So far, Black Friday seems to be bustling. Is the economy improving?
Black Friday weekend may give economists a snapshot of how shoppers are feeling going into the holiday season. Even though some consumer numbers are sluggish, Americans may spend when they hit the malls.
The early signs are that this will be a “very successful” Black Friday weekend, according to the National Retail Federation (NRF), a trade group in Washington.
Economists say that this weekend may give them a snapshot of how consumers are feeling going into the holiday season. On the one hand, if Americans are reticent to whip out their wallets, this might not be so good for many retailers and perhaps the economy. On the other hand, if the Black Friday inducements get Americans to spend, it might mean the holiday shopping season is going to be bright.
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“Black Friday is often considered a litmus test for the consumer appetite coming into the holiday season,” says Richard DeKaser, an economist at the Parthenon Group, a business strategy consulting group based in Boston. “It is especially important for luxury retailers: It’s the make-or-break season.”
According to a survey done for the NRF, some 152 million people said they planned to shop on Black Friday weekend (Friday to Sunday). Last year, 138 million were expected, but the actual number who hit the malls was 212 million – a record number of bargain hunters.
If larger crowds do materialize this year, that would start to fit a slightly improving picture of the US economy, say some economists.
“Yes, the unemployment rate is still high,” says Robert Brusca of Fact & Opinion Economics in New York. “But there are some indications consumer spending is picking up and job growth is getting a little better,” he says. “We seem to be coming out of a period of weak numbers.”
If the economy is improving, it hasn’t shown up yet in consumer sentiment numbers, which are still at recessionary levels. “Consumer confidence has stirred from its lows, but it’s still in bad shape,” Mr. Brusca says.
That’s why Black Friday sales have some meaning. Even when surveys show that consumers are glum, says Mr. DeKaser, sometimes they act differently when they hit the malls. “Surveys may show us one thing, but actual sales results are more meaningful,” he says.
The NRF does a survey of consumer spending on Black Friday, but it doesn’t expect to have results until Sunday. However, even before the results were in, the group was claiming it was a good start. “Early morning openings appear to have been well worth it for both retailers and holiday shoppers, with many Americans believing that deals were too good to pass up regardless of who they were shopping for – themselves or others,” said Matthew Shay, NRF president, in a statement.
But it’s also important to put the Black Friday weekend into context, the NRF notes. Historically, sales over the weekend represent only about 10 percent of holiday sales.
“The final two weeks of December are two very important weeks,” says Kathy Grannis, an NRF spokeswoman.
For the holiday season as a whole, economist Chris Christopher of IHS Global Insight in Lexington, Mass., expects an increase of 4.2 percent in sales over last year. However, he says, this does not indicate robust traffic at malls, since almost half of the increase is the result of higher prices.
For example, as of October, clothing prices were up 4 to 5 percent compared with a year ago, Mr. Christopher says. “After food and energy, this is one of the highest increases for consumers,” he says. That may also be why clothing- and department-store sales flagged in October.
But electronics – especially flat-screen TVs – have dropped in price compared with last year, says the IHS analyst. “In October, the electronics numbers were blown out by sales of the iPhone,” he adds.
On Friday, most US shoppers had clear weather to hit the malls. But that was kind of mixed news for retailers because temperatures were warmer than normal.
“The clothing stores are stocked up for winter, but it’s too warm,” says Mr. Christopher. “Clothing stores may have some trouble looming for them.”
For consumers, that may mean big sales in January.