The HS Dent Financial Blog

RSS      

Tight Credit and Christmas Shopping

The first few days after Christmas, when sales figures start to trickle in, should be quite interesting this year.  We’re expecting holiday sales to be roughly flat over last year’s disappointing numbers.  But headlines like this make us wonder if we’re being too optimistic:  “Shrinking Credit Threatens Almost $9 Billion in Holiday Sales”

Bloomberg writes,

Target Corp. and U.S. retailers may lose almost $9 billion in holiday sales as banks rein in lending to cash-strapped consumers before a new credit-card law takes effect.  Sales in November and December may fall 1.2 percent to $436.7 billion from the same period in 2008, said Britt Beemer, chairman of consumer polling firm America’s Research Group. If lenders weren’t cutting customer spending limits and rejecting more credit-card applicants, sales would gain about 0.8 percent to $445.5 billion, he said in a Dec. 21 interview.

Despite the best efforts of the Fed to open the floodgates, credit remain tight in the private sector.  It will be interesting to see exactly how badly this dents 2009’s holiday sales.

Charles Sizemore, CFA

Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy