A woman pepper-spraying her fellow shoppers to better her chances of getting an Xbox. A crowd of people stepping over the body of a heart attack victim, worrying less about his fate and more about their Christmas purchases. Violence, mayhem, and chaos seemed to be the stories making headlines on Black Friday.
Despite this bad behavior, the traditional first day of holiday shopping was a big success for the nation’s retailers, and a sign of life in what has been a bleak year for the American economy. Black Friday sales increased 6.6% over the same day last year, according to ShopperTrak. That amounts to $11.40 billion in retail purchases and the biggest dollar amount ever spent during Black Friday.
Cyber Monday outshone last year’s numbers, too.
But will this seasonal boon for retailers continue beyond the New Year — and translate into a broader economic recovery that affects other industries, such as housing?
The Thomson Reuters/University of Michigan final index of consumer sentiment rose to 64.1 (out of 100) in November, the highest since June, from 60.9 in October. The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, increased to 77.6 from 75.1 the prior month.
All of this seems to be good news. But we aren’t out of the woods. The housing sector remains a problem. Bloomberg News quotes analyst Michelle Meyer, a senior U.S. economist at Bank of America: “Demand for new construction remains weak … Builders are still competing with the significant overhang of existing homes for sale. Overall, the housing market remains out of balance, with much more supply than demand.”
A NATIONAL ASSOCIATION OF REALTORS® survey shows the unsettled and variable story of housing, with sales of previously owned homes rising 1.4%, but prices dropping 4.7% between September and October. Distressed properties, including foreclosures and short sales, made up 28% of those purchases.
What does this all mean?
Consumer confidence is inching its way back up, but housing is still a big drag on the economy’s future growth. Policy makers should take note, and avoid doing anything to make the housing market worse. Give consumers confidence that they can buy homes now (deals and rates are great!), and won’t face any change in the rules (especially the elimination or reduction in the mortgage interest deduction) in the future.
We’re seeing some signs of life in the economy. Let’s hope it continues and policymakers build on the momentum.
Do you think the Black Friday numbers indicate a general uptick in the economy, or is it a seasonal blip?