The U.S. House voted to repeal most restrictions on derivatives for Wall Street banks, setting the stage for a spectacular banking sector collapse in the future.
A credit union was closed tonight. Health One Credit Union, in Detroit, had about 4,000 members and $15 million in assets. Member accounts and assets are being transferred to New England Federal Credit Union.
Responding to the impact of the recession, Russia has taken steps to limit transaction clearing activities and international transactions, with the central bank taking on a more prominent position. The central government is preparing a broad bailout of the banking system, which could extend to a financing vehicle for national infrastructure projects. The bailout is being paid for using pension funds.
Hawaiian Electric Industries’ board of directors approved a plan to spin off its $5 billion banking subsidiary, Honolulu-based American Savings Bank. It is one of three large banks based in Hawaii. The bank’s operations are not expected to be affected by the change in ownership. The new bank holding company will be one of two surviving entities in a planned electric company merger.
In Portugal, the successor to the failed Banco Espírito Santo will soon stop using that name. Workers have begun changing signs at branches to the new bank’s name, Novo Banco. Meanwhile, Novo Banco is working on selling some divisions and assets to make way for a sale of the bank to a new owner next year.
A surprisingly strong November U.S. jobs report has observers speculating that the Fed could begin raising interest rates. The current crisis-level interest rates are beneficial for banks that are deep in debt, but the artificially low rates tend to reduce the size of the banking sector and make it difficult for banks to make a profit from normal banking activities.
A credit union was liquidated this week. Metropolitan Church of God Credit Union had 191 members, who were members of the namesake church in Detroit, Michigan. State regulators closed the credit union on Wednesday, and the NCUA was in the process of verifying member accounts.
Two more days of data releases confirm that Black Friday sales were down significantly this year, and that the change is not the result of shoppers squeezed for cash. How much smaller was Black Friday than last year? One indication comes from album sales, as reported in Billboard:
According to Nielsen Music, album sales declined 15.2 percent for the week ending Nov. 30, when sales were 7.28 million units, versus the nearly 8.6 million units scanned last year during the corresponding week ending Dec. 1.
In-store album sales is a declining category, of course, but it isn’t declining that fast.
The decline in shopping comes as consumers are feeling nearly as confident as they were before the recession. From Bloomberg:
Consumer confidence climbed to a more than seven-year high in November as Americans’ views of their financial well-being improved heading into the holiday shopping season.
Could it be that reduced shopping is part of what is making consumers feel more confident? That is a difficult conclusion to come to, as it is something never observed before, but it is consistent with what I have observed in the stores since the Christmas shopping season got going in a visible way on October 31. I have been seeing people shopping with more energy and optimism than in years past, feeling good about what they get, being decisive, but buying less and taking less time than in past years.
Ignore the snarky article and just look at the data CNBC is showing here (and the nice time series graph):
Search data from Polyvore shows Christmas shoppers started earlier this year:
Beginning of Christmas-season retail searches:
2012: Oct. 27
2013: Oct. 23
2014: Sept. 28
If shoppers are spending the entire fall season getting ready for Christmas, it stands to reason that some of us are essentially ready by the time Thanksgiving rolls around. This would explain a lower level of activity at retail in recent days. Despite mixed predictions, the reduced buying carried over into Cyber Monday and today.
Are the many people who have not bothered to do any shopping over the past five days missing out?
I think that is the question that may help to explain the reports that show sluggish activity at retail on Black Friday, yesterday, and today and predict the downward trend will cut into today’s online shopping. Sales on Thanksgiving and Saturday looked like they were up from last year, but not enough to make up for the decline on the other days.
One reason the retail results are puzzling is that there were so many shoppers out at some point on Black Friday. The difference this time seemed to be that most shoppers were following a script, a preplanned sequence of stores with specific products in mind at each destination. Shoppers were trying to avoid distractions and delays so that they would not have their whole day taken up with shopping. That’s how a large number of shoppers can translate into light foot traffic in the stores, with retail workers being sent home early at the ends of their shifts.
Consumer confidence seems to be higher than the past few Christmas shopping seasons, and the mood I saw in the stores seemed to bear that out. People were in a good mood. They were feeling successful in their shopping. If they were spending less, it was not out of financial distress, but by choice or because of lower prices. Maybe the big spending of 2012 and 2013 was, in part, a way to make up for the restrained spending of the previous six years. If so, maybe that was a moment of splurging that no one ever intended to carry forward into 2014.
A Cyber Monday decline, if true, is easier to explain. There were millions of late deliveries last Christmas, with high profile media coverage of the lapses. Many of those late deliveries were for orders placed between Thanksgiving and Cyber Monday. Tens of millions of other deliveries were not made until Christmas Eve and Christmas, technically not late, but late enough to cause worry. After that scare, it is easy to imagine that a few of the more cautious shoppers might want to place their online orders a week or two earlier.
My own experience of the holiday weekend couldn’t possibly be typical, but others’ reactions to it could be indicative. When I told people I would be spending most of the weekend at home, trying to catch up on my studies and housekeeping, the consensus reaction was one of envy. There weren’t any of the “Aren’t you at least going to ___” questions that I might have faced last year. Maybe, then, we have reached the point where the hustle of Thanksgiving weekend has built up beyond what most people really want. Perhaps, then, it is now the shoppers more than the non-shoppers who worry that they are missing out on something. That would explain shoppers determined to stick to a shopping plan and get home on time.
I wonder also if there is some cultural embarrassment that Black Friday, the unofficial U.S. holiday dedicated to shopping and the consumption of manufactured products, is beginning to overshadow the more conventional holiday on the day before. I counted at least six different shopping boycotts, all poorly organized and seemingly unrelated to each other, but each one getting some traction anyway. When a boycott movement gains broad support, it usually means people are looking for an excuse not to go. Even without remembering what Thanksgiving is about you could get the feeling that turning it into Black Friday Eve would not be a step forward. The pushback against this trend has been widely remarked on for at least ten years, but may now have reached the point where it means something in a commercial sense.