If we have a huge retail day in the US the day after Thanksgiving...

[63dot]

...will it be a good sign for the incoming Obama administration?

Can it lead to a Dow Jones 10,000 point stock market?

And will it restore confidence back into our economy?

Somehow, I think economic analysts will really be watching this day very closely.

[Rodimus Prime]

Not going to happen. At best it will not be as bad as they are predicting. This Holiday season is going to be a bad one. Question is just how bad.

[rdowns]

I live close to a huge mall and shopping area (name a store and its there). Parking lots were not packed.

[mkrishnan]

At best it will not be as bad as they are predicting.

Hate to be pessimistic, and I'm optimistic on us climbing out of this crisis overall, but srsly. I don't think any sensible person is predicting a good retail day for Black Friday or a good retail holiday season in general.

On the other hand, I will note that the Dow had it's best two day gain (http://www.bloomberg.com/apps/news?pid=20601087&sid=akKx_JtbEs28&refer=home) since 1987 in the week leading up to today. I don't know, however, that this is a good thing. Market volatility is definitely a part of the overall recipe for disaster that created this mess, once you look beyond the subprime issue itself.

Slow, steady recovery. This is a turtle race, not a rabbit one.

[jessica.]

I live close to a huge mall and shopping area (name a store and its there). Parking lots were not packed.

I just drove by the largest (or at least most visited) mall in Orange County and the parking lots were slightly more bare than I recall. I attribute much of this to online shopping deals that can be had but I don't rule out people clutching their wallets a bit more either.

[Rodimus Prime]

Hate to be pessimistic, and I'm optimistic on us climbing out of this crisis overall, but srsly. I don't think any sensible person is predicting a good retail day for Black Friday or a good retail holiday season in general.

On the other hand, I will note that the Dow had it's best two day gain (http://www.bloomberg.com/apps/news?pid=20601087&sid=akKx_JtbEs28&refer=home) since 1987 in the week leading up to today. I don't know, however, that this is a good thing. Market volatility is definitely a part of the overall recipe for disaster that created this mess, once you look beyond the subprime issue itself.

Slow, steady recovery. This is a turtle race, not a rabbit one.

Oh I agree we are going to get out of it like the rest of the world is. The growth will long term will continue to match its historical numbers.

Just this is part of the cycle and it is bad one. Right now it is just hunker down and weather the storm.

[LumbermanSVO]

I just got a message on through the on-board computer on my semi-truck. The company is expecting a much slower holiday season and they are expecting Q1 '09 to be way slower than normal.

They are also trimming the fleet by laying off the poor performers and those with bad safety records.

[mkrishnan]

They are also trimming the fleet by laying off the poor performers and those with bad safety records.

Just when fuel costs had finally fallen, too! :( Hope that the effect on you is minimal.

[LumbermanSVO]

Just when fuel costs had finally fallen, too! :( Hope that the effect on you is minimal.

I should be ok for this round, they are focusing on company drivers right now. I am not a company driver anymore, I drive a truck that is leased to them. Technically I am employed by a brewery, not a trucking company :)

[63dot]

thanks for the early reports since i am on the west coast and many have not hit the malls yet, and i live in a very sparsely populated area so the recession hit us harder than most

while people in san jose/san francisco complain about losing their 100K jobs a year, we have similar jobs with similar training and we are being axed from 40K jobs and we don't have their nestegg/investments but we have the same priced homes/rentals

slow recovery is probably most likely

the last time we had a bush in office, we had a proven recession from every point of view, even GOP think tanks, and the democrats made some radical changes and we climbed out rather quickly and sustained a growth, actually the longest in american history

that type of miracle recovery only happens once every 200 years so it's a lot to expect again just 18 years later, i know, but you can't fault me for hoping

UPDATE: So I just got back from the main mall of our town of 30,000 and it was packed. The city downtown shopping region of the neighboring town of 1,800 people was packed.

The town with three much larger malls which serves 30,000 people directly, and three times that indirectly to the north of us were packed.

