No, Sales Didn't Fall 2.7 Percent Thanksgiving Weekend
One would hope that after a decade of people lamenting the poor reporting of Thanksgiving weekend retail data, the news media might learn to do better. Yet we see few if any signs that reporters understand the misleading press releases put out by the retail industry and its flacks.
The innumeracy of the media has not been greatly exaggerated.
The Wall Street Journal, the New York Times and others reported industry estimates of sales as if they were grounded in fact. As we discussed last week ("Ignore the Black Friday Hype"), these shopper surveys and measures of foot traffic have in the past had no predictive value relative to retail sales. Their track records are fairly awful. The National Retail Federation has been especially terrible in its forecasts. A coin flip-- 50/50 chance of getting it right -- has much greater accuracy than these surveys.
Let's look at each of these reports to see if we can identify where they went awry.
• WSJ: Holiday Sales Sag Despite Blitz of Deals
"Retail spending over Thanksgiving weekend dropped for the first time in at least seven years, the industry's main trade group said ..."
It may have said so, but we do not have any reliable data yet as to how much was spent over the holiday weekend. What the WSJ was reporting were answers to a survey question as to what shoppers recalled spending last year over Thanksgiving weekend -- $423.55 -- versus what they thought they would spend this holiday weekend -- $407.02.
Neither shopper number is based on any review of actual spending; these are figures that random shoppers literally make up on the spot. They are made without the benefits of looking at checking accounts balances or credit card statements. History informs us that neither guess is remotely accurate.
One would imagine that the best-read business publication in America would be able to handle analyses of this sort easily. Over the years, I have witnessed other sorts of innumeracy from the Journal when it pays attention to industry flacks. The one that stands out most was confusing the annual seasonality of home sales with a housing recovery (see this and this).
• NYT: Gloomy Numbers for Holiday Shopping's Big Weekend
"Over the course of the weekend, consumers spent about $1.7 billion less on holiday shopping than they did the year before, according to the National Retail Federation, a retail trade organization."
No, they did not spend $1.7 billion less. (We don't know yet). The most you can say with any degree of accuracy is that shoppers said they were planning on spending about 3 percent less this year. However, shoppers' declared intentions in years past have been anything but accurate. This has been true whether they expect to spend more or spend less. Humans are simply terrible at predicting their own behavior; you are not that good at recalling your own past behavior, either.
Unfortunately, the Times also pulled a lot of the NRF press release verbatim. The "paper of record" was acting more like the stenographer of record.
(Even data-driven Bloomberg News isn't blameless,reporting ShopperTrak's foot-traffic surveys as if they have some sort of predictive value.)
The media seem to get this wrong every year. Last year, there were glimmers of hope as we saw lots of smart and skeptical reporting ("Black Friday Skepticism (Finally!) Goes Mainstream"). I wonder if green and inexperienced reporters are simply thrown onto this beat with no guidance, no institutional memory to aid them.
It seems the media has relapsed. This year the skepticism evaporated, and mostly negative reporting has occurred with no factual basis for it. Investors are advised that media reports of holiday shopping are unreliable and inaccurate.
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Barry L Ritholtz at email@example.com