Sunday, November 25, 2012

Was Black Friday a Boom or a Bust?

My old nemesis the National Retail Federation is out trumpeting the boom that retailers saw this past weekend with record sales everywhere.  However, the real data that's been collected so far is much less flattering.

Do you remember how the National Association of Realtors constantly preached the value of housing throughout the housing boom and bust?  Well, that is what trade groups do best.  They spin the data to make it look great and lazy media outlets sometimes take the bait hook, line and sinker.

At least according to the National Retail Federation, Americans spent an average of $423 PER PERSON for total Black Friday WEEKEND sales of $59 billion.  Here are the problems with this number ---
1) Black Friday sales tend to be a negative indicator even though no one ever mentions this.  People don't maul one another for $4 DVD's and $50 prepaid cell phones when they are feeling "confident" about their economic situation.  If we believe the NRF's numbers I'd argue they are just pulling forward sales that would normally occur in the weekend after Black Friday.

2) Comparing 2011 to 2012 is really not possible b/c so many more major retailers moved their opening times from 6am Friday to 8pm Thursday.  This really changed the amount of shopping hours available in 2012 and again altered the total sales figures.

I'd offer my own anecdotal evidence from spending much of Black Friday weekend in the mall at -- traffic was up but the number of people carrying packages was very small.  Also, because they stretched Black Friday into a weekend event I think many casual shoppers just bailed on the whole concept. 

Quick market update - the markets have gone into hyperdrive in the past week on rumors of progress being made on the fiscal cliff.  Again, this fiscal cliff stuff is mostly made up media nonsense, but the pending debt ceiling debate could really screw up the markets like it did in 2011.  The rumored progress seems to be very difficult to pinpoint (a couple of Republicans have hinted at accepting some tax increases and a couple of democrats have hinted at entitlement cuts) and I'm hearing that behind closed doors the "progress" have been negligible.

I'm also a bit worried that everyone seems to be on one side of this trade.  Everyone is all in on the long side that stocks are going up and we'll get a grand deal by 12/15.  Remember my number one lesson of investing - when everyone thinks X, you should be looking at Y.

Just a final note of thanks to the many loyal readers that continue to listen to my ramblings.  I am also very thankful for the customers that have taken a chance on my new venture - NNY Math.  Enjoy the rest of 2012 and keep checking back for updates as news breaks.

1 comment:

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