American's Shop till they drop: Record Thanksgiving Sales for 2011

In my Earlier blog Exagerrated Poverty Levels in the USA, I was mentioning how the American media was projecting the state of affairs of US economy and particularly the poverty levels. While there are cries over increasing poverty, falling salaries, increasing unemployment numbers a surprising and contradictory scenario emerged from the Thanksgiving sales.

Thanksgiving apart from being an American tradition is the most happening Sales season in the US, where the retailers and consumers across the country and from neighboring countries get into a shopping frenzy.

What's rattling are the emerging numbers from the National Retail Federation (NRF), USA. NRF reported that estimated sales of $52.4 billion during the four-day weekend, up from $45 billion last year. With 9% unemployment numbers and $15 trillion in debt, this is rather surprising figures. The consumer spend continues and no conservatism seems to ever return. Whatever the news of bad economy and recession are the spending in the holiday season has not on held on but also rose year on year.
The retailers make about 20% of the revenue over the Thanksgiving weekend sales which typically lasts 4 days.

Annual revenue earned by Indian I.T. which is estimated $88 billion in revenue in 2011 according to Indian I.T. trade group, NASSCOM looks like a ridiculous figure comparing what the retailers make in an year which is around $500 Billion. One could imagine how deep the consumerism in the US is and how it drives the debt, prices and costing skyward.The same spending can not only eradicate poverty and hunger in the US but the world over !!!!
 

A few observations

1. Exceedingly heavy promotions this year, couple with staggered store openning times drew more consumers. More stores participate and many opened at midnight or even earlier - during Thanksgiving Thursday - rather than waiting until 5 or 6 a.m. as they used to.This added shopping hours in peak season mean that year-on-year comparisons will be skewed. For example Walmart opened it stores at 10pm instead of 12am Kohls and Target opened early at 12am. Many retailers followed this suite. For myself I had my own road map based on store openings. There were beelines everywhere huge huge lines. Even the afternoon sales at North Face and Coach outlets had a line for getting into to the store and billing. North face we stood in entry line for 30minutes and another 55 minutes for billing. 
2. What was ironic was most of the Apparel and few regular consumables have been marked up by atleast 15% in comparison to last year.Add inflationary measures the cost of merchandise has actually increased. Am pretty sure that the basket size of shopper definitely shrunk this year compared to earlier years.
3. Thirdly the hardships of 2008 seems to be taken care as of today, as many consumers either got of debt or reduced their debt or refinanced it better. With worse off shoppers did manage to indulge in some impulsive buying suppressed previously.
4. To sum it up the observed human condition behind the supposedly bullish Thanksgiving weekend sales indicates a bearish consumer mindset. Even though small-scale personal anecdotal experience is rarely cause for significant investment action, the nature of the encounter serves to reinforce my belief that the so called bullish Black Friday sales numbers were borne out of both consumer and seller desperation rather than some sort of resurgent confidence.

Behind the Statistics of NRF, ShopperTrak
Here is the survey method from NRF.
The survey, conducted Nov. 24-26 by BIGresearch for NRF, polled 3,826 consumers and has a margin of error of plus or minus 1.6%.* NRF’s definition of “Black Friday weekend” includes Thursday, Friday, Saturday and projected spending for Sunday. The survey estimates number of shoppers, not number of people. 
 

For a person like me who had been working with statistics for a major part of my career can say the sample set is rather misleading and too unrepresentative of the actual population. The numbers given out by NRF are sample projection to a population and not actual numbers by any means. There is a significant error factor in the same. More so going by the Thanksgiving numbers it is highly improbable to predict how the rest of the holiday season which is to follow will pan out. Dampening, fatigue is never ruled out looking at 2008 numbers.
Secondly the shoppers numbers is actually traffic and not count of people who shopped. In traffic it is again an estimate of people who went to a shop.

Some more Interesting Numbers
$11.4 billion Retail sales on Black Friday alone.
28.7 million Shoppers who visited stores and websites on Thanksgiving Day
37.8 % Spending done online
48.7 % Shoppers went to department stores
37.5% Shoppers went to discount retailers
51.4% Bought clothing and accessories 39.4% Bought electronics 32.6% Bought toys
More than 9,000 People waited outside the Macy’s flagship store in New York City’s Herald Square for a midnight Friday opening
$2Price of waffle irons that set off a frenzy – or a “near-riot” as some have called it – among shoppers at a Walmart near Little Rock, Ark
20 People injured at a Los Angeles area Walmart when a woman eager to buy an Xbox 360 reportedly pepper sprayed her fellow shoppers


