Holiday Shopping Forecast
Consulting house Deloitte issued survey results that will depress retailers. People will drive to the malls in droves this year, as foot traffic for holiday sales improves. CNBC reports:
One half of the more than 5,000 consumers polled in Deloitte's survey said they expect the economy to improve next year, up from last year when about just about one-third of consumers expected economic improvement ahead.
Even better for retailers, fewer shoppers - some 37 percent - are expecting to spend less on the holidays this year than they did last year. That's the lowest level since 2006.
But despite these positive signs, there are some challenges.
First, consumers plan to spend about $386 on holiday gifts. That's down from last year's survey, when shoppers said they would spend $395.
One factor contributing to the decline is the expectation that consumers will give an average of 12.8 gifts this year, said Jackie Fernandez, a partner in Deloitte's retail practice. Consumers have been trimming their gift lists every year since 2007, when they gave an average of 23.1 gifts during the holidays.
ECB Chief Heads to Germany
European Central Bank chief Mario Draghi will travel to Germany to explain to members of parliament there his bond-buying solution to the recovery of Europe. Germany's banking officials have objected to the action as one that will let troubled nations off the hook by cutting borrowing costs without austerity budget changes. Draghi has said the purchase of sovereign paper will go hand in hand with budget reviews, but it is not clear that these will be stringent. One hurdle Draghi faces is concern among Germany politicians and voters that it is primarily their money that the ECB will use to buy the debt of weak countries. Bloomberg reports:
"Draghi is on a mission to smooth concern that OMT won't send inflation skyrocketing or lumber German taxpayers with liabilities they can't pay," said Frank Schaeffler, finance spokesman for the Free Democrats, who are in coalition with Chancellor Angela Merkel's Christian Democrats. "Many lawmakers - even if they don't admit it - have grown suspicious of the ECB and its head, once dubbed the most German of non-German central bankers."
Volkswagen reported reasonably good earnings for the first nine months of the year, despite trouble in Europe. The global rival of General Motors Co. (NYSE: GM) and Toyota Motor Corp. (NYSE: TM) reported that sales revenue was up 24% to €144.2 billion. Operating profits were flat at €8.8 billion. But even VW could not escape the downdraft in Europe. The firm reported that deliveries in Western Europe fell 2.8% in the first three quarters of the year. At least it picked up ground on rivals in the region. Market share in Europe for the period was 24.6%, up from 23.2% last year. Management brimmed with optimism despite the slowing of the world's economy:
CFO Hans Dieter Pötsch was satisfied with business developments in light of the uncertain economic environment. "We have always said that the second half of the year would be more difficult, so our performance is in line with expectations. We have achieved a robust result." He is confident that the Volkswagen Group will master the challenges that lie ahead of it. "We have a broad global positioning and our strong financial basis is practically unrivalled", said Pötsch. "Our relative strength compared with the competition shows that we are on the right path."
He may find his optimism wrong as the world's economy slips deeper into recession.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Market Open Tagged: GM, TM