Holiday sales grew only 2.7%, the lowest level since the depth of the Great Recession in 2009. And this is on top of a weak year ago. Further, GDP grew $4.1% in the third quarter mostly due to inventory build up in advance of the holiday season. So large inventory less weak sales equals surplus! This should lead to large January markdowns.
We’re stuck in a five year pattern of very slow growth while we have trillions of dollars held in cash on consumer and business balance sheets. This means people don’t have the confidence to invest. And the primary reason for that comes back to uncertainty over government policy: taxation, debt, deficit, entitlement reform. Businesses can’t plan since they don’t know what will be their costs, especially on the labor side. We need government economic reform to drive certainty and unleash investment.