charles Hugh Smith is a novelist and economic commentator who writes for Business Insider and blogs at Of Two Minds.
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