Online Shopping Hit a Record

The final numbers for holiday retail spending are trickling in, and for many retailers it was a VERY merry holiday. Online shopping hit a record $32.6 billion dollars from November 1st through the end of December, which was higher than projected. While the TOTAL retail numbers aren’t “officially” out yet, the National Retail Federation announced an increase to its projection for total holiday spending of $451 billion dollars, up 3.3% from 2009, due to a very “robust” November. The good news for consumers is that even though spending was UP, the Federal Reserve just announced that November marks the 27th month in a row that revolving consumer debt has DECLINED. As for credit card companies and banks, a New Year brings with it new fees for consumers. Thanks to the Card Accountability Responsibility and Disclosure Act, or the CARD Act, and some new Federal Reserve regulations, credit card companies have new rules and procedures to follow when it comes to consumer credit cards, all of which are costing them, and eventually you, money. Banks are now looking for NEW ways to ramp up revenue this year. Just as those holiday credit card statements start rolling in, so will NEW fees. And, if you think you’re exempt to an increase in fees, because you’re a debit card user – think again. Ok, so what’s really going on here? Let’s “check” the facts using our Checks and Balances process. rnInternet retailers, or E-tailers, saw a number of records broken this past holiday season. The total amount spent online during the months of November and December was 12% higher than in 2009; the Monday after Thanksgiving, better known as Cyber Monday, was the first day ever to break the 1 billion dollar mark in online sales. While the National Retail Federation has not yet released the official numbers of total holiday sales, they believe it should come in at around $451 billion dollars, which would be the greatest one year increase since 2006, and just under the record high of $452.8 billion dollars in 2007. Many are calling 2010 the best holiday shopping season since 2006, and believe that the economic recovery in consumer spending is well underway. However, the unemployment rate in November of 2006 was 4.5%, compared to 9.8% in 2010. Revolving consumer debt in 2006 was at $871 billion dollars, two years later it totaled $957 billion dollars in 2008. Spending has been on the rise!! But this brings up an important question…with increased holiday “retail spending”, and more than DOUBLE the rate of unemployment, how is it that consumer debt is STILL on its way down? Part of the reason, is consumer debt charge offs by many banks. Lower revolving debt can be largely traced to these bank-charge offs, which occurs when a consumer declares bankruptcy or when their credit card debt is more than 180 days past due.