Yahoo Finance is carrying the AP story, Early data shows strong Black Friday shopping:
The holiday shopping season got off to a surprisingly solid start, according to data released Saturday by a research firm. But the sales boost during the post-Thanksgiving shopathon came at the expense of profits as the nation’s retailers had to slash prices to attract the crowds in a season that is expected to be the weakest in decades.
Sales during the day after Thanksgiving rose 3 percent to $10.6 billion, according to preliminary figures released Saturday by ShopperTrak RCT Corp., a Chicago-based research firm that tracks sales at more than 50,000 retail outlets. Last year, shoppers spent about $10.3 billion on the day after Thanksgiving, dubbed Black Friday because it was historically the sales-packed day when retailers would become profitable for the year.
On the plus side, these numbers imply that there will be fewer jobs lost due to a retailer meltdown. This certainly beat expectations. The economic calendar lists only the existing home sales report tomorrow. Could we actually see another consecutive up day for the Dow and S&P?
On the negative side, Americans seem to be spending money they don’t have. It is known that people will spend more effort to maintain a standard of living than they will to improve their situation. Household wealth has decreased tremendously over the last year. Unemployment has skyrocketed. Where is this money coming from? Is it credit card debt? Did people sell out their 401(k) for a good Christmas? Those sources would be bad for the long run. A relatively positive source for the money would be from people who have made the move from homeowner to renter to improve cash-flow. Unfortunately, I think that number is more than offset by the increase in unemployment.
I keep thinking of analogies to the prisoners’ dilemma. If you and I have to choose between spending and saving, I’m probably best off right now if you spend and I save. If we both save, the contraction in consumer business will drag down the economy even more. If we both spend, neither of us will have a suitable cash cushion for the current downturn. The parallels aren’t perfect. It could very well be that the long run is better when both of us save. Again, I usually prefer my economic shocks to be fast, violent, but short-lived. This slow, grinding, and lasting problem doesn’t seem to be doing any good. The argument, of course, is that the alternative would actually be fast, violent, and long-lived. Nobody wants that.
I have a poorly researched bet with my mother. I bet her that we’ll see an uptick in bank failures in the near future if there are strong results for Black Friday. My reasoning was that large aggregate moves in money are more likely to expose troubled banks. It’s poorly researched because I have no idea what portion of deposits at troubled banks are from shoppers’ disposable income. I’m guessing that businesses are more likely to be banking at stronger institutions (or at least concentrated on fewer institutions). Cash transfers from consumers to businesses may be sufficient to kill off a few weak banks.
UPDATE
Doh! Wrong economic calendar week. Tomorrow is the construction spending report and the manufacturing index. I doubt they’ll be good. Futures are down.
