And its not just cars that are piling up. The port usually exports recycled paper. They send it to China where it is turned back into the boxes that you rip open during the holidays to reveal all sorts of consumer products. TVs, toys, video games. Whatever. But the demand is slowing. The paper is piling up...

Long Beach is an important port, particularly for the West. It is where imported products arrive and filter through the tributary of trucks, trains and retailers into the hands of consumers. But now, products are just sitting.

“We’re supposed to move things, not store them,” Mr. Wong said.

The NYT says this phenomenon is nothing new for Detroit — American cars are housed at the Michigan's state fairgrounds and at its airports.

A Sea Of Unwanted Imports [NYT]

Best Buy says:

A Message from Brad Anderson, Brian Dunn and Bob Willett
To all employees:

This morning, we announced that we've seen a sudden change in consumer spending, in our comparable store sales, and in our expectations for this year's earnings. We'd like to provide more context around these changes and their impact on our business.

The year started off well, with total company comparable store sales (sales at stores open more than 14 months) growing 4 percent for the first half of our fiscal year, a period that runs March through August. Our results were fairly consistent until September, when our comparable store sales turned negative, declining by 1 percent. Then our comparable store sales softened further in October, declining by nearly 8 percent, amid unprecedented changes in the financial markets, a deteriorating economy and weakening consumer sentiment. From where we stand today, we could see total company comparable store sales for the rest of the fiscal year decline by 5 percent to 15 percent.

Revenue gains are important to our business model because the majority of our costs ─ such as rent and store operating costs ─ are fixed. Typically, when comparable store sales increase by 3 percent or better, revenue growth outstrips expense growth (including merit increases, rising health care costs and the like), and our earnings rise. Currently, due to comparable store sales declines as well as spending increases, we have expenses rising faster than revenue. That's why we're now anticipating an earnings decrease for the year.

Specifically, today we also announced a new range for our earnings expectations: $2.30 to $2.90 per diluted share. The midpoint of our range is a 17-percent earnings decline compared with the $3.12 per share we earned last fiscal year.

Let us be very clear. These reduced earnings expectations reflect the unprecedented tumult in the financial services industry, which has reduced consumer spending across the board in retail. The outstanding work of our 165,000 employees doesn't make us immune to our environment. We can't change the overall level of consumer spending, but we can focus on deepening our relationships with customers wherever we interact with them: in our stores, on our Web sites and through our call centers.

While our comps have been negative, we gained market share in September and October. So we're getting a bigger piece of a business that is currently shrinking. Customer satisfaction remains at all-time highs. Employee turnover is at historic lows. We firmly believe that our strategy of customer centricity is of great value in driving our performance versus the industry, and that's the strategy we plan to pursue to continue to strengthen our position in the marketplace.

We must find ways to win with the customers who are coming to us today. Serving our customers better than anyone else is the best way to create value for customers, employees and shareholders alike. We need every employee engaged in serving customers better, and more efficiently. We want your unique perspective on what we should do differently in this market, based on what you see and touch, and using the talents you have.

We could let today's turmoil distract us from serving customers. Other retailers might do that. But we will not. Instead, we will use these circumstances to redouble our efforts and deepen our commitment to each other, to our company, to our strategy and to the customers we serve. In so doing, we will strengthen and fortify ourselves as a team. A winning team. That's who we are, and that's Best Buy.

Brad Anderson, vice chairman and chief executive officer
Brian Dunn, president and chief operating officer
Bob Willett, chief executive officer of International and chief information officer

"Consumers have thrown in the towel,'' said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts, who correctly forecast the drop in spending. ``They have no choice but to cut back on spending in a very big way. This is going to be a fairly deep, long recession.''

American Express is feeling the pain, as consumers stop spending — and stop paying their credit card bills.

American Express Co., the largest U.S. credit-card company by purchases, said yesterday it'll slash 7,000 jobs as consumers spend less and defaults rise. Cardholders failed to repay loans in the third quarter at almost twice the rate of a year earlier, and the company set aside $1.4 billion for loan losses.

