Cost of Thanksgiving soaring: Merrill Lynch
Thu Nov 22, 2007 2:24pm EST
reuters.com
By Kristina Cooke
NEW YORK (Reuters) - The cost of Thanksgiving is soaring, according to investment bank Merrill Lynch & Co, which may help explain the gloom among U.S. consumers as they head into the holiday season.
Merrill Lynch, the world's biggest brokerage and one of the most powerful names on Wall Street, calculated a Thanksgiving cost-of-giving index using the prices of traditional holiday meal items such as turkey, cranberries, sweet potatoes and pumpkin pie -- as well as the cost of flowers, gifts ranging from toys to clothing and electronics, plus gasoline, hotels, air fare, and greeting cards.
The index has risen 7.9 percent year-over-year in the approach to the festive season -- a huge swing from a drop of 4.4 percent a year ago. In fact, this is more than double the historical trend for this time of year and the second highest since 1999, said David Rosenberg, Merrill Lynch North American
economist, in a report.
"One reason why consumer confidence is receding at a time of year when everyone would be so joyous may be because the cost of partaking in the holiday spirit has soared and bitten deeply into purchasing power," he wrote.
"Black Friday," the day after Thursday's Thanksgiving holiday and the start of the traditional year-end spending spree, threatens to be a Bleak Friday this time around.
The Black Friday moniker stems from the time when U.S. retailers rang up enough sales on the day after Thanksgiving to turn the corner into the black -- or profitability -- for the year, as Americans started their annual Christmas shopping. Now such sales are anything but a certainty, with Wal-Mart Stores Inc and other big retailers starting to offer holiday sales discounts much earlier this year.
Earlier on Wednesday, a Reuters/University of Michigan survey showed U.S. consumer sentiment fell in November to its lowest in two years as gasoline prices soared and the housing market downturn threatened to ensnare more Americans.
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