Don’t Be Impressed By Black Friday Sales Numbers

The media has been making a huge deal out of the large consumer spending numbers on Black Friday this year, touted as the most ever spent on Black Friday and a considerable increase over last year.

However, all of this is being viewed through a laser-focused lens. Absolute tunnel vision is in effect, giving a distorted image of the truth. There is a lot more which has to be taken into consideration than the numbers of a single day or weekend.

Timing is everything. The first thing to take into consideration is when Black Friday occurs during a given year. This year it occurred on 11/29/19. What does that mean? It means that 12/1 occurred on a weekend. The result is that Social Security, government and many other paychecks typically paid on the 1st of the month were deposited instead on.. Black Friday. If you have ever been shopping, especially grocery shopping, you know that the first weekend of the month is generally much busier than other weekends because of those consumers forced to live paycheck to paycheck. The last time that Black Friday and December 1st occurred on the same weekend was in 2013. (7 year cycle.) Guess what the media was reporting at the time? They reported how consumer sales had increased over the previous year for Black Friday. Not to the same degree, of course. We were allegedly coming out of the Great Recession and one has to take inflation into account, which affects absolute numbers AND percentages reported.

Changing shopping habits. Another thing to take into consideration is that remote orders for store pickup increased considerably this year. While part of this is technology-driven, it also indicates consumers are planning their purchases in advance. They know what they are going to buy and that is what they order. This has the effect of reducing impulse purchases made while shoppers wander through stores and buy more than they originally planned. If shoppers only buy what they have planned for, this indicates that spending will most likely taper off very quickly before mid-December, which will negate the gains reported right now.

A wider view. When we take all the above into account, the obvious becomes clear. We cannot look at a single day or weekend to judge consumer spending or confidence. Instead, we have to take a wider view and look at consumer spending both before and after Black Friday weekend. Not meaning an isolated view of one week before and after but at least 1 month before and after. This gives us a much more accurate view. Obviously we cannot really predict what the coming month will bring but we can look back at previous months. In October, retail sales increased by 0.3%. Statistically this is negligible to begin with. However, go back one more month and we find that sales in September had declined by 0.3%, which brings even the October increase to a flat even number.

Consumer sales do not equal consumer spending. Something else to look at is how these sales are funded. Consumer credit spending has increased and that is likely how much of the current spending was funded. Many consumers are still paying credit card debt from 2018. This is debt spending, which is not truly consumer spending. Rather than indicating consumer confidence or any improvement in the economy, it tends to indicate the reverse, that consumers are not in the position to spend actual income at this time. Even if they have the liquid assets to spend, they are not willing to part with those assets, which demonstrates a lack of confidence in the ability to recuperate those assets in the near future.

The Trump irony. It is extremely ironic that the neoliberal media is reporting how well sales are doing, which amounts to a claim that the economy is doing extremely well. In effect, they are stating that Trump is having a positive effect on the economy. This, even as they make concurrent claims that he is destroying the economy and the country. The numbers they are reporting literally increase support for Trump, even as the neoliberal media is pushing for his impeachment. Meanwhile the same corporate media on both sides report falsified employment numbers and simply do not report comprehensive numbers of layoffs and retail or manufacturing closures which have taken place this year. What they are doing is trying to play both sides in an attempt to force the illusion that capitalism is successful while trying to bring down the most capitalistic president to ever hold US office.

The rebound effect. Consumer debt is already at a level higher than any time in history, while labor income is the lowest it has been in decades in terms of real wages. Now consumers appear to be taking on new debt. If jobs which offer living wages are not created in mass numbers in the very near future, meaning the next few months, as debts come due we will see consumer spending plummet drastically as consumers are forced to reduce immediate spending to pay the debts. This will cause more layoffs in an increasing spiral downward for the economy. This is likely to concur with the end of the Federal Reserve bailout of unstable banks, resulting in the perfect storm for an economic crash the likes of which few people have imagined.