Grinch

Holiday Shopping Season Outlook Gets Murky

Does this news resonate with you? I know it does with me. We've already cancelled sibling gift-giving in my family this year, partly because it's simply time to do so, but partly because this winter is beginning to look like the economic end-time, with energy prices going through the roof. It's getting expensive to drive anywhere, and it looks like it will be even more expensive to stay home in anything resembling warmth. Bloc Party's "Like Eating Glass" threatens to become the national anthem. (Sample lyric, repeated dozens of times: "It's so cold in this house!")

And I doubt energy prices will be the only ones to rise. Daniel Gross laid out a fairly compelling argument yesterday that inflation, that old bugaboo, will be back in the economic picture, meaning that we'll see prices rise everywhere: at the mall, at grocery stores, and at every other retail outlet. Indeed, Gross notes that the Consumer Price Index rose 3.6 percent over the last 12 months; unless prices start to drop between now and December, that figure will either hold up or rise when the year-over-year number is calculated, making 2005 the worst year for inflation since, ahem, the second year of the first President Bush's term, 1990. (Inflation that year was 6.1 percent following three years of 4 percent-plus inflation, a great recipe for a recession.) Unless companies respond to this inflation by offering employees raises bigger than the average 3.5% of last year, purchasing power will decline. And as the housing boom starts to wane, people will likely grow shy about tapping their equity for cash, realizing housing prices won't keep growing exponentially forever.

No doubt some Americans will still do their patriotic duty and plunge themselves into debt this winter to fulfill their holiday dreams and keep the economy strong. Count me out. Our house will be chilly this winter, and there won't be many gifts under the tree. Am I the only grinch?