Friday, January 27, 2012

One more update on Black Friday, Holiday Sales, and Consumer Spending

In late November, I commented on the historical relationship between Black Friday and different measures of consumer spending (holiday sales and fourth quarter consumption).  Many commentators were optimistic about economic growth for the quarter, given the strong performance of Black Friday sales.  With the release of today's GDP report, we can now consider that relationship for 2011.  With the exception of 2006, Black Friday sales have been a poor predictor of overall consumer spending for the quarter (sometimes too high, while other times too low).  This time, Black Friday sales proved to lead to too much optimism about the consumer.  It appears that Black Friday led to an early burst in consumer spending that disappeared in December, resulting in modest gains in holiday sales and consumer spending.  See the updated chart below for more information (numbers in parentheses are adjusted for inflation; consumption is already adjusted for inflation):
Black Friday
Holiday Sales
Consumption Q4
+6.6% (+4.0%)
+4.1% (+1.5%)
+0.3% (-1.0%)
+5.2% (+3.9%)
+0.5% (-1.0%)
-0.4% (-1.9%)
+3% (+1.3%)
-2.8% (-4.5%)
+8% (+4.5%)
+2.4% (-1.1%)
+6% (+4.1%)
+4.6% (+2.7%)