What will be key is if the town 30 minutes away that has half a dozen malls that serve 140,000 people were packed. If all malls were packed, it only means 300,000 people in total have malls that did well on black Friday. Not conclusive proof of climbing out of a recession locally, but not a bad sign, either.

[Unspeaked]

Black Friday sales were up 3% from last year, but the market still tanked.

(The outlook for the remainder of the holiday shopping season is very poor.)

So to answer the OP, it looks like:

...will it be a good sign for the incoming Obama administration?

No.

Can it lead to a Dow Jones 10,000 point stock market?

No.

And will it restore confidence back into our economy?

No.

:(

[mkrishnan]

Interesting... the violence (which is being discussed in another thread already) aside, I guess the rest of it is still surprisingly positive. I would still be shocked if it's a good Winter for retail, but 3% (http://www.marketwatch.com/news/story/Black-Friday-doesnt-a-season/story.aspx?guid=%7BE750D7E5-44FD-4501-B18C-F111D2BB857D%7D) is nothing to be ashamed of.

[MacNut]

We won't see the Dow hit 10,000 for a few years. It was over valued when it was that high.

[Desertrat]

From this morning's "Rude Awakening":

“Americans, Your Retailers Need You!”

"We can just imagine the signs hung in the poor shopkeeper’s window, adorned with last year’s decorations (he can’t afford new ones) and complete with a finger-pointing Uncle Sam, reminding customers of their duty to the great consumer nation.

There’s nothing quite as patriotic as splashing out on a big ticket item you don’t really need with money you don’t really have in order to jump start your flailing economy, right?

Well, no...but never mind all that, it’s the holiday season!

Across the Empire, 172 million shoppers hit the stores (both actual and virtual) over the four-day weekend, up from 147 million last year, according to the National Retail Federation. Figures released by ShopperTrak RCT Corp. revealed that day-after-Thanksgiving retail sales alone rose 3% over last year to $10.6 billion. That’s a lot of big screen TVs and Abercrombie & Fitch sweaters..."
_____________________



I've read that the numbers of shoppers were in response to deeper discounts than in the past. So, doesn't that mean less profit per sale? If what you want to do is clear the shelves, fine. If you're trying to make money, yuck.

It's reported in the financial news that the national average savings rate has gone from 0% to 10% in just these last few months. That's pushing a trillion dollars, held out of our consumer economy.

Sorta sounds like the Black Friday flood might well be followed by a trickle...

'Rat

[mkrishnan]

"Sales up 3%": Is that in terms of dollars, or numbers of sales?

Dollars, per the link in my last post. Specifically:

2008 = $10.6B sales, up 3% YoY, $372.57 per customer, est. 172M customers*
2007 = ~$10.3B, up 8% YoY, $347.55 per customer, est 147M customers

*customer estimates = online + in-store

[leekohler]

I was downtown on Saturday and it was a madhouse! I heard Friday was an absolute nightmare crowd-wise down here, so I'd say it definitely looked better than last year.

[mkrishnan]

I was downtown on Saturday and it was a madhouse! I heard Friday was an absolute nightmare crowd-wise down here, so I'd say it definitely looked better than last year.

This reminds me that I want to go to Marshall Field's (Oh, yes, you heard what I said ;) ) to get one more Spring tie. Looks like violets and purples are the it colors. :)

[MacNut]

I was downtown on Saturday and it was a madhouse! I heard Friday was an absolute nightmare crowd-wise down here, so I'd say it definitely looked better than last year.That is one day, they need to sustain it for 3 more weeks. If the stores are offering big sales to get the people in that is going to cut into the bottom line.

[leekohler]

This reminds me that I want to go to Marshall Field's (Oh, yes, you heard what I said ;) ) to get one more Spring tie. Looks like violets and purples are the it colors. :)

Good! Because there is no such thing as Macy's. :) We were in J Crew yesterday and the colors this season are awesome! They had a lot of great shirts, but I'm gonna wait for a better sale. They had serious slut potential. :D I think I could do some major damage dressed in a nice purple.