Financials
On Black Friday alone, retailers raked in an estimated $11.4 billion, up 6.6% from last year, according to ShopperTrak. It was the biggest year-over-year increase since an 8.3% surge in 2007, and easily surpassed the anemic 0.3% growth rate reported last year. Nationwide, about 227 million shoppers visited stores and websites during the long weekend, up from 212 million last year, the retail federation said. Foot traffic on Black Friday jumped 5.1%, ShopperTrak said.
Spending during the period is closely watched by retailers to gauge how sales might go in the final sprint before the holidays, and is also monitored on Wall Street because consumer spending accounts for about 70% of the U.S. economy. The market loves the news flow overall, by close of trading, the Dow Jones industrial average was up 291.23 points (2.59 %), the S&P 500 gained 33.88 points (2.92%).

Exaggerted Poverty levels in the USA

Every now and then the American media cries aloud on how poverty is on a rise in the US and how the government is failing to arrest the same. I find it surprising for the most prosperous nations media's insane cry on poverty rise where both the government and business focus on consumerism and spending as means of economic growth. One fails to understand that spending doesn't mean to spend on unnecessary items and luxury. The context here is seems to be within the developed/Industrial world. The poverty levels are no where comparable to rest of the world.
If a country is getting deep into poverty there should be steps taken by government and public alike to increase savings in view of the tougher times, but he opposite seems to happen here. USA's is building on it debt to finance more and more spending and feed corporate greed and do nothing to stem the financial problems for the long term. No wonder US today has got a debt mounting to 100% of its GDP. Germany's debt accounts to more than 150% of its GDP. Compare that to India which has got only 25% GDP in debt.
About the cartoon: Poverty stricken people all over the world might be starving but the poor fill their diet with cheap fast food like McDonalds. Obesity by poverty and fast food chains is rampant in lower class in the US, while the opposite is true in India. Middle class and effluent communities cherish the American fast foods like the McDonalds, KFCs, Dominos and hence put on weight.
Behind the poverty definitions
Definitions of poverty vary considerably among nations. For example, rich nations generally employ more generous standards of poverty than poor nations.
Dictionary.com - the state or condition of having little or no money, goods, or means of support; condition of being poor.
Standard definition - Significant material deprivation, an inability to provide a family with adequate nutritious food, reasonable shelter and clothing.
What does poverty in India actually mean? It is difficult for those living in an industrialised country to truly appreciate the level of poverty in our country.
In the West, even those living in poverty can live in well-constructed dwellings, with heating, clean running water, indoor toilet facilities, access to health care, and even a vehicle. But such luxuries are a distant dream for India's poor.
In the US, the poverty level defines a earning threshold of $22,350 (total yearly income) for a family of four. If a family of four falls below this level its considered in poverty.





Statistics
USA - Nearly 46 million in poverty that's 15% of US population (as per US Census Bureau)
India - Nearly 415 million in poverty that's 41% of Indian Population (as per World Bank)
There has been no uniform measure of poverty in India.The Planning Commission of India has accepted the Tendulkar Committee report which says that 37% of people in India live below the poverty line(BPL)

The Arjun Sengupta Report states that 77% of Indians live on less than INR 20 a day (about $0.50 per day).The N.C. Saxena Committee report states that 50% of Indians live below the poverty line.
India has 33% of World's poorest population. India's number of 415 million are more than combined numbers of Africa's 26 poorest countries.

Income Levels of poor
USA - Poverty level for 2011 was set at $22,350 (total yearly income) for a family of four. That's $5587 per person per year. This doesn't take into consideration Social security, unemployment, food stamps and state paid benefits. If one where to consider these benefits most of them are above the threshold.
India - 80% of Indian Population earns less than 2 $ per day. That is less than 750$ per annum if they earn for 365 days. Which is 7 times less than what US follows as its standard.


What do the Poor Own ?
USA - According to data compiled by US government agencies, the typical household considered “poor” by census officials has a car and air conditioning. For entertainment, the household has cable or satellite TV, two color televisions, a DVD player and a VCR. If children (especially boys) are in the home, they have a video game system such as Xbox or PlayStation. In the kitchen, the household has the ordinary conveniences: refrigerator, oven, stove, microwave. Half the poor now have a personal computer. A third have a widescreen TV (plasma or LCD); a quarter have a digital video recorder such as TiVo.

