Boxing Day: Holiday shopping with missing data

Shops opened for the Boxing Day sales at the end of a holiday season run almost entirely without official data. The October consumer price index was never collected and the federal shutdown left official retail sales figures badly delayed, so retailers and fund managers had to plan with no reliable macro benchmarks to go on.

How the gap opened

The shutdown that began on 1 October closed the agencies that produce the country's basic economic statistics. Field staff at the Bureau of Labor Statistics stopped visiting shops to record prices, and the Census Bureau suspended the surveys behind the monthly retail sales report. When the government reopened in mid-November, the statisticians could not go back in time to price goods on October shelves, so that month's index was simply lost. The backlog of other reports took weeks to clear, which meant the retail figures arrived late and out of sequence.

The timing could hardly have been worse for merchants. October and November are when chains confirm their holiday assortments, place the last replenishment orders and draw up markdown calendars for the weeks after Christmas. Those decisions normally lean at least partly on the national picture: whether spending on clothing, electronics or furniture is rising across the economy, and how fast prices in each category are moving. This year that picture was blank for the period that mattered most.

Discounting by guesswork

With no official price indices to show how shoppers were responding to prices, merchants set them on nerves and guesswork. Big-box retailers and clothing chains cut prices hard after Christmas, each on their own, to turn high-tariff stock back into cash. The hit to margins will show up in fourth-quarter earnings reports well into the new year.

The accounting explains why the damage lands where it does. Import duties paid when goods cross the border are added to the cost of inventory on the balance sheet, and that cost moves into the income statement only when the goods are sold. Stock that arrived over the summer and autumn carries the tariffs paid at the time, so a markdown on that stock squeezes gross margin twice: the selling price falls while the recorded cost stays high. A retailer that bought heavily before the holidays and then misjudged demand has no way to recover the duty it has already paid.

The reporting calendar stretches the delay. Most large American retailers run fiscal years that end in late January or early February, so their fourth quarter spans November, December and January and is reported from late February into March. Investors will therefore see the full cost of the post-Christmas discounting only in the spring, long after the decisions were made.

Substitutes for the official numbers

Private data filled part of the gap. Card networks, banks and online analytics firms publish their own spending trackers, and retailers have their own point-of-sale systems that record every transaction. Those sources are timely and detailed, but they have limits. Card data miss cash spending and cover only the customers of a particular network or bank, and online trackers measure dollars spent rather than volumes, so they cannot separate higher prices from stronger demand. That separation is exactly what the consumer price index is for.

The gap matters most for comparison. A chain that sees its own sales fall cannot tell from its tills whether it is losing customers to rivals or whether the whole market is weakening. Those two diagnoses call for different responses: the first for sharper prices and promotion, the second for smaller orders and leaner stock. Without official retail sales and price data, many merchants chose to discount heavily as insurance against both.

Earlier shutdowns, smaller holes

Previous shutdowns disrupted the statistics without erasing them. The 16-day closure in October 2013 delayed several reports, but most were published within weeks. The 35-day shutdown that straddled the turn of 2019, the longest before this one, closed the Commerce Department and delayed retail sales releases, but the Labor Department had already been funded and the BLS kept collecting prices throughout. This year both agencies were shut at once, and for long enough that a month of price collection could not be recovered.

The case that retailers did not need it

A fair objection is that merchants do not set prices by reading the consumer price index. The largest chains hold far richer data on their own customers than any government survey, and they adjust prices daily using that information. On this view the missing month was an inconvenience for economists and bond traders, not a real handicap for the shops.

The objection holds for the biggest players and much less for everyone else. A handful of giant retailers can read the economy from their own receipts because they account for a large share of national spending. Regional chains, specialist stores and the small businesses that buy from wholesalers see only their own slice. The information gap therefore favoured the largest companies, and off-price chains, whose business is buying surplus stock cheaply from brands that ordered too much, stood to gain from other retailers' mistakes.

Flying blind costs money

Losing reliable data in the busiest shopping quarter of the year shows what political dysfunction in Washington costs the economy. When the world's largest economy cannot publish basic monthly figures on prices and retail sales, companies end up allocating capital by guesswork.

The costs extend beyond the shops. Lenders to retailers use sales trends to set credit lines secured on inventory, and the Federal Reserve uses the same data to judge whether tariffs are feeding through into prices. Every one of those decisions was made with a wider margin of error this autumn, and some will have been wrong in ways that surface only when the missing data are reconstructed.

What will fill in the picture

The first checks will come in January. Some chains publish holiday trading updates early in the month, the December consumer price report will show whether goods prices were rising or falling as the discounting began, and the delayed retail sales releases will gradually bring the official series back up to date. The quarterly results from late February will then show how much margin was given away.

Boxing Day 2025 ends a season in which retailers gave away margin to clear stock without knowing what shoppers could bear. Investors will see the bill in fourth-quarter results over the coming weeks, and the mid-sized chains that lacked the data advantages of the largest retailers are likely to report the deepest margin squeeze when the full-quarter figures arrive in late February and March.