Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.
Black Friday Fizzles With Consumers as Sales Tumble 11% (Lauren Coleman-Lochner, Bloomberg) Six million fewer shoppers showed up than expected. Over the final four days of November retail sales were $50.9 billion in 2014 compared to $57.4 in 2013. Almost half of the $6.5 billion difference is accounted for by a $3 billion increase in online sales so far this season, from $19.7 billion in 2013 to $22.7 billion this year. Some more of the shortfall was undoubtedly the result of aggressive pre-Thanksgiving promotions this year. No sales figures were given for that.
Deflation Is Going To Cause A Scary New Kind Of Debt Crisis (Merry SomersetWebb, Moneyweek, Business Insider) What's wrong with lower prices? Well, they can be beneficial. But when prices fall it increases the possibility of a "credit event" and when such are very big, like a country or a "uber bank", then disruption can be very large. Prices come down not only for items you consume but also for prices you can own (stocks, real estate, etc.) This is an interview of a serious deflationist, Russell Napier, who says "Hold lots of cash. Have some equities in case you're wrong and never take your eye off gold."
GOP congressional majority likely to change way it crunches numbers (Bob Livingston, Personal Liberty) The new Republican Congress is likely to introduce a new assessment process known as "dynamic scoring" for proposed legislation. Instead of evaluating the effects of a new law by assuming an unchanged economy and workforce, the dynamic scoring process will make use of complex models to predict how the economy and employment will be changed by the new law. Supporters say it is "reality-based scoring" while opponents seem to think that predictions are problematic, especially about the future.
Billionaire Shale Pioneer Sees Drilling Slowdown on Oil Price Drop (Bradley Olsen, Bloomberg) Bakken baron Harold Hamm, CEO of Continental Resources, who has lost an estimated $12 billion (half his wealth) in recent months, says lower prices will slow U.S. drilling. But he says his company will be unaffected, having sold nearly all its hedges through 2016. Continental plans boost output in 2015 by as much as 29%. Hamm says what we have now is a correction, a bump in the road. He thinks people need to take the long view. See also next article.
The American Oil Boom Won't Last Long at $65 Per Barrel (Matthew Philips, Bloomberg Businessweek) Even before OPEC's decision, forecasters were calling for a slowdown. Last May, for instance, the Energy Information Agency forecast that total U.S. production would peak just shy of 10 million barrels per day before 2020. While production probably will not fall for at least a year, and may even increase through 2015, projections of further growth continuing on the 2009-2014 trend are almost certainly off the table. See (also by Matthew Philips): At OPEC Meeting, Saudi Arabia Stares Down Texas and North Dakota. Also, see next article.
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