Black Friday: Boon Or Bust?
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Black Friday is upon us. Nowadays, it often starts Thursday (which happens to be Thanksgiving Day), and then is followed by Cyber Monday -- although the lines and times are increasingly blurred.
Here's what a selection of reputable economists and analysts think you should look for, or can expect, from the explosion of rabid capitalism we'll be experiencing over the weekend.
Marvin Clark & Sinclair Noe in Time For Pie write,
And neither rain nor snow nor sleet nor dark of night shall keep shoppers from their holiday rounds. Over the next few weeks, and especially this weekend, we will hear stories about the importance of holiday shopping on the economy. And it is important, but most of the stories are hyped up. The National Retail Federation forecasts that holiday sales this year will total $616.9 billion, which is a lot of money but it is not the amount of holiday sales. You see, we spend money in other months, not just November and December. You buy gas in October, just like you do in December and just because you fill up the tank in December, it doesn’t make that gas a “holiday purchase”. There’s no question that December is the strongest month for retail sales. From 1992 to 2013, December retail sales averaged 23 percent higher than the rate from January through October. November was also a good month, averaging 4 percent higher than January through October. So, to get a realistic idea on holiday sales we should compare the difference between sales in November and December with the rest of the year. Using this measure, if retail sales in November and December of this year exceed normal months this year by the long-term averages, a reasonable forecast for holiday shopping in 2014 would be $16 billion in November and $90 billion in December.
In other words, holiday sales should be about $106 billion this year. Maybe more, maybe less; could be as much as $150 billion; could be as little as $80 billion. It is a lot of money, but the difference between a good holiday spending season and a bad holiday spending season is about 0.4% of the economy. And it isn’t enough to make the economy take off like a rocket or fall like a rock.
Tyler Durden of Zero Hedge thinks the S&P 500's highest close yet should be "providing just the right amount of confidence-inspiring 'wealth creation' to ensure you spend, spend, spend this weekend all those gas price savings." But he's not convinced, citing the 'macro massacre.'
Bloomberg reported Black Friday Deals Expected to Lure 140 Million Shoppers, with mostly general optimism coming from retail analysts but a bit of mitigation from variables such as weather and online competition.
Discussing the Thursday-opening trends, the Zacks researchers ask Will This Thanksgiving Bring Bountiful Sales For Retailers? , talking about which retailers are feeling the need to be Thursday-opening earlybirds and saying,
Retailers must be on their toes to make the most of the holiday splurging. Be it with early-hour store openings, promotional events, free shipping on online purchases or heavy discounts, retailers will throw all possible baits to attract buyers in flocks.
Is this Radio Shack's (RSH) last chance to turn things around? Zacks says 'maybe' in It's Raining Offers for Radio Shack Buyers This Holiday Season.
Oh, and in case you run out of dinner-table chitchat, Tyler Durden provides the Frozen Turkey Indicator and James Quinn charts Turkey Dinner Costs. Political Calculations even finds How U.S. Turkeys Predict Global Market Crashes.
Happy Thanksgiving from all of us at TalkMarkets - and, as the saying goes, 'don't spend it all in one place.'
Disclosure: None.