Earn What You Spend

Last month I introduced a series of posts I’m calling TrendMints - I use the anonymous data from Mint.com’s 650,000 users to look at trends in the overall economy.  While there are certainly a number of pitfalls in such a calculation, it is still a useful guide. 

First, let’s take a look at the average spending, in dollars, in the aggregate category of ‘All Spending’ for the month of December in two cities, New York City and Minneapolis.  As a quick reminder, Mint.com aggregates the dollar amount spent each month by individuals across a variety of categories such as shopping, home/mortgage, and food/restaurants.  We’re using the anonymous, aggregated version of that same data. 

The story here is depressingly simple: spending was significantly down.  Notice how November, which includes that holy grail of shopping, Black Friday, was down slightly from the preceding months.  Back at the end of November, I thought this was nearly catastrophic - November should have seen a significant gain, so any loss represented a drastic net change from where spending should be:

Even with stronger-than-expected sales reported on Black Friday, this clearly corroborates the story that the consumer is drastically pulling back his or her spending. 

But when compared to the drop in December, the drop in November looks quite tame.  It’s clear that December saw a huge decline in overall shopping, as corroborated in both New York and Minneapolis.  Why this retrenchment?  The recession is really hitting home, and the one excuse for shopping this time of year - the holidays - wasn’t enough to overcome this. 

Next, let’s take a look at two more specific categories: expenditures on clothing and electronics.  

Here again we see quite a clear story - even if it is one we wouldn’t like to hear.  Spending on clothing took a nosedive - people bought their holiday presents and quickly went back to being terrified consumers. 

And the story in electronics? 

The exact same: a sharp decrease in spending.  Here it looks like New York City fared better than elsewhere, with December average spending levels still higher than those for October, though not by much.  Minneapolis is showing a clear decline.

The takeaway, then, is simple: we’re spending less money on shopping.  The holidays, of course, are supposed to carry the weight for retailers for the entire year - it’s when they come into the black and historically make money for the first time all year.  That didn’t happen this year.  Now, the major impetus to spend - holiday shopping - is over for another 10 months.  It’ll be interesting to see what happens in January.