[63dot]

So last night on CNN I saw a wrapup show about Friday through Sunday. It wasn't as slow as some people thought it would be, but it wasnt' gangbusters. Friday was far beyond what people expected nationwide, but Saturday was a real letdown to dampen the whole thing. Overall, it was so so. I was hoping for a breaking out of the recession we have been in for a year now, officially, but we will have to see how this entire season does overall. It's not likely, from the past weekend, that it's going to be spectacular.

At a certain point, prices are going to get so low on products, and housing, that the bargain hunters are going to come out, but only when they think things have hit rock bottom.

We may still have to stay in this recession for some time and that bums me out. At least we have hope come January in the White House.

This is so reminiscent of this time in 1992 when we had a Bush in the White House, and there was a recession caused by voodoo trickle down economics, and a young Democrat came in and turned things around. If Obama can do the same, the GOP will no longer be seen as the party that takes care of the economy and business.

Goldwater and his cronies, to their credit, built up such a legend that the GOP was about the economy, and that the democrat's were useless mad spenders. It's funny that since Reagan's second term, the GOP has been the tax and spend wasteful ones with our tax money. :)

[leekohler]

So last night on CNN I saw a wrapup show about Friday through Sunday. It wasn't as slow as some people thought it would be, but it wasnt' gangbusters. Friday was far beyond what people expected nationwide, but Saturday was a real letdown to dampen the whole thing. Overall, it was so so. I was hoping for a breaking out of the recession we have been in for a year now, officially, but we will have to see how this entire season does overall. It's not likely, from the past weekend, that it's going to be spectacular.

At a certain point, prices are going to get so low on products, and housing, that the bargain hunters are going to come out, but only when they think things have hit rock bottom.

We may still have to stay in this recession for some time and that bums me out. At least we have hope come January in the White House.

This is so reminiscent of this time in 1992 when we had a Bush in the White House, and there was a recession caused by voodoo trickle down economics, and a young Democrat came in and turned things around. If Obama can do the same, the GOP will no longer be seen as the party that takes care of the economy and business.

Goldwater and his cronies, to their credit, built up such a legend that the GOP was about the economy, and that the democrat's were useless mad spenders. It's funny that since Reagan's second term, the GOP has been the tax and spend wasteful ones with our tax money. :)

Sorry man, but housing has a long way to drop before us bargain hunters shop for that. It's so over-inflated that it's going to have to drop a lot. Housing is still not affordable at all.

[63dot]

Sorry man, but housing has a long way to drop before us bargain hunters shop for that. It's so over-inflated that it's going to have to drop a lot. Housing is still not affordable at all.

The over inflation of housing started in late-1945 when the troops came home from the war, and outpaced wages/salaries thus starting a bubble. And a few years ago, we saw that gigantic bubble pop.

I agree with you that housing will drop a long ways more. Our house has a real value 1/3 of what it had during the height. At least it is very small and still liquid. But huge houses that went for millions and got reduced by half are illiquid and have a market valuation of $0 dollars. I didn't understand why very large houses could have a zero value but that crazy Cramer guy on CNN actually explained the concept pretty well. If you have a 3 million dollar house and you list it a 1.5 mil. and people laugh until they pee on themselves, then that house is illiquid and has a zero market value.

I remember right before the bubble popped and Suze Orman said invest in yourself, go for happiness, get a college education, and watch out for the overinflated real estate market. Some called her alarmist, but she was right and accurate about the timing of the bubble burst.

Right before the stock market crash in '89, a couple of young brothers (virtually kids at the time) starting to make predictions, talked about the danger in the market. Few listened and now they are the "Motley Fools", as a financial company and brand name that came out a few years later, who nobody consider foolish. ;)

[IJ Reilly]

Sorry man, but housing has a long way to drop before us bargain hunters shop for that. It's so over-inflated that it's going to have to drop a lot. Housing is still not affordable at all.

That depends on where you are looking.

The bottom-feeders are already out in droves, but many buyers aren't staying away so much because prices are too high but because the banks are hardly lending, and not many want to buy when prices are still falling.

The overall trend in housing prices is upwards. It has been for a long, long time.

[leekohler]

The over inflation of housing started in late-1945 when the troops came home from the war, and outpaced wages/salaries thus starting a bubble. And a few years ago, we saw that gigantic bubble pop.

