The phrase “Black Friday” is the description for the day after Thanksgiving, when hordes of shoppers charge to — and charge at — stores to buy Christmas presents or to find bargains for themselves. For many retailers, this day marks the point in the calendar year when their bottom lines begin tipping toward black with profit, the first time since the previous year’s Christmas season. It’s a critical few weeks for retailers.
But as the national economy continues to recover from a historically deep recession, Black Friday still invokes a darker meaning. The worst of the economic crash is probably behind us, but its memory haunts shoppers from Wall Street to Walmart.
Sitting around the Thanksgiving table yesterday, grumpy old Uncle Harry may have lamented days when people saved money to buy new furniture, electronic equipment and clothes, rather than borrow through a credit card to pay for today’s purchases. The double-edged sword of needing consumer spending to goose the economy toward robust growth while worrying that people are borrowing their way toward insolvency still hangs over us.
The Gross Domestic Product has trended toward a reliance on consumer spending at an accelerating pace in recent years. Consumer spending as a percentage of GDP held steady at about 63 percent until 1980, when it began to grow. In 1990 it was 66.2 percent, in 2000 it was 68.6 percent and in the late years of this decade, it has held steady at about 70 percent. The remainder of the economy is linked to business investment (16 percent), government spending (19 percent, one-third of which is defense spending) and net exports.
Surveys show that Americans are less likely to spend recklessly, yet their wallets may open more widely this year than in recent years. The 25th annual holiday survey by the accounting and financial services firm Deloitte found that Americans plan to spend $466 on Christmas gifts, marking the first up-tick since 2004. Sixty-two percent planned to spend the same or more this season, an 11 percent increase over last year and the highest showing since 2006. Thirty-six percent indicated they have permanently reduced the amount they will spend on gifts.
Other findings are that 66 percent of consumers said their financial status is the same or better than last year. Yet half believe the economy is in recession or beginning to slide back into recession. Forty-six percent said they would pay cash for more gifts than in recent years.
This mixed bag of consumer confidence, though trending toward optimism, may make this Friday after Thanksgiving more gray than black.