Christmas Keynesianism

A bit of holiday economics courtesy of Bloomberg’s Black Friday coverage:

Holiday sales may also get a boost from there being 32 days between Thanksgiving and Christmas this year compared with 30 in 2011, Jennifer Davis, an analyst at Lazard Capital Markets in New York, wrote in a note.

Yeah, doubt it. Remember your Parkinson’s Law: work expands to fill time. If you have 32 days for Christmas shopping instead of 30, odds are that you may distribute your shopping days differently, but how many of you are changing your total gift budget based on having an extra 48 hours? Sure, there might be some minor knock-on effects — if the extra time leads to you going to the mall four times instead of three, there may be an extra trip to the adjacent Starbucks, for instance — but it’s probably not the kind of thing that’s going to make a big difference.

It’s a minor quibble but one that shouldn’t go unchallenged, because this kind of thinking has a way of bleeding into policymaking. Remember “Cash for Clunkers“? It somehow came as a huge shock to the plan’s proponents in Washington that auto sales plummeted when the program came to an end. By creating an incentive to make vehicle purchases during the window when the plan’s benefits were operative, the policy shifted when consumers made their purchases, but it didn’t goose long-term demand. And the resultant downturn was exactly what you’d expect from such sugar high economics.

While we’re on the topic of sucrose public policy, where batter to wrap this all up than with the Willy Wonka of such efforts, Franklin D. Roosevelt? Let us not forget his attempted contribution to the yuletide economy, as memorably captured by our friend (and occasional guest contributor at Ricochet) Melanie Kirkpatrick, who chronicled “Franksgiving” for the Wall Street Journal back in 2009:

In 1939, FDR decided to move Thanksgiving Day forward by a week. Rather than take place on its traditional date, the last Thursday of November, he decreed that the annual holiday would instead be celebrated a week earlier.

The reason was economic. There were five Thursdays in November that year, which meant that Thanksgiving would fall on the 30th. That left just 20 shopping days till Christmas. By moving the holiday up a week to Nov. 23, the president hoped to give the economy a lift by allowing shoppers more time to make their purchases and—so his theory went—spend more money.

For the next two years, Roosevelt continued to move up the date of Thanksgiving, and more states resigned themselves to celebrating early. By 1941, however, the facts turned against Roosevelt.

By then, retailers had two years of experience with the early Thanksgiving, and data were available regarding the 1939 and 1940 Christmas shopping seasons. In mid-March 1941, The Wall Street Journal reported the results of a survey done in New York City. The Journal’s headline put it succinctly: “Early Thanksgiving Not Worth Extra Turkey or Doll.” Only 37% of stores surveyed favored the early date. In Washington, the federal government reported that the early Thanksgiving resulted in no boost to retail sales.

A timely reminder that there are probably a few people in your life who could use some Henry Hazlitt in their stocking this year.

  1. TomJedrz
    Indeed.  In fact, continuing the analysis, if the retail spending is not higher but the window of expanded hours, higher advertising and other increased costs is widened, one could posit that the impact on the retailers is net negative from the lengthened shopping season. That said, I like the early Thanksgiving.  I wish it was late October, halfway between Labor Day and Christmas/New Year. The *perfect* timing for me would be the last Oct Thursday for Thanksgiving followed by Halloween the next day, then 2 months until Christmas!
  2. KC Mulville

    I might have some sympathy here if shopping itself was still an event.

    When I was a kid, my mother took my brother and me on the subway to downtown Philadelphia. We followed her around as she did some shopping, either at Gimbel’s or Strawbridges. There were carolers near the Salvation Army stand. There were soft pretzel stands. Chocolate stores. Small shops with musty smells and old men wearing ties to wait on us.

    By noon, we would head over to John Wanamaker’s for the huge light show in the Wanamaker’s concourse. Then we’d get in line for Santa and the Christmas picture. Mom would do some more shopping. 

    Then we’d go back to Wanamaker’s and meet Dad at the Iggle after he got off work. (Don’t worry, if you’re not from Philadelphia, this last event won’t make sense to you.) 

    All the time, the magic of The City made it special. That’s what I think of when Christmas shopping – the grand ritual.


    Those days are gone. These days, shopping is about the things we buy. How boring is that?

  3. ConservativeWanderer

    I am definitely spending far less this Christmas.

    I doubt I am alone.

  4. Nathaniel Wright

    While it is true that shoppers may distribute their shopping days differently, how does the 32 days affect their access to ready cash flow? (It probably doesn’t as we’ll see).

