Black Friday sales soared as the country steps into a holiday shopping season anticipated to challenge consumers, responsible for nearly three-quarters of the U.S. economic activity.
Consumers surged online during Black Friday, setting a new record by spending a whopping $9.8 billion, which signifies a 7.5% uptick from the previous year, according to data from Adobe Analytics.
A surge in shopper visits, a vital gauge for in-person sales, also became evident, with a 4.6% increase compared to the previous year. This spike stands nearly twice the average overall surge in foot traffic registered earlier in the year, as reported by retail data firm Sensormatic Solutions.
The shopping fervor isn’t expected to dwindle anytime soon. Projections suggest that consumers may splurge between $12 billion and $12.4 billion on Cyber Monday alone, making it potentially the most significant online shopping day ever noted, as forecasted by Adobe Analytics.
Amidst these robust spending figures, there have been some financial adjustments for consumers. Reduced inflation rates over the past year have provided a semblance of relief. However, there’s a noted squeeze caused by dwindling savings amassed during the pandemic and a spike in borrowing costs for credit cards and mortgages.
Chief economist at Moody’s Analytics, Mark Zandi, shared insights with ABC News, emphasizing a promising start to the Christmas shopping season. “Consumers are hanging tough,” Zandi stated, highlighting the resilience amidst economic shifts.
The economic landscape appears to hold favorable signs for consumers as the festive season unfolds. Factors like a near 50-year low unemployment rate, wage growth surpassing inflation, and steady savings among middle and upper-income households bode well for consumer sentiment, according to Zandi.
A government report released last month indicated a robust economic growth rate of 4.9% over the three months ending in September, more than doubling the previous quarter’s growth rate, assuaging fears of an imminent recession.
The surge in Black Friday sales data suggests a continuation of consumer prosperity through the year’s end, remarked Zandi, considering it as an encouraging sign, albeit not always a precise indicator of overall Christmas sales.
However, potential pitfalls loom on the horizon for consumers and consequently, the U.S. economy, cautioned Simeon Siegel, a retail analyst at BMO Financial Group. He pointed to escalating credit card debts, reaching record highs in the third quarter of 2023, potentially impacting late payments among borrowers, as per a Federal Reserve report.
This burgeoning debt coincides with a surge in borrowing costs stemming from the Federal Reserve’s interest rate hikes. Despite a robust job market, recent months have seen a slowdown, adding concern to the broader economic landscape.
While acknowledging positive indicators, Siegel stressed caution, stating that Black Friday sales, while indicating spending, do not provide insight into consumers’ financial reserves.
“The holidays have seen a robust start,” Siegel stated, noting the revenues generated but emphasizing the invisibility of consumers’ financial standings.
In conclusion, while the sales data reflects consumer enthusiasm, it’s prudent to approach these optimistic signals with a nuanced understanding of the complex financial landscapes that individuals navigate during festive shopping seasons.