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Get out there and spend
Commentary: When the going gets tough, the tough go shopping
By Irwin Kellner, MarketWatch
Last Update: 12:16 AM ET Nov 11, 2008
PORT WASHINGTON, N.Y. (MarketWatch) -- As the nation's retailers gird for the holidays, it's time to remember the golden rule: he who has the gold, rules.
By now it should be no surprise that a growing number of people are in dire straits. Consumer spending in the third quarter fell by the most for any quarter in 28 years.
October doesn't look any better.
Excluding the post-9/11 plunge, it could very well be that retail sales in the past month turned in their worst performance in as many as 40 years. Folks, we're talking about 1968 -- when the nation was in turmoil over two assassinations, the Vietnam War and a presidential election.
We'll know for sure this Friday, when the Commerce Department releases its first look at October's retail sales. But whatever the number is, it won't be pretty.
Consumers are reeling from a vicious combination of soaring food, energy and health-care prices, combined with falling stock prices and home values. To incomes not keeping pace with inflation, add huge debt loads, depleted savings accounts and bankers as penurious as Ebenezer Scrooge.
As for jobs, forget about it! More than 1 million jobs have been lost so far this year, pushing the unemployment rate to a 14-year high of 6.5%.
Little wonder why most people are in no mood to shop.
Retailers feared as early as this summer that sales would fall in the fall. As I observed then, even as the mercury was rising, merchants began displaying and discounting fall clothing, Halloween merchandise and even toys for Christmas. See July 28 column
By doing so, merchants figured that they would enter the key holiday shopping season lean and mean with only a bare minimum of inventories on hand. Little did they know that the bottom would fall out of the economy in September, leaving them just as overstocked as ever.
Call it high anxiety if you're a shopkeeper. I call it a great buying opportunity for those shoppers with cash and the confidence to spend it.
If you think the stock market is a bargain with the Dow Jones Industrial Average $INDU some 37% below last year's peak, drive over to your local mall and you'll find markdowns of 60% or more as retailers struggle to move holiday gear.
This will be one holiday where consumers don't have to wait for retailers to blink and cut prices. They've already done it and are ready to slash prices even more just to ring up some sales.
So give yourself and the economy a present while you're shopping for others. This is the year to shop till you drop, and don't be afraid to haggle on prices.
Nowadays, everything is negotiable, whether it's a luxury car, a designer dress or a flat-screen TV. Don't forget to ask for a discount at restaurants as well -- especially the high end, which are suffering dramatic declines in diners.
The 6.5% unemployment rate means that 93.5% have jobs. What's more, many are not only keeping up with inflation, they are beating it.
More than ever, it pays to remember that when the going gets tough, the tough go shopping.
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