O’Connor: Election hits retail sales in the pants
Wake up, Funny Money fans, ’cuz it’s time to talk about economic indicators. Yes, I know those are the two most potentially boring words in the English language after “kale recipes,” but stick around. Just like kale, it’s good for you. Besides, it’s about your money which, coincidentally, if you tried to chew a wad of dollar bills, would taste just like kale.
According to the University of Michigan, consumer sentiment in September was up, indicating that all of us Americans who buy things are feeling more confident about the future. However, the people who sell us the stuff we buy aren’t feelin’ it, because sales are down. Ask retailers about their sentiment, and they’ll sigh and recollect a time before the Intertoobs when they could sell videocassettes for $29.95 a pop.
What could lurk behind this disconnect? This could require a deep dive into economic data and consumer behavior statistics, unless you’re a CEO, in which case you glance over at cable news and blame the next thing that flashes across the screen.
Scary clowns, profits down!
I know this because I have spent years interviewing corporate CEOs. When I worked from home, I once interviewed the CEO of Office Depot in my bathrobe, although he didn’t look any better in it than I do.
Ask a CEO why his sales are down and you’re likely to hear excuses about the weather (“It was too hot. It was too cold. There were sunspots on Venus.”). Or excuses about the holidays (“Easter was late. Christmas was early. The January white sales were in August.”).
But now they’re getting inventive — or at least desperate — as Matthew Townsend of Bloomberg points out. Now the CEOs are blaming the election.
Evidently, the political contest between the Raging Pumpkin of Doom and She Who Must Be Obeyed is causing consumers to lose their appetites for cheeseburgers at McDonald’s or jeans at the Gap.
According to Gap CEO Art Peck, “The election here in the United States is a level of uncertainty that’s probably unsettling consumers right now.”
Please, Gallup, start polling the heck out of this question:
Pollster: “When it comes to the presidential election, are you voting for Clinton or Trump, or have you decided that not knowing who will occupy the White House next means you’ll just stop buying pants until Nov. 9?”
Prospective voter: “I’m undecided, but leaning pretty hard toward, ‘No pants.’ ”
Bad answer, Mr. Clinton!
The suggestion that consumers are waiting until after Election Day before they make a financial commitment to chicken nuggets off the $1 menu strikes me as about as unlikely as Gary Johnson hosting a memory improvement workshop, so here’s where the economic indicators come in.
Americans might be feeling more confident about the future, but based on the past several years of the economy, that means they feel unlikely to be laid off anytime before, say, next week. That is not the definition of “confident” but of “less lousy.” Adding up a few numbers shows why.
First, projected raises for workers were small going into this year, just 3 percent, according to consulting firm Aon Hewitt. But that’s only if you got one — 10 percent of companies froze salaries last year, up from 6 percent in 2015.
If you did get a raise, chances are it got lost to increased health care costs. According to the American Society of Employers, 40 percent of employers have hiked the cost of health care benefits for workers in the past few years. Deductibles for in-network preferred provider plans increased $250 for family coverage last year. That’s 7 percent which, if you’re doing the math at home, is more than that 3 percent raise.
That’s not adjusted for inflation. In 2015, says the Census Bureau, adjusted median income was 2.2 percent less than in 1999. If you haven’t had a raise since the Great Recession, your $45,000 salary is worth barely more than $40,000 now, for what amounts to an 11 percent pay cut.
Add it up and your 3 percent raise is far from covering your effective 11 percent pay cut plus your 7 percent-plus hike in health care costs. Even a corporate CEO should know that having no money has been found to correlate very strongly to people not spending the money they don’t have.
The next time some CEO blames poor sales on the weather, the calendar or coverage of tax returns and email servers, just know that the emperor is wearing no pants.
Fortunately, he can borrow my bathrobe.