Phl good news: US consumer spending is up

Christmas (or yuletide to some), the season of peace and rejoicing, has finally come.  As tradition suggests, however, the yuletide season shall start on December 24 yet and ends on January 6 the following year.  Historically, it was celebrated as a winter festival by the “Germanic people”, as a “pagan religious festival”.  Through the years, however, it has evolved and is largely likened with the Christians’ celebration of Christmas.  In fact, today, we have synonymously called the “Christmas season” - the “yuletide season”.

The celebrations-then and now-may have differed a lot considering the religious belief of these two distinctively different groups of believers.  Regardless, however, of the contrasting rituals that come along with their beliefs’ peculiarities, these celebrations have one thing in common.  In both occasions, they are both on buying sprees and relish on mouth-watering dishes with reckless abandon.  In other words, they simply spend and enjoy.

Today, this scenario is repeated all over the world.  In fact, in the USA, a surge in retail sales was very impressive.  As we all know, the Black Friday (November 23 this year) of every year is the beginning of their four-day Thanksgiving holiday weekend and shall kickoff the US holiday shopping season.  As records would show, the Americans spent US$1.042 billion on Black Friday alone, up by 26% from last year (provided by Comscore).

This development is so encouraging. It is a known fact that the US Gross Domestic Product (GDP) is 70% consumer spending driven.  Therefore, should consumers curtail spending, the US economy contracts.  In simple terms, if Americans stop buying, the world loses the money of the widely known habitual big spenders.  On the contrary, the world shall benefit.

Moreover, US Housing Starts is at a current level of 894.00K, up from 863.00K last month and up from 630.00K one year ago. This is a change of 3.59% from last month and 41.90% from one year ago.  This is a huge improvement and shall significantly affect Cebu’s economy favorably too should the trend continue.

For us, Cebuanos, “housing starts” statistics are very relevant.  Rightly so, because there is one industry in Cebu that will be directly benefited by its rise and will be badly hit by its fall.  These statistics are used in the USA as indicators of the state of the economy.  These are very important indicators because they show how much money the general public has.  If there is a rise, it will simply mean there is more money in the economy.  If there is a fall, it means the economy is cash strapped and unemployment must have gone up.

Statistically, “housing starts” records building activity at its inception, measures the number of private housing units on which construction is begun each month.  It includes all types of accommodations designed as family living quarters, whether single units or apartments.  Apartments, however, are counted separately, so that a 5-door apartment building is tabulated as 5 housing starts.

As we track and analyze the rise and fall of “housing starts” in the USA, we must be aware that there are many industries whose fates are tied to residential construction.  Apart from the easily identifiable construction materials like lumber, cement, roofing materials, etc., the furniture industry is among those directly affected by its movements.  Any drop in the “housing starts” statistics coupled with an unequivocal dependence in the US market could mean disaster for Cebu’s furniture industry.  Any rise, however, could mean bounty for industry players and their dependents (who are mostly dependents of skilled but not adequately schooled workers).

Indeed, these are bits of good news.  For our manufacturing sector’s sake, hopefully, they (USA) can sustain it.

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