Look at Black Friday horse in the mouth

Early indicators from Black Friday weekend sales suggest US consumption is strong, but beginning to show signs of weakness. Contested as an economic indicator, the discount shopping binge has done better than its pre-pandemic average growth after peaking last year on a low base. The key takeaway this year is credit is fuelling this consumption, which may have a bearing on household indebtedness. US consumer behaviour has been confounding economic forecasters all of this year by moving out of step with inflation and interest rates. Macroeconomic data, too, is sending mixed signals on how far the US is from a recession. Chances are Black Friday sales figures will do little to shed clarity, apart from providing a broad indication of festival spending on bigger dates in December. These sales are driven by gifts and provide merely a sense of the mood of the US consumer.

Even among its adherents, the ability of Black Friday sales to provide a quick indicator is being diluted by retailers spreading out the season. This is read as a sign of nervousness that weekend buying may not clear inventories. Retailers use the run-up to offer discounts on select items rather than a flat sale on a specific date. Online purchases capture consumer behaviour at a more granular level and serve as a better dipstick. Black Friday sales strategies – how deep the discounts will be – are devised using these data sets. Online sales this year have been signalling caution that initial estimates of US festival spending would seem to corroborate.

The findings are a bit more sombre in Europe where a relatively trenchant inflation is preying on the minds of buyers. Of course, Black Friday sales are of no use as an indicator of consumption in Asia but work as a guide for export demand. Makers of clothes, toys and electronics use it to plan inventories for the last quarter of the year. They have some cheer ahead.