U.S. Consumer Spending Declined 0.3% in September (Update1) [Bloomberg]
(Photo: mirnanda )

From the NYT:

In response to the falling value of their homes and high gasoline prices, Americans have become more frugal all year. But in recent weeks, as the financial crisis reverberated from Wall Street to Washington, consumers appear to have cut back sharply. Even with the government beginning a giant bailout of the financial system, their confidence may have been too shaken for them to resume their free-spending ways any time soon.

Recent figures from companies, and interviews across the country, show that automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores.

When the final tally is in, consumer spending for the quarter just ended will almost certainly shrink, the first quarterly decline in nearly two decades.

The Times says that when the government releases the numbers this month, they are expected to show that consumer spending shrank by 3%, which would be the steepest decline since 1981 and the only decline since 1990.

Consumers are apparently buying more groceries, enjoying fewer meals out, and spending less on clothes, school supplies, and air travel. Nintendo Wiis, however, are still flying off shelves.

“My view is that when consumers get concerned about their nest egg, or their country, they need entertainment,” said Bo Andersen, president and chief executive of the Entertainment Merchants Association, which represents distributors and retailers of home entertainment products.

Full of Doubts, U.S. Shoppers Cut Spending [NYT]
(Photo: robinryan )

Only twice since 1965, despite half a dozen recessions, have Americans spent less in a year than the previous one. Indeed, it often seems that we have defined ourselves by our ability to buy supersized everything, from McMansions to tricked-out SUVs to 60-inch flat-screen televisions—all enabled by decades of cheap credit.

Now that the credit party is over, how are consumers reacting?

"The process of bringing our wants and our needs into realignment," says Merrill Lynch economist David Rosenberg, "is going to involve years of savings and frugality." Or, to put more it more simply, "there is an anti-bling thing going on," says Marian Salzman, chief marketing officer of Porter Novelli.

Of course, if you're broke and have no access to credit you don't have much choice but to be frugal, but is that all that's going on here? Or are consumers tired of being pressured to take on massive debt in order to "super size" and "bling" everything? What do you think? Is credit card consumerism over?

Is Starbucks' "free refills" offer the new "super size it"?

(Full disclosure: I'm quoted in the article, and yes... yes my first car was a Geo Metro. It's true. Despite what "FreeCreditReport.com" would have you believe, some people do choose to drive them. And they also get their credit reports from www.annualcreditreport.com.)

The End of Credit Card Consumerism [US News & World Report]
(Photo: tokyohanna )

There are mounting anecdotal signs that beginning in December Americans cut back significantly on personal consumption, which accounts for 70 percent of the economy.

A raft of consumer companies — high-end stores like Nordstrom and Tiffany, and middle-of-the-road ones like Target and J. C. Penney — reported a pronounced slowdown in growth last month, and in several cases an outright drop in business.

American Express said that starting in early December the growth in the rate of spending by its 52 million cardholders, a generally affluent group of consumers, fell 3 percentage points, from 13 percent to 10 percent, the first slowdown since the 2001 recession.

And consumer confidence, an important barometer of economic health, has plunged. Andrew Kohut, president of the Pew Research Center, says consumer satisfaction with the economy has reached a 15-year low, according to the firm's polling.

Even wealthier consumers, who were seen as invulnerable to rising gasoline prices and falling home values, are feeling the squeeze.

"People are clearly concerned that we are headed into a recession," said Stephen I. Sadove, the chief executive of Saks Fifth Avenue, the upscale department store whose runaway growth throughout much of the year slowed markedly in December.

Even in tough economic times Americans rarely reduce their consumption, preferring instead to slow the growth in their spending. Since 1980, they have cut spending in only five quarters — a total of 15 months — most of them in the depths of a recession. The 2001 recession passed without a cutback in consumer spending.

Only once before, in 1980, did consumer spending fall during a presidential election year, helping Ronald Reagan in his campaign against Jimmy Carter, the Democratic incumbent.

Americans Cut Back Sharply on Spending [NYT] (Thanks, Molly!)
(Photo:Ben Popken)