Anyone in the Northeast affected by the snowstorm--particularly in the Washington, D.C. area where people are still employed--will not likely make it out for the last major shopping weekend before Christmas. What does this mean?
In all likelihood, potential consumers will be doing what my wife and I are doing (other than shovelling snow and watching movies). They'll be on the computer and purchasing items online, paying slightly more for faster shipping. (Incidentally, it just goes to show how many people are purchasing gifts online. I ordered a DVD that took about two weeks to arrive through normal shipping. Usually, it would be about five business days).
With D.C. shut down, much like it was back in 1979 during Washington's Birthday weekend, bricks and mortar retailers will likely get hit in an already poor holiday retail season. Inventory has been ordered with whatever money they had remaining.
But the snow won't fair well for commercial real estate, i.e. malls and shopping centers. Retail commercial real estate, if hit harder than it has been so far this year, will like get hit more on their loans, which will further devalue bank assets and further devalue banks. And, let's not forget about derivatives, credit default swaps, blah, blah, blah.
On the bright side, the Internet continues to reign supreme, so that's good news for Amazon.com and other online retailers.
But, if bricks and mortar retail is hit again this year, we might see some failures and that means higher unemployment levels from the likes of at least high-end retail.
Keep in mind that the D.C. area still has purchasing power because people have jobs, but this big snowstorm does not help the economy for the area or country. As retail woes continue, it means further problems in unemployment, less consumer spending and the cycle continues.
Now, some of you might be saying, "Hey, unemployment went down last month to 10 percent from 10.2 percent in October." My sources tell me the unemployment rate last month did not add unemployed persons ready for extended unemployment benefits. Here's why:
In November, Congress agreed to unemployment extensions--possibly longer in states with unemployment higher than 8 percent (which represents most states). In order to make the numbers look better in November (probably to push consumer confidence higher for the holiday season) Congress decided not to officially approve the extension until December. See Senate OKs Filing Extension for Jobless.
The Labor Department's Bureau of Labor Statistics did not include unemployed persons eligible for extensions starting in November because the Senate did not OK it until this weekend. Therefore, a number of these unemployed civilians claiming unemployment (now extended unemployment) fell into a "black hole" and did not exist in BLS (or BS) unemployment statistics.
Look for unemployment to reach at least 10.5 percent for December, based on BLS numbers. Which (here's the BS part) actually was 17.5 percent if you include people who are part-time, discouraged workers not looking for a job, etc. That number should increase in January's unemployment because it might have included some people who had part-time jobs for the holidays. Keep in mind unemployment hit 25 percent during the Great Depression.
So, after one of the largest snowstorms in the D.C. history hit at one of the worst times for retailers, the losers in this scenario include retail commercial real estate and retail mortgages (topping of a horrendous year already), bricks and mortar retail establishments (topping off an already horrendous year), banks and/or commercial mortgage-backed securities special servicers holding retail defaults, bondholders on those CMBS retail loans (topping off an already horrendous year) and unemployed people looking for work in retail establishments (topping off an already horrendous year for them as well). Also, Democrats in Congress since this is another hit to banks, it will worsen the economy and continue to hurt their re-election chances for next year--and don't get me started on their inability to agree on healthcare--dumbasses.
The winners include UPS, Fedex and postal workers (although budget cuts can still affect their positions during the year). Online retailers, including Amazon.com, Best Buy and retailers who sell items that do not need to be tried on. and can be ordered online That would also factor in Target, Wal-Mart and other discount retailers who still did well this holiday season. Also, the grocery stores did well (topping off an already good year for them since all of us need to eat). They were packed prior to the snowstorm.
Who else did well? Hmmm....airline flights cancelled, possibly less people travelling...that can go either way. See East Coast Flights, Shopping Snowed In.
I think rock-salt companies are going to have a good year, snow shovelling, infrastructure workers who will repair potholes and cable television operators (topping off an already good year for them).
Oh, and banks, for no other reason than the Federal Government gave them a Christmas gift year round of free money so that they can save their sorry asses.
With that I can only say--Oh...the weather outside is frightful, and the timing's not delightful, but since none of us have any dough...Let it Snow, Let it Snow, Let it Snow!
Merry Christmas and Happy New Year! Let's hope for a more prosperous year in 2010!
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