The 12 Nays of Christmas
     by Merrill Lynch

This was put out by Merrill Lynch the other day:

12th: Slowing Real Wage and Disposable Income Growth – Both wage
growth and disposable personal income growth, which propped up
consumer spending during last year's recession, appear to finally beslowing.

11th: Plummeting Consumer Confidence – Consumer confidence measures are at eight-year lows.

10th: Impending Threat of War In Iraq – The threat of war in Iraq is tightening consumer wallets
and the outbreak of war could keep consumers glued to the TV.

9th: Rising Oil Prices – The threat of war has boosted oil prices by nearly 50% year-over year.

8th: Backed Up Merchandise At West Coast Ports – The backlog of containers at the West Coast
ports could result in retailers marking down late arriving goods.

7th: Low Financing Rates May Boost Auto Sales – Lower interest rates and increased promotional
activities may boost auto sales, to the detriment of general merchandise sales.

6th: No "Must-Have" Fashion – For the second consecutive year, there are few, if any,
"must-have" fashion items to drive apparel sales.

5th: Six Fewer Shopping Days – This year's late Thanksgiving will result in the shortest possible
Christmas selling season (26 days). We estimate that this factor could reduce Christmas sales
(Nov/Dec combined) by 1.6%.

4th: Declining Payrolls & Increasing Unemployment – Payroll declines and increasing unemployment
will pressure consumer wallets.

3rd: Potentially Bloated Inventories – Weak sales in September and October may leave retail inventories
(most notably at the department stores) somewhat bloated, leading to increased markdowns over the next two months.

2nd: Stock Market Declines Cause Negative Wealth Effect – A 40% decline in the S&P 500 over the past
two years has hurt consumers' perception of their own wealth and may limit discretionary spending.

1st: The Post-9/11 Sales Surge – Last year's "Post-9/11 Sales Surge," when consumers increased their spending
on general merchandise at the expense of travel and lodging, has created difficult comparisons for broadline retailers.


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