Black Friday figures boost holiday-spending hopes

November 29, 2011

| MoneyRates.com Senior Financial Analyst, CFA

Christmas came early for retailers this year, in the form of sharply higher sales over the Black Friday weekend. National Retail Federation (NRF) figures indicate spending over the four-day period beginning with Thanksgiving reached $52.4 billion--an all-time high and a 16 percent increase over last year.

While it's too soon to say whether this spending trend will continue through December, the numbers fed hopes that a strong holiday spending season could deliver a much-needed boost to the U.S. economy.

Black Friday retail numbers

This trend toward more shopping activity seems to have had both breadth and depth: breadth, in that record numbers of consumers participated, with over 226 million people shopping during the Black Friday weekend, and depth, in that individual consumers spent more on average. The NRF found that the average shopper spent $398.62 this Black Friday weekend, which is 9.1 percent more than last year's average.

While in-store promotions made headlines, much of the activity took place online. IBM released tracking data from 500 retailers that showed online sales up by 39.3 percent on Thanksgiving and 24.3 percent on Black Friday.

Will it last?

The record shopping figures for the Black Friday weekend are a great start, but they do not guarantee a successful holiday shopping season. Aggressive Black Friday promotions--many of which were especially aggressive this year--can sometimes front-load the shopping season, so that some of the activity seen on the first weekend simply detracts from spending later in the season.

The question, then, is whether the promise of the Black Friday weekend can be sustained. High unemployment continues to be a drag on consumer potential, but on the plus side, household debt service burdens have dropped to their lowest levels since 1994.

The impact on savings account rates

Improved economic activity can set the stage for higher savings account interest rates in a few different ways. A stronger economy would allow the Federal Reserve to back off from its low interest rate policies. The financial markets often respond to optimism about the economy by driving bond yields higher. Finally, stronger consumer spending could revive bank lending, giving banks more incentive to offer higher interest rates to attract the deposits that could help fund their loans.

Black Friday weekend may be the kickoff to the most important period of the year for retailers, but the weekend's promising activity needs to be sustained in the weeks ahead in order to get the economy, and savings account rates, moving again. Still, at a time when markets were reeling from discouraging news on European debt and Washington discord, last weekend's retail boost is a significant sign of hope.

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