India - In India the poorest are living a life of real deprivation: a large family crowded into a leaky, overcrowded, unsanitary slum-like shelter. In most situation most of the poor might not even have roof when they go to sleep on the hard ground. One can only wonder when was the last time when such person would have had stomach full of food. Life is despair and miserable, with no materialistic possession at all. Government and NGOs alike try to provide Food, Cloth and Shelter as bare minimal, but these efforts are far from reaching the millions and millions.

Hunger

USA - The media cry with alarm that “nearly one in four kids” in the nation are hungry. Again, government data show otherwise. Fully 96 percent of poor parents stated that their children were never hungry at any time during 2009, despite the severity of the recession, according to data from the U.S. Department of Agriculture.

India - It is estimated that about 42.5% of the children in India suffer from malnutrition. The World Bank, citing estimates made by the World Health Organization, states that "About 49 per cent of the world's underweight children, 34 per cent of the world's stunted children and 46 per cent of the world's wasted children, live in India. The child malnutrition rate in India is twice as great as sub-Saharan Africa. Data from The World Bank shows that the percentage of underweight children in sub-Saharan Africa is 24% while India has almost twice the amount at 47%.

Moreover, the malnutrition is not just common among children but about one third of adults in the country also come under the same category with their weight less than the set standard (body mass index- 18.5).

Indian Government says that food subsidy would rise if there was any increase in the number of BPL families. Food subsidy stood at about Rs 720 billion (or $16.5 billion) in 2010. Considering the food shortages and inflation in India things are only to get worse.

An Unequal World

In 1960, the 20% of the world's people who live in the richest countries had 30 times the income of the poorest 20%; by 1995 it was 82 times.

The world's 225 richest people have a combined wealth of over $1million million. Only four per cent of this wealth - $40 billion - would be enough for basic education and healthcare, adequate food and safe water and sanitation for all the world's people.

There is a satire in corporate world saying "We are not here to solve World Hunger". May be its time to think beyond making exotic swaps and derivatives and driving economies into recession by self driven greed of gobbling more and more wealth for what ??

THE GOOD NEWS: in the past 50 years poverty world over has fallen more than in the previous 500. Since 1960 child-death rates have been halved and malnutrition has declined by a third. Developing countries have covered as much distance in human development during the past 30 years as the industrial world managed in over 100.
THE BAD NEWS: one in four of the world's people still live in severe poverty. It's worse for women than for men; and for black people than for white. Even in the so-called 'rich' world increasing numbers of people do not have enough to live on.

US needs to ask itself in retrospective....
1) Were you aware of the growing gap between the rich and the poor? May be

2) Why do you think the U.S. has higher income inequality than other industrialized countries? Capitalism

3) Why do you think the U.S. has some of the highest poverty rates among industrialized countries? Overspending

For the US, it's time to focus on human development and raising the standard of living by cutting down the disproportionate wealth between the rich and the poor. Cutting down on spending defense (rather offense) expenditure for all the conflicts they get into around the world. As for the general public it would be more of indulging in conservatism and moderation while trying to let go off unwanted fashion, luxury and fad. On the hind-sight obsession with alcohol, tobacco and other in-toxicants also needs to go.

Regrettably, however, most discussions of poverty in the U.S. are riddled with exaggeration and misinformation. Effective anti-poverty policy must be based on an accurate assessment of actual living conditions and the long-term causes of real deprivation—especially the collapse of marriage and erosion of the work ethic. Does any media houses in the US understand and even remotely interested in this. May its time not to just boost ratings by giving exaggerated numbers of their own country while rest of the world suffers on misdeeds, over consumption and greed of a few. Wake up nation.

Credits - Poverty: Dimantling myths, "How poverty is calculated in India" on rediff.com, Wikipedia and Robert Rector in Real Clear Politics

