Black Friday sales were a huge hit as we enter a holiday season that is expected to test shoppers, who account for nearly three-quarters of U.S. economic activity.
According to Adobe Analytics, consumers spent a record $9.8 billion online on Black Friday. This is an increase of 7.5% compared to the previous year.
According to retail data firm Sensormatic Solutions, shopper traffic, a measure of in-person sales, increased 4.6% year-over-year, nearly double the average growth rate for overall store traffic so far this year. Ta.
Additionally, consumers are expected to spend $12 billion to $12.4 billion on Cyber Monday, making it the largest online shopping day in history, Adobe Analytics said.
A significant drop in inflation over the past year has provided some reassurance to consumers. At the same time, they are being squeezed by reduced savings accumulated during the pandemic and rising borrowing costs for loans such as credit cards and mortgages.
“The Christmas shopping season is off to a strong start with what appears to be strong Black Friday sales,” Mark Zandi, chief economist at Moody’s Analytics, told ABC News. “Consumers are in a difficult situation.”
As the holiday season gets into full swing, many key metrics bode well for consumers. Zandi said the unemployment rate is near a 50-year low, wage growth is outpacing inflation and savings among high- and middle-income households are resilient.
The U.S. economy grew at an annualized rate of 4.9% in the three months to September, more than double the previous quarter’s growth rate, a government report last month said, dispelling concerns about a possible recession.
Zandi said Black Friday sales data suggests the good times for consumers could continue into the rest of the year.
“Black Friday is not necessarily a good indicator of overall Christmas sales, but this is a good sign,” he said.
Still, potential pitfalls remain for consumers and, by extension, the U.S. economy, BMO Financial Group retail analyst Simeon Siegel told ABC News.
Credit card debt will reach a record high in the third quarter of 2023, surging nearly 5% from the previous quarter and increasing the percentage of borrowers who are delinquent on their payments, according to a Federal Reserve report earlier this month. It was shown that
The rise in debt comes alongside rising costs of borrowing, from credit cards to mortgages, due to Federal Reserve interest rate hikes.
Since last year, the Federal Reserve has been raising benchmark interest rates at the fastest pace in more than 20 years in an effort to curb price increases by slowing the economy and reducing consumer demand.
In theory, the economy should eventually slump as borrowing costs become higher for businesses and consumers. For example, the job market remains strong but has slowed in recent months.
Siegel said there is “good reason to be concerned” about broader economic trends. But he noted that Black Friday sales appear to have allayed concerns about the worst-case scenario for consumers.
“The question was, ‘Are we going to have such an overhang that registers are closed and people can’t go online or in stores?'” Siegel said. “Retailer responses would suggest otherwise.”
Siegel said people should be wary of making rosy inferences from the data. Siegel added that Black Friday sales are an imperfect shorthand for consumer health, as consumers often spend the holidays shopping, even if it means spending more than they can afford.
“The holidays are off to a good start,” Siegel said. “What you and I can see from revenue is what people spent on. But what we can’t see is what’s in their bank accounts.”