Warning of Dire Economic Circumstances Ahead of Christmas

Despite the US corporate media's insistence that the economy is thriving in the lead up to the presidential elections, many Americans are feeling the pinch. Inflation and rising interest rates have forced many to spend more and receive less. The situation is so dire that many people have depleted their personal savings and accrued significant credit card debt just to keep up with the escalating costs of food, energy, insurance, and housing. This toxic combination of inflation, exacerbated by failed economic policies, has hit low- and middle-income families the hardest. This could potentially lead to a crisis point in the upcoming holiday shopping season.

Consumers Running Out of Money

Gerald Storch, CEO of Storch Advisors, expressed his concern about the current economic situation during an interview with Fox Business' Maria Bartiromo. "It's very clear that consumers are running out of money. They're increasingly stressed by inflation and the exhaustion of their pandemic-era savings. The consumer might still be spending, but they're spending less than the growth of inflation," he stated.

Forecast for the Holiday Shopping Season

When asked about his predictions for the spending season between Black Friday and Christmas, Storch, a former Target executive, was not optimistic. He said, "I don't expect too much, frankly ... and think that if we can get growth in the 2.5% range, that'd be doing pretty well, and that's not very good. You have, by the way, the shortest holiday season you can even imagine, so that's against retailers." Storch, who was also the former CEO at Toys "R" Us, added, "Now and the time between Thanksgiving and Christmas is very, very short, so that's going to be bad. The election's going to weigh on things and the geopolitical situation as well, so I think it's going to be a pretty weak Christmas."

Consumers Spending More but Receiving Less

Storch's warning about a potential consumer slowdown this holiday season follows recent retail sales data showing consumers increased their purchases at retailers last month. However, this increase is attributed to higher prices, meaning consumers are spending more but receiving less.

"Trading Down" Phenomenon

Storch's bleak outlook for the holiday season aligns with observations from Goldman analysts about the "trade-down phenomenon" affecting both high-end and low-end consumers. The last time "trading down" was mentioned frequently on earnings calls was during the 2008 Global Financial Crisis.

Lower Forecasted Spending Trends

The National Retail Federation's annual Prosper Insights & Analytics survey showed lower forecasted spending trends for Halloween among consumers nationwide. The last time this happened was just before the Covid crash. All eyes should now be on Black Friday and Cyber Monday to gauge holiday shopping trends.

Surge in US Drinking Rates

It's worth noting that economic hardships may be contributing to the surge in US drinking rates, which are at their highest levels since the 1970s inflation storm.

Bottom Line

The economic stress experienced by millions of Americans in this era of failed economic policies is palpable. It's only a matter of time before something gives. What are your thoughts on this issue? Do you agree with the dire predictions for the upcoming holiday season? Share this article with your friends and let's get a conversation started. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.