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By Jason Stipp and Robert Johnson, CFA | 12-27-2012 12:00 PM

Holiday Sales Better Than a Lump of Coal

Despite recent conflicting reports, holiday retail sales should manage decent 3.5% to 4% year-over-year growth once all the data is in, says Morningstar's Bob Johnson.

Jason Stipp: I'm Jason Stipp for Morningstar.

A couple of metrics this week may have some folks worried about the health of the consumer and the holiday shopping season. Here to offer his take on the data is Morningstar's Bob Johnson, our director of economic analysis.

Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: We got a couple of pieces of data about the consumer this week. They didn't look so hot, but you said they might not really be indicative of the actual health of the consumer right now. The first one was from MasterCard [Advisors SpendingPulse], and it showed really weak year-over-year holiday sales.

Johnson: Yes.

Stipp: What was that data?

Johnson: That data is compiled from individual [transactions], when you swipe your card, what goes back to MasterCard, and they survey the data, and then extrapolate. And frankly, their numbers didn't make a lot of sense, but they said during the holiday period--which they calculate from Oct. 28, which is kind of when Sandy started to hit, through the day past Christmas--that sales were only up 0.7%, and there were screams all over the place yesterday, "worst Christmas since 2007," "disaster hits [consumers]" … but I don't believe a word of it.

Stipp: You said that this data doesn't pass the smell test, and there is one big reason that, I guess, smells the most, and that's online sales. It didn't look like it could be accurate in this MasterCard report.

Johnson: I don't know what it is, [maybe] people used PayPal or something [else] has messed up the [MasterCard] numbers, but here is the deal. [Internet] retail sales in this report were only up 8%. Every other report that I have seen suggests somewhere between the neighborhood of 14% to 16% growth year-over-year in online sales. The [MasterCard] number is wrong by a factor of half, and even if Amazon was the only guy out there, which is a big part of the number, and they are growing 30%, I'm still already over 10% before anything else grows. So, I'm really concerned that that number may be part of what's messing it up.

Stipp: You also said that this report last year ended up being a little bit light compared with the other data on the holiday shopping season in 2011.

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