Ho Ho Ho: Poor Christmas Sales?

Below is the Cass Freight Index, which tracks domestic freight shipping in North America. It bears ominous news.


Notice where we were in October. The trend is down. Freight shipments are falling. It’s not a free-fall, but still a significant drop. The Cass Freight is the lowest it’s been at this time of year compared to any time in the past 4 years.

Freight shipments fall usually due to businesses cutting back on orders. When businesses have bloated inventories they need to clear out, they cut back on orders. By extension, we can usually conclude that consumer spending is down. Consumers are cutting back, leading to businesses cutting back, leading to first-order producers cutting back.

This isn’t a one-off indicator. Check the Baltic Dry:



The Baltic Dry tracks large international freight shipping. Currently, it is near all-time lows. Shipping orders are way down. 2015 has been the worst year for the BD thus far.

Overall, this tells us something: corporate forecasters do not think consumers are going to be buying much over the winter and in the near future.  A key element of recession is a fall in consumer spending.

We’re already seeing this in some areas. Macy, Nordstrom’s, and Kohl’s have suffered over the last quarter:

Retail sales came out Friday morning and they were worse than dreadful. They confirmed the horrific quarterly reports from Macy’s, Nordstrom’s, and Kohl’s. Total retail sales grew a minuscule 0.1% from September and only 1.7% versus last year. It’s even worse than it looks. When you back out the subprime auto loan spurred auto sales (long term rentals), retail sales grew only 0.5% over last year.

I will follow the Christmas retail sales reports with great interest. If retailers and producers are not importing much for the Christmas season, as we saw in the Cass Freight and Baltic Dry, this indicates worrying in the marketplace. If this data continues to trend downward for November, then I predict a bad sales season for Christmas this year.

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