Holiday shopping: On your marks, get set... spend!

holiday.jpgTomorrow night is Halloween and that can mean only one thing: Christmas. This over-hyped annual ritual really comes down to inexperienced reporters cribbing the guesstimates of NY-based analysts about the prospects for Southern California merchants. Good luck sorting that out. Holiday sales are, of course, a big deal for retailers because they represent such a large portion of annual profits and because they can provide some measure of consumer confidence. But the complete picture won't become available until fourth-quarter financial results are released early next year, and for reasonably healthy chains, the numbers won't be jaw-dropping, one way or another. Holiday sales, in fact, are usually only significant in times of major growth or contraction - neither of which is at play in 2013. As for consumers, there's probably a timidness about spending this year because of the decent-but-not-great economy, but so much depends on individual situations (job, investments, debt, etc.). Here in L.A., sales are likely to be fine (helped along by international visitors). From this week's Business Update on KPCC:

Steve Julian: Business analyst Mark Lacter, whatever happened to "better late than never?"

Mark Lacter: Well, Steve, retailers never want to sell late because it often means having to reduce the price. They're looking to start out as soon as possible - and we're reminded every season that these last three months represent their biggest payday. And here in California people do seem to be buying stuff - consumer spending has been up for 14 consecutive quarters, going back to the spring of 2009. Also, consumer sentiment is at its highest level since the beginning of the recession in late 2007, though that's probably been brought down because of the government shutdown. But California is generally outpacing the rest of the nation.

Julian: There has to be a "but" in here someplace...

Lacter: The "but" is that only 60 percent of the jobs lost during the downturn have been recovered, and the unemployment rate in many parts of the state, including L.A. County, is still at or above 10 percent, which isn't what you'd call a healthy economy. And that's why holiday shopping this year could end up being sort of hit and miss. Folks who have well-paying jobs and a bunch of their money in the stock market - and Southern California has its share of both - those folks will probably be spending good amounts.

Julian: Are there geographic tell-tale signs?

Lacter: The closer to the coast you go, the more spending there's likely to be. But it's a different story if you're feeling vulnerable about your job or in the amount of savings you have in the bank. So you have retailers once again coming up with ways of reaching as many budget-conscious folks as possible, as early as possible. The most obvious move is opening their stores on Thanksgiving night - Macy's is the latest of the chains to get a head start on Black Friday. Another strategy is matching your prices with the prices on Amazon and other online retailers. All told, expect holiday sales to run 3 percent ahead of last year, with the L.A. area likely to be a bit higher. Decent, but not great.

Julian: What's the message to consumers now: buy or not buy?

Lacter: Well, we'll start with the good news - gasoline prices are at their lowest level since the beginning of the year, with an average gallon of regular in the L.A. area running $3.75. If those numbers keep falling into November and December, consumers might feel comfortable enough to buy more at the malls. Here's some more good news - the L.A. area has seen a huge drop in the number of homeowners who are underwater, which happens when the value of a property is less than the amount that's owed on the property. This of course was a big problem during the recession, but over the last year the median home values have gone up between 20 and 30 percent.

More by Mark Lacter:
American-US Air settlement with DOJ includes small tweak at LAX
Socal housing market going nowhere fast
Amazon keeps pushing for faster L.A. delivery
Another rugged quarter for Tribune Co. papers
How does Stanford compete with the big boys?
Those awful infographics that promise to explain and only distort
Best to low-ball today's employment report
Further fallout from airport shootings
Crazy opening for Twitter*
Should Twitter be valued at $18 billion?
Recent Business Update on KPCC stories:
Naysaying emerges in wake of LAX shootings*
Holiday shopping: On your marks, get set... spend!
What to do with all that bad chicken?
Why it's hard to gauge progress of health care programs
Why L.A. isn't being hit too hard by shutdown - for now

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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