    Does it cause a line up of pay periods that allows for a slight increase in disposable income? (Not for those who are paid on the 15th and 30th or 1st and 15th).

    Does it allow for an additional credit card payment to have been sent which opens up additional credit that can be used? (Not likely and this could be affected just as easily by there being a weekend/no weekend on the payment date).

    Do shoppers actually wait for Thanksgiving to begin their Christmas shopping? (My wife and I don’t).

    As for KC’s nostalgic waxing and grumbles of “Shoppers today not appreciating the season’s festivities properly,” I’d like to invite him to shop at the Americana in Glendale or to attend the “Snow Day” event in Glendora, the Glendora Christmas Parade, or any number of wonderful events that happen during the Season in the various “Old Towns” in SoCal. Let alone Mass at St. Augustine’s in Culver City. 

  5. SPare

    The trick to understanding this is the definition of “holiday sales”.  The extra shopping days do contribute to larger holiday sales, though they likely will not have a significant impact on annual volumes.  So, the pair of socks that you needed to buy anyway on day 31 get counted as holiday sales this year, where they wouldn’t have last year.

    btw, the same thing happens when your cell phone company is trying to explain monthly revenues.  the number of business days in a month creates a pretty substantial swing when comparing month over month results.  February revenues are always the lowest of the year, but it’s not that people use the phone less just because it’s February.

  6. dittoheadadt

    You see this same kind of brainlessness occasionally when the inevitable “don’t buy any gasoline on (some particular) day!” email makes its rounds, and soooo many people (as it turns out, in my experience, mostly Libs) pass it around and encourage it as a way of forcing down the price of gas.

    It never occurs to these people that unless you reduce your consumption, changing in a miniscule way your purchasing timing won’t have the intended effect…and if implemented, might actually cause a gas shortage and a corresponding increase in the price (however temporarily).

    Similarly, I don’t think people buy what they buy based on how much time they have.  They spend the time they have to buy whatever it is they want/need to buy – whether Xmas gifts or gas for their cars.

  7. Muleskinner

    Being a Keynesian means never having to say “budget constraint.”

  8. BlueAnt

    The questions to ask are simple:

    1. Will two extra days in the “season” change how retailers plan for the future? (hiring extra workers, adjusting prices, pre-ordering more inventory, etc)

    2. Will two extra days change the amount consumers purchase?

    That covers supply and demand respectively, the two main drivers for economy boosting effects in the sector.  If the answers to the above questions are no, then two days is an irrelevant note in the economic analysis.

    I won’t claim it can’t happen, but I really want to see the detailed justification for thinking the answers are yes.

  9. Pilli

    I ran a retail electronics store for ten years.  My Christmas purchasing plans were put together in August and did not include the number of days in the Christmas cycle.  I planned based on comparisons between last year’s sales to date and this year’s.  I also planned based on projected gains I wanted (needed) to enhance my bonus.

    The only consideration for the number of days between Thanksgiving and Christmas was in payroll planning and when the payweek ended for the temporary Christmas help.

    I was way more concerned about when the last Saturday fell before Christmas because that’s when most men and a lot of women do their serious shopping.  That was ALWAYS my biggest sales day before Christmas.  If Christmas fell on a Sunday, I made sure to have extra (all) personnel on the sales floor because we closed at 6:00 pm instead of 9:00 or 10:00.  I even installed extra checkouts. We were going to have the same sales. We just had to make them faster.  Which brings us back to the original question.

    BTW, this was NOT fun but it did pay…well.

  10. Henry Scanlon

    Speaking of “Cash  for Clunkers”, I’d bet dollars to doughnuts that when the facts come out– if they ever do– it will turn out to have been an absolute monument to corruption, grafting, grifting, double-dealing, books-fudging, back-scratching, scamming ridiculousness. We may never know– certainly not until the Obama administration isn’t on the line of scrimmage blocking any attempt to get to the truth of it, but, my gosh, when did we, as a nation, get “Idiot” tattooed on our forehead?

  11. Trace

    There are no passive political messages at work here. The retail analysts are not Harvard laureate economists. They are mired in the practical. Logical or no, if the Lazard retail analyst says it will drive a bump in y/y sales then you can take it to the bank. I suspect the rationale has something to do with when the whistle gets blown on the season. There are always more presents to buy if there is only enough time for plenty of us.

    On the other hand if the extra two days of shopping does not result in a favorable comparison that makes the negative news all the more depressing.

  12. dittoheadadt

    Do you write a better term paper if you’re given more time? No, you still start it the night before it’s due.

    Do you write a longer term paper if you’re given more time? No, you still fill the requisite number of requisite spaced pages.