Fatenning lifestyle

Nov 14 in India is remembered as "Children's day" remembering Pandit Jawaharlal Nehru the first Prime Minister of India on his birthday. Nov 14 world wide is also marked for a rather notorious reason, it is the World Diabetes day.
The statistics world over are startling with rising number of cases with ever growing percentage of population being effected by this health condition. Estimated by 2030 1 in 5 in the US would be diabetic. India is not way to far, it has the highest diabetic population in the world. Whats alarming these numbers are set to increase and grow in unmanageable proportions with the current generations failing to realise the simple cause for this an epidermic problem. Our children, the younger generations are more obese than the other age groups.
Obesity is one of the primary causes to diabetes in addition to genetic makeup. People fail to realise that diabetes as condition is a safety mechanism by which the human body is genetically evolved over centuries to survive hardships of mother nature. This bodily condition maintains and controls the blood glucose level to what is required, sustainable and needs to be stored for future needs.
In Indian or African races where the population is geographically and historically exposed to repeated famine and malnutrition the human races here have evolved to adopt the life of famine. The way the body achieves this is by responding to small indication or triggers for starvation. Human body or brain to be precise receives an indication of anxiety, stress and reads it as stress and anxiety driven from fear of lack of food; lack of food was foremost primeval fear of mankind; fear of immediate loss of life drives adrenaline, and energy boost to take evasive action. The anxiety and tensed state of mind drives automatically triggers in the body for the preservation mechanism to kick in and convert as much of energy as possible into fat reserves and slow down the metabolism. There is a human hormone called "Cortisol" which is released into the blood stream during those anxious and stressed out moments. Any amount of "Cortisol" means the self preservation and fat storage mechnism of the body starts. Once the days of anxiety and fear have passed, the human body slowly returns back to higher metabolic rate and lower fat storage. This has been a successful mechanism to sustain life during the difficult days of famines and lack of nutrition which the human race has sustained and conquered during the evolutionary periods and this embedded in the genetic make-up.

What is happening today ?

1. Stress levels are high; why ? Today's world all over has become so competitive that everyone is forced to run fast with time and each and every one is playing an endless catchup with each and everyone. Result is people are stressed out trying to reach the targets set by family, by their schools, by their organization to top it all personal goals and targets if any only make the things worse. Stress, stress and more stress piles up. Anxiety and tension of future goals triggers a brain triggered chemical reaction sensing the need of self preservation against non-existence. Only that non-existence in the present is not driven by hunger. Hence the effect of body stacking up fats and slowing down metabolism. While this continues we are not only high on calories we are loosing control on our calorie intake.


2. Then there is a thinking in the recent generations that you got to enjoy what ever you can today as you have no tomorrow. Result is people are over indulging in Sweet beverages, fried foods , bakery foods and sweet savoury. Add to this the idiot box, the movies, the game boxes, the smart phones implying an addiction and a complete lack of control on physical activity. With people drooling all over these devices and snacking in with all those sodium and fat rich foods exponentially implodes the problem.


3. There is no physical or mental activity. True we are so much used to luxury and things happening on push of a button, that we hardly get to do anything which sustains a healthy living lifestyle. Evolutionarily be it hunter-gatherer or forger, the amount of physical activity which the human body endured during the lifetime today is not equal to what out ancestors might have endured in an year or lesser. We live a complete sedentary life, full of materialistic indulgences, cravings and ever growing desire for more more and more.

What does the body which is already in preservation mode do ?? With all the tension it continues to pile more and more fat for future needs. This is a cycle triggered by the stress around us and uncontrollable appetite of unhealthy foods which follows us. Lack of activity, slower metabolism !!! Recipe for disaster
So how can we reverse this ?
1. Cut down stress levels. Reassess what is that one will finally achieve by going 100 miles an hour. One needs to apply brakes voluntarily or else we will run into huge road bumps.
2. Think positive and be happy. Stop worrying so much of everything and anything. What is the worse that can happen is someone will die. But everything in this world has expiration date isn't it. We either do what we are supposed to do or worry about what can't be done. We have a choice
3. Be active - Both mentally and physically. As long as one is really engaged and occupied with determination and goals, the focus of the body and brain are all on achieving one singular purpose and as long as on is unabated they will tend to have control on what the brain activity is like. Physical activity on the other hand will keep challenging the body physically to improve, keep all of its systems running. If any part of body are not used, the body responds by shutting it down slowly. Ex. Lesser we walk, lesser the challenge on leg muscles, lesser the challenge on sustaining those muscle groups, hence under nourished over a period of time leading to weak lower body.
4. Be conscious of what we eat - This may be the last. Why ? if one is successfully in 1 & 2, the impact is there are no self preservation triggers from the brain. Hence the body is not getting into starvation and self preservation mode. If one is successful on 3, the body metabolism is still relatively high. This combined the body takes in only those which are essential and ejects which are not. This is in the same way the proteins or vitamins are minerals which are excess and not required are rejected by the body. The body has capacity to reject fats and excess calories one consumes if one trains oneself to those levels. This is achieved by a disciplined mind over matter and intelligent eating which prevents any trigger of starvation by the body.
It's my strong view point that one who has control over there brain and followed by positive self talk can achieve and sustain and relatively healthy physical state over a sustained period of time. Any negative thoughts, any stress any anxiety levels has such a negative effect that the impact of the same are beyond our comprehension. Let conquer or minds, tune them, calm them. Meditate slow down the pace and make space for happiness and well being.
Diabetes, obesity and related issues will not bother for a healthier part of life.