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With gas prices having dropped so drastically......

Charles DeanCharles Dean
edited December 2008 in The Economy
I'm wondering if that might be why black Thursday numbers were much better than expected. I know most small businesses added fuel surcharges or raised their prices last spring because of the spike in fuel prices. I find it unlikely that they have dropped those prices accordingly.

Also, people don't have to spend as much on gas. That coupled with a current drive less mentality anyway, I wonder if people who still have a job are finding that they have more in the bank than normal. Also I wonder if small businesses who had such fuel surcharges are finding themselves more profitable.

Even though it wasn't talked about much, fuel prices were a big reason for the decline in the economy recently.

Comments

  • WestSideBillyWestSideBilly
    The numbers were better because all the retailers were (are) having crazy sales. Revenue will be OK, profits will not.

    It's likely that people are spending some of the gas savings, but for most people that's only $50-100/mo since August.
  • WestSideBillyWestSideBilly
    Most of the nation's stores kicked-off the critical holiday shopping season with double-digit sales declines, portending more price-cuts in December and raising questions about the long-term prospects for many retailers.


    Guess it wasn't that good.
  • snigletsniglet
    Don't pay much attention to Black Friday sales statistics. There is a LONG history of bullish Black Friday results but over-all dismall holiday spending. I've read articles explaining how the Black Friday statistics methodology are spurious at best, and don't really measure sales that well.
  • perfectfireperfectfire
    ShopperTrak just counts foot traffic which doesn't necessarily translate to sales or profits. However it's easy to count and so they always have their data out first.
  • lamontlamont
    I think the consumer recession has taken on a life of its own now due to layoffs, the equity extraction ATM having been shut off a long time ago, and credit cards becoming maxed out and with tighter credit standards preventing the expansion of credit. High gas prices may have been the nail in the coffin of the consumer, but relaxing that isn't going to remove all the other factors which are a drag on spending now.

    The lower commodity prices across the board will show up first, probably, in producers of things which are somewhat recession-proof. Consumer staples will probably perform well because people still eat during a recession, and the collapse of corn and oil prices will increase their margins. Its possible that other companies that have large exposure to oil (e.g. UPS) might also do better than expected, but that has to be balanced by the demand destruction they're facing. As an obvious example, airlines are highly exposed to fuel prices and should perform better than expected given their top-line revenue -- but their top-line revenue is collapsing right now. Drug stocks and healthcare should also do reasonably well and should have some upside surprise as their input costs come down.

    But beware -- a lot of companies with significant commodity/oil exposure were hedging against inflation by locking in prices, and they will have locked in some prices near the commodity/oil peak in prices and it will take some time for those contracts to unwind and for them to start benefiting from lower input prices.
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