Modern economics teaches that consumer spending drives the economy. How well things are doing can be judged by how quickly people empty their wallets. Consumption is what matters, not production. Well, at least in the elites’ eyes.
While this notion of consumption driving the economy is wrong, we can always go with the flow and make judgments about the economy based on that too. Black Friday is no longer the busiest shopping day of the year – that title was given up to Super Saturday (the last Saturday prior to Christmas), but economists and talking heads still love to talk about Black Friday.
The trend of shoppers moving from brick and mortar stores to online continued this year with shopping malls seeing a decline in traffic of 3.7%, and brick and mortar overall dropped 5% over Thursday and Friday. The number of in-store transactions also fell a staggering 8%!
Bad news for brick and mortar, but not to worry – online traffic grew by 4.2%, and the amount spent online surged by 18%! Brick and mortar stores will need to adapt to the market or be left behind as more people choose to stay home on Black Friday, avoid the crowds and lines (and chaos), and shop from their couch.
However, despite the increase in online sales, it still wasn’t enough to show any growth in consumer spending over the Black Friday weekend. Even after combining online and in-store sales, shoppers spent 3.5% LESS than in 2015; disappointing numbers for the pundits who figured a Trump-fueled bullish stock market would translate into the average consumer spending more.
If economists continue to analyze the economy by measuring consumer spending, they ought to decouple the average consumer from the stock market. The stock market has its ups and downs, and since the election, it has seen new heights, with the Dow Jones reaching over 19,000. Regardless of how well some people’s 401k may look, this doesn’t translate to a better economy, as this year’s Black Friday proved.