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Holiday hopes

Money | Retailers think smaller debt loads will lead shoppers to open their wallets this month

Issue: "Daniel of the Year," Dec. 18, 2010

The Christmas shopping season arrived early, with several big retail chains opening on Thanksgiving Day (Kmart at 6 a.m., Sears at 7 a.m., Toys R Us at 10 p.m.) rather than waiting for "Black Friday." In the online world, rolled out some of its Black Friday deals as early as October. Walmart, the nation's top retailer, touted online-only deals on Thanksgiving Day, but it held off until Black Friday's arrival (barely) to throw open the doors of its physical locations: Walmart stores opened at midnight.

With household discretionary spending near a 50-year low (as a percentage of total consumer spending), retailers-following two years of disappointing Christmas-season sales-are hoping to reap the rewards of pent-up consumer demand. The National Retail Federation is predicting a "moderate" uptick in holiday retail sales this year of 2.3 percent. Last year, sales rose less than half a percent, following a 3.9 percent decline in 2008.

Among the consumer statistics cheering retailers this Christmas season: Outstanding credit card debt has fallen 16 percent since late 2008, suggesting that consumers may feel less strapped and be more willing to spend.

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Merchandise sold in November and December typically accounts for about one-fourth of annual sales for discount and department stores-and the amount is even higher for jewelry stores.
-Joseph Slife is the assistant editor of

Irish eyes are crying

"It's clear we need some form of external assistance," Ireland's Finance Minister Brian Lenihan said as European Union banking leaders and representatives from the International Monetary Fund (IMF) arrived in Dublin to craft a rescue plan for the Emerald Isle. The intervention followed weeks of pressure from other Eurozone members, as well as nervous financial markets, as Ireland tries to weather a banking crisis that's driving interest rates for its government debt above manageable levels.

A portion of the funds for the Irish bailout, pegged at a total of $90 billion, will come from the $991 billion European Financial Stability Facility set up earlier this year, with the remainder coming from the IMF. The Irish bailout, in the form of loans at below-market rates, is slightly smaller than the Greek bailout earlier this year.

To reduce Ireland's budget deficits (this year's deficit is expected to hit a staggering 32 percent of the country's gross domestic product), Prime Minister Brian Cowen unveiled a four-year plan calling for $13.2 billion in spending cuts and $6.6 billion of tax increases. The plan aims to cut public-sector payrolls by nearly 25,000 and reduce pay for new public-sector workers by 10 percent.

Fed forecast

The Federal Reserve's Open Market Committee said U.S. unemployment is likely to stay near 9 percent in 2011, then drop to near 8 percent in 2012. The forecasts were included in notes from the committee's early November meeting, released just before Thanksgiving. (In comparison, the unemployment rate was less than 5 percent in 2007.)

Committee members also downgraded their 2011 GDP-growth projection to between 3 percent and 3.6 percent. Earlier estimates, made in June, were about a half-­percent higher.

Joseph Slife
Joseph Slife

Joseph is the senior producer of WORLD Radio and the co-host of The World and Everything in It.


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