Pour the egg nog but hold the rum: Index predicts a less vice-full holiday season

Photo by Flickr user Prettywar

With the last of the discounted Halloween candy vanishing from retailers’ shelves, it’s now that time of year where some have already started to cue the Christmas music for holiday shoppers. But if you’re in the business of booze, sex or cards, this winter may not be so merry for you. The “Vice Index,” calculated by SouthBay Research’s Andrew Zatlin, tracks spending levels on vices to predict consumer spending four months into the future. September’s index registered at the lowest level since February 1996.

“It’s signalling that consumer spending growth is about to drop and stay subdued for a few months,” he wrote in a note to clients, according to the Wall Street Journal. “Not contracting, but well below expectations.”

Zatlin is not completely transparent about how he tracks the prices, volume and frequency of spending on vices like prostitution, alcohol and gambling. But this kind of discretionary spending, he says, provides a good assessment of the health of the economy. He admitted to the Wall Street Journal, however, “I don’t think people spending on vices think that far into the future,” suggesting that such a forward-looking index may not be indicative of spending on these specific commodities.

But other indexes that track spending levels suggest a somewhat similar picture for September. The Census Bureau’s retail sales report showed a decline from August.