I agree with you that housing will drop a long ways more. Our house has a real value 1/3 of what it had during the height. At least it is very small and still liquid. But huge houses that went for millions and got reduced by half are illiquid and have a market valuation of $0 dollars. I didn't understand why very large houses could have a zero value but that crazy Cramer guy on CNN actually explained the concept pretty well. If you have a 3 million dollar house and you list it a 1.5 mil. and people laugh until they pee on themselves, then that house is illiquid and has a zero market value.

I remember right before the bubble popped and Suze Orman said invest in yourself, go for happiness, get a college education, and watch out for the overinflated real estate market. Some called her alarmist, but she was right and accurate about the timing of the bubble burst.

Right before the stock market crash in '89, a couple of young brothers (virtually kids at the time) starting to make predictions, talked about the danger in the market. Few listened and now they are the "Motley Fools", as a financial company and brand name that came out a few years later, who nobody consider foolish. ;)

I'm sorry, but it was just common sense that told me the housing market was over-inflated. I kept asking myself who was able to afford all these $350,000 condos in my city. The answer was- no one. People were gambling that they would go up to $475,000 and then they could sell! I'm not kidding! I had a banker friend actually try to tell me this. I told him not to ever introduce me to anyone stupid enough to buy into that line of thinking. I mean, come on! There's only so many people who can afford that.

That depends on where you are looking.

The bottom-feeders are already out in droves, but many buyers aren't staying away so much because prices are too high but because the banks are hardly lending, and not many want to buy when prices are still falling.

The overall trend in housing prices is upwards. It has been for a long, long time.

Starting to drop pretty fast here lately. There are entire empty condo buildings everywhere.

[63dot]

I'm sorry, but it was just common sense that told me the housing market was over-inflated. I kept asking myself who was able to afford all these $350,000 condos in my city. The answer was- no one. People were gambling that they would go up to $475,000 and then they could sell! I'm not kidding! I had a banker friend actually try to tell me this. I told him not to ever introduce me to anyone stupid enough to but into that line of thinking. I mean, come on! There's only so many people who can afford that.


My friend from school bought her condo for $350K, in a medium sized city, and at the height of over pricing, it's valuation went to $450K, and today, it's worth $100K and she still has $100K left to pay on it. She is pissed.

She is no dummy and had been a real estate agent for many years. She didn't predict this type of downturn.

I remember real estate people who thought San Diego, SF, and LA condos, small, in unremarkable neighborhoods, would go into the million dollar market. This happened at one time in Hong Kong but that economy, the buyers, and the philosophy is completely different.

Paris Hilton's 10 million dollar mansion listed for just over 3 mil. Wouldn't you think there would at least be one crazed fan, who is rich, let's say from Japan, who would pay more? Real estate times are certainly hard.

[IJ Reilly]

Starting to drop pretty fast here lately. There are entire empty condo buildings everywhere.

Prices have been dropping steadily around here for over a year. Foreclosures on every block, a lot like the early '90s. But that does not change the basic fact that real estate is an historically appreciating asset. Just as prices overshot on the upside (due to ridiculously easy credit), they are very likely to overshoot on the downside. I wouldn't claim to know when this will occur, but if you're expecting housing to become "affordable" before buying in, then good luck.

When I was a student in urban planning, I had a professor who any time anyone used the term "low cost housing" would wag his finger at them and say, "there's no such thing as low cost housing. There's low income housing. There's government subsidized housing. But no housing is low cost!" That was in the mid-70s, when housing was cheap by current standards. I've always remembered that lesson, it has always been right.

[leekohler]

My friend from school bought her condo for $350K, in a medium sized city, and at the height of over pricing, it's valuation went to $450K, and today, it's worth $100K and she still has $100K left to pay on it. She is pissed.

She is no dummy and had been a real estate agent for many years. She didn't predict this type of downturn.

I remember real estate people who thought San Diego, SF, and LA condos, small, in unremarkable neighborhoods, would go into the million dollar market. This happened at one time in Hong Kong but that economy, the buyers, and the philosophy is completely different.

