Kazutaka Mayuzumi Security, Trade and the Economy The United States of America

What Did Black Friday Reveal about the Economy?

In the US, Black Friday has become notorious for it’s hyped up deals, massive lineups and frantic crowds. For the average shopper, Black Friday offers the opportunity to get deep discounts and an early start to Christmas shopping. However, for economists and those in the finance industry, Black Friday tends to mean something different. As one of the busiest shopping days of the year, Black Friday gives economists a glimpse of the current health of the economy. Consumer spending is a telling indicator of consumer confidence and is one of the biggest indicators of the current state of the economy. A high level of consumer spending indicates a healthy economy and a low level may indicate an economy in trouble or an economy in recovery.

The Black Friday rushSo how did this year’s Black Friday compare to previous years? Given the recent fall in oil prices, many economists were expecting consumers to take the money saved on gas and spend it on Black Friday weekend. Surprisingly, this year’s Black Friday sales dropped by 11% compared to last year, going against many predictions that sales would increase significantly for this year. Some experts say the reason there has been a decrease is that Americans just do not have enough disposable income to spend on electronics and appliances, items that are typically on sale during Black Friday. Consumers are spending most of their income on necessities that do not typically go on sale during Black Friday, such as cars, healthcare, etc.

On the other hand, some experts are arguing that this year’s fall in sales may actually mean that the economy is healthy. The argument goes that current consumer confidence is high enough that consumers are not as desperate to get a deal on items. Instead, they do not mind paying full price for the same items. As it may be expected, households that have higher income levels are less reliant on Black Friday sales than households with lower income levels. It seems that this year’s Thanksgiving weekend sales fell short of all estimated forecasts, with Cyber Monday sales falling short as well with only an 8% increase from last year.

Whether or not the question that this year’s Black Friday bust means that the economy is healthy or hurting remains to be seen. Perhaps with the upcoming holiday season, further indicators can be analyzed in order to accurately answer this question.

Author

  • Kazutaka Miyuzumi

    Kazutaka Mayuzumi is currently a 4th year undergraduate student pursuing a double major in Economics and Human Resources/Industrial Relations at the University of Toronto. His main research interests include: economic policy and macroeconomics, financial economics, and financial market structure. His other interests include the causes, impacts and results of financial crises, in particular the 2008 Financial Crisis. After completing his undergraduate degree, he hopes to pursue his Masters degree in Economics and to work at a central bank or other type of financial institution. During his leisure time, he enjoys browsing the web and catching up on events occurring around the world.

Kazutaka Miyuzumi
Kazutaka Mayuzumi is currently a 4th year undergraduate student pursuing a double major in Economics and Human Resources/Industrial Relations at the University of Toronto. His main research interests include: economic policy and macroeconomics, financial economics, and financial market structure. His other interests include the causes, impacts and results of financial crises, in particular the 2008 Financial Crisis. After completing his undergraduate degree, he hopes to pursue his Masters degree in Economics and to work at a central bank or other type of financial institution. During his leisure time, he enjoys browsing the web and catching up on events occurring around the world.