11/29/2010

Black Friday

Black Friday is a good indicator of how well the economy is doing. The article “Retailers happy with black Friday Turnout” claims that this Thanksgiving had more shoppers than the previous two years. Economists estimate that this is a good indicator that Utah is pulling out of its recession.

Many retail stores analyze the turn out on black Friday as an indicator how the remaining year will go. One reason why consumers are out spending more could be that they have more money to spend. It could also be that people have less uncertainty or fear of the economy. However, the article also claims that other factors also increase retail spending, such as the snowy weather. Snowy weather can create a mood of Christmas which will send more consumers Christmas shopping. The increase in spending is more likely a factor of money available to spend as well as people’s perception of how well the economy is doing.

Regardless of what factors send people out shopping on black Friday; this acceleration in shopping is a great boost to the economy. Analyzing Black Friday compared to previous years can be a great way to measure how well the economy is doing.

10 comments:

als22 said...

I agree that an increase in the number of shoppers on Black Friday is a welcome sight and gives us hope of a good shopping season. I also feel that the actual money spent is a good indicator of possible future spending. The article states that customer counts were up 2.2+/- percent and spending was up .3 percent. I think this shows more people are out shopping but are being frugal and wary in what they spend. Also, the numbers from Black Friday are used as an indicator of what might come. I hope we see the positive growth over last year in sales and spending. The economy could use a boost, no matter how big.

Rex said...

The numbers for Black Friday are obviously a welcome sight, but it will be interesting to see what the rest of the holiday season brings for retailers. It may be that people trying to get the best deals because of lack of disposable income. Without continued discounts at stores, people may be less willing to continue shopping and the increase of black Friday may not help overall.

Dave said...

I'm glad MIA actually explained why we should be interested in Black Friday. I've never fully understood why the media harps on sales figures from Black Friday, when it isn't clear how tightly they are related to profits. I think they may do this because the data is available to them, not because they really understand it.

I'll also emphasize again that we are not in a recession (sorry MIA). We are recovering from one, yes, but we are not in one.

Derek said...

I appreciate the post because as I was witnessing the Black Friday madness, I was wondering to myself if there were any correlations to the health of our economy simply from the turnout of shoppers on this day. I personally concluded that the more shoppers there were, the more desperate people are to save money. Your article proves that isn't the case. I am glad to see improvement forecasted from such a chaotic environment.

Nikki said...

The sales on Black Friday increase market efficiency by providing price discrimination. Stores offer people who might not have the economic power to buy items at full price a chance to buy them at a discounted price if they wait in the cold for several hours. Brilliant.

Belba said...

Price differentiation is a great factor why consumers are willing to spend more money. They realize when they can receive the deals, allowing sales to be increased. But another major factor of increased sales the past few years is the fact that stores are opening their doors before Black Friday. This gives stores more time, so of course they are generating more sales.

Dr. Tufte said...

Belba, do you mean price "differentiation" or "discrimination"?

I think the opening earlier is a case of a prisoners' dilemma. Opening early is most beneficial when no one else does. But if you do that and reap a benefit, then others open early too, and your benefit goes away. So you open even earlier.

Belba said...
This comment has been removed by the author.
Belba said...

I was doing some research and it said that Price differentiation and price discrimination were the same thing...is that true?

Dr. Tufte said...

I have never seen it used that way.

It's not a big deal though: 1) you don't lose any points on the economic details blogging for me, and 2) you did the right thing by going out and doing some clarification on your own.