Paris Hilton's 10 million dollar mansion listed for just over 3 mil. Wouldn't you think there would at least be one crazed fan, who is rich, let's say from Japan, who would pay more? Real estate times are certainly hard.

Come on though- when you really think about it, that kind of inflation is completely unsustainable. It shouldn't take a genius to figure that out.

[63dot]

Come on though- when you really think about it, that kind of inflation is completely unsustainable. It shouldn't take a genius to figure that out.

Economists have been saying all along for any stock (Google, Yahoo, Webvan) or housing (Silicon Valley region), to hold its value, there had to be a real asset valuation behind it, not vapor assets.

Homes need to be supported by a populace who have good wages and salaries.

Stocks need to be supported by real revenue and net income.

There is certainly a reason we had a dot.bomb and now this housing crisis. Right now, if I had any stock in Google, I would be terrified. Some optimists had high hopes for a MS-Yahoo empire, but that was not supported by adequate revenue on both sides. It would have been an empty one sided takeover.

Sure Jerry Yang will still be a billionaire, but only from the monies people threw at that untested company, the same as is the case with Google. I also think E-Bay can get nailed in the future. We will have to go back, somewhat to the tangible assets for now and use the net to be in a supporting role.

[leekohler]

Prices have been dropping steadily around here for over a year. Foreclosures on every block, a lot like the early '90s. But that does not change the basic fact that real estate is an historically appreciating asset. Just as prices overshot on the upside (due to ridiculously easy credit), they are very likely to overshoot on the downside. I wouldn't claim to know when this will occur, but if you're expecting housing to become "affordable" before buying in, then good luck.

When I was a student in urban planning, I had a professor who any time anyone used the term "low cost housing" would wag his finger at them and say, "there's no such thing as low cost housing. There's low income housing. There's government subsidized housing. But no housing is low cost!" That was in the mid-70s, when housing was cheap by current standards. I've always remembered that lesson, it has always been right.

Of course it always goes up, I'm not an idiot. But what we saw in the last decade or so was utterly ridiculous. Housing prices went way up way too quickly. And there was no way in hell I was buying anything during that.

[Desertrat]

Until the high inflation of the late 1970s, the national-average house sold for 2.7 times the median wage. A quick and dirty search gave a number in the mid-forty-thousand range for the median, so the average house price should be around $130,000.

I guess that's maybe a 3BR/2Ba/garage sort of house?

Good luck.

[leekohler]

Until the high inflation of the late 1970s, the national-average house sold for 2.7 times the median wage. A quick and dirty search gave a number in the mid-forty-thousand range for the median, so the average house price should be around $130,000.

I guess that's maybe a 3BR/2Ba/garage sort of house?

Good luck.

Good luck finding a 2BR condo for that. :rolleyes: It's more like $240,000 right now.

[63dot]

Until the high inflation of the late 1970s, the national-average house sold for 2.7 times the median wage. A quick and dirty search gave a number in the mid-forty-thousand range for the median, so the average house price should be around $130,000.

I guess that's maybe a 3BR/2Ba/garage sort of house?

Good luck.

Or 4 times the price of a new mid level car, which for a 2b/1ba house was about 16K in the main town. Of course a single maxed out Rolls/Bentley costs more than most houses at the time, and still does in many areas of the world.

At the 2.7x formula, with my county's median income, you can't find any house at $130K close to a 3 b/2ba/garage that I can think of. Maybe way, way in the outskirts. That's more for a condo with 3 b/2 ba/garage port in a not so nice area of town. I think the formula is at 4x or so, but was close to 6x or more at peak. The housing has certainly come down, but maybe we will see it bottom out at 2.7x or lower as things tend to balance toward equilibrium.

[IJ Reilly]

Of course it always goes up, I'm not an idiot. But what we saw in the last decade or so was utterly ridiculous. Housing prices went way up way too quickly. And there was no way in hell I was buying anything during that.

The point is, housing has been ridiculous for decades -- so good luck picking a moment when it's not. In most places, prices have retreated to what they were five years ago. Is that still too ridiculous?

