Government urging a bumper Xmas spend

A bit like Christmas last year the government (in Australia) is telling us that things aren't as bad as they may appear; and that we should all go out and spend up big for Christmas.

They are trying to encourage people to spend in order to put more money through the retailers. This then makes the retailers happier (and richer), and also adds to the government's revenue. As well, if people spend up big at Christmas, it might create some additional temporary jobs and bring the unemployment rate down for a month or so.

However I think that the more likely outcome will be that people will spend about the same as last year and possibly a little less. With the official all-in unemployment rate at a twelve year high, youth unemployment at a staggering 14.5 percent, and financial experts advising unemployment will trend upwards in 2015, I don't think there are going to be very many people going out and splurging this Christmas.

Retailers are already discounting heavily to try and get sales and there is still two weeks until Christmas.

I would put money on a 60:40 bet that this Christmas is the same as, or not as good as, last Christmas for the retailers. If I remember, and I am sure I will, I will let you know if I would have lost my $60.

Edit ... 12/12/2014

In today's Australian Financial Review at the bottom of page 15 there is an item by Sue Mitchell where she reveals that, because of the slow Christmas sales so far, David Jones and Myers are considering having their Boxing Day discount sales before Christmas. Sue tells us that the big department stores are already discounting heavier than normal but the shoppers are just not spending.

Barry.