[synth3tik]

Good luck finding a 2BR condo for that. :rolleyes: It's more like $240,000 right now.

That would be the price of a 1br closet "condo in Minneapolis. Around the Chicago area it would have to be higher.

[Desertrat]

My memory has it that house prices started dramatically rising during the latter half of the 1970s. The energy crunch started folks buying houses closer into town, for the shorter commuting distances. The increases eased off during the middle 1980s as oil fell to the $10/$15 range, and then started back up with the dot-com bubble period. After that, the uber-loose lending standards had folks only looking at the monthly payments, not the amount of the mortgage.

[IJ Reilly]

My memory has it that house prices started dramatically rising during the latter half of the 1970s. The energy crunch started folks buying houses closer into town, for the shorter commuting distances. The increases eased off during the middle 1980s as oil fell to the $10/$15 range, and then started back up with the dot-com bubble period. After that, the uber-loose lending standards had folks only looking at the monthly payments, not the amount of the mortgage.

Just the other night I was going through a box of my parent's old papers. I found their mortgage for the first home they bought in 1949, for $8,800.00 ($100.00 down with a GI loan). They sold that house for twice that price ten years later. Sold their next home 15 years later for nearly three times as much (in a very depressed real estate market), bought another which they sold five years later for nearly triple the cost, and so on. They only time they stepped off the escalator was when my mother got cold feet during the '80s and insisted on selling their home, and renting an apartment for a couple of years. They lost out, since real estate continued to appreciate during those years too. In fact they managed to buy back in right before the last big fallout in housing prices during the early '90s. So again, good luck trying to time real estate purchases.

[leekohler]

That would be the price of a 1br closet "condo in Minneapolis. Around the Chicago area it would have to be higher.

Actualy no- it's not. You can get a very large 1 BR for that amount in a very nice area. Hell, you can get a 2BR for that in a decent neighborhood.

The point is, housing has been ridiculous for decades -- so good luck picking a moment when it's not. In most places, prices have retreated to what they were five years ago. Is that still too ridiculous?

Yep- around here it is.

[IJ Reilly]

Yep- around here it is.

Everywhere. In the places where housing is less expensive, incomes are commensurately lower. Affordable housing is a thing of the past -- about 50 years past. There are no secular forces on the downside of housing prices.

[leekohler]

Everywhere. In the places where housing is less expensive, incomes are commensurately lower. Affordable housing is a thing of the past -- about 50 years past. There are no secular forces on the downside of housing prices.

Then I guess I'm never going to own anything.

[IJ Reilly]

Then I guess I'm never going to own anything.

If I'm not being too nosy, is this because you simply can't afford to buy, or because you object to spending what it costs to buy in to the housing market?

[leekohler]

If I'm not being too nosy, is this because you simply can't afford to buy, or because you object to spending what it costs to buy in to the housing market?

I can't afford it. I'm solidly middle class, but I've done the math, and it's not affordable in any way, shape or form.

[IJ Reilly]

I can't afford it. I'm solidly middle class, but I've done the math, and it's not affordable in any way, shape or form.

I hear you -- it's very tough. The problem is, except for periodic drops in the housing market like we're seeing now, it just gets tougher and tougher. Hardly anyone can afford to buy in any longer without two incomes in the household. Back in my parent's generation, it was a completely different story.

[Desertrat]

I've always likened my life to being like a ping pong ball in a concrete closet. Four different high schools, four different colleges, different jobs in different cities. So, the idea of moving to a low-cost area and using skills accumulated through the years didn't bother me.

I began with some land with a tired old mobile home on it. Fine for an old bachelor. With a second marriage, I figured that a decent house would be a good thing, living with a decent woman. :) So, she did the floor plan architecting, and I designed the roof truss and did the elevations. We stockpiled the materials, doing lots of bargain-hunting. Hired a crew to "dry in" the box. We finished the place ourselves, with minimal outside help. I will say that by the time I was done, I had my left thumb "beat plumb into submission". :D Plain vanilla outside, jewel box inside--and a helluva neat set of views from any window.

There's more than one way to keep the rain off besides sign up with the banker-man...