Black Friday as an Indicator of Holiday Spending

One of my most viewed posts in the last 12 months considered whether Black Friday sales provided a good indicator of holiday sales and consumer spending, so I decided to update it for 2012 (here's a link to update for the 2011 holiday season once all the data had become available).  Let's update the table given the performance of Black Friday in 2012 (numbers in parentheses reflect sales after adjusting for inflation):

 

Year	Black Friday*	Holiday Sales	Consumption Q4
2012	+2.7% (+1.0%)	?	?
2011	+6.6% (+4.0%)	+4.1% (+1.5%)	+2.0%
2010	+0.3% (-1.0%)	+5.2% (+3.9%)	+3.6%
2009	+0.5% (-1.0%)	-0.4% (-1.9%)	+0.4%
2008	+3% (+1.3%)	-2.8% (-4.5%)	-5.1%
2007	+8% (+4.5%)	+2.4% (-1.1%)	+1.2%
2006	+6% (+4.1%)	+4.6% (+2.7%)	+3.8%

*Black Friday weekend (Thurs-Sun) was used for 2012
note: data for Black Friday sales comes from ShopperTrak; Holiday Sales comes from the National Retail Federation; Consumption comes from the BEA (Commerce Dept)

You'll note one change in the table.  Given the increased relevance of Thanksgiving Day sales, Black Friday weekend was used for 2012 (sales for Black Friday declined in 2012 as many people shopped on Thanksgiving night instead of Black Friday).  Is the relatively small increase in sales this year a bad sign for the holiday shopping season?  As the table indicates, Black Friday sales tend to be a poor indicator of holiday sales and consumer spending, so there's hope.  On the flip side, in five of the previous six years, Black Friday sales rose more than holiday sales (exception was 2010), so the weakness may be a precursor for weak sales this year.

Why the weakness so far in 2012?  One reason is the growth in personal income.  Over the past 12 months (Oct 2011-Oct 2012), total real personal income (i.e., income adjusted for inflation) rose by 1.4% (note: this is total personal income, not the average per household).  How does that compare to previous years?  It rose by 1.9% for the comparable period in 2011 and 4.1% in 2010.  Thus, real personal income has outperformed Black Friday sales as a predictor of holiday spending.  A 4.1% increase in income led to a 3.9% increase in holiday spending in 2010 while a 1.9% increase in income led to a 1.5% in holiday spending in 2011.  What does that imply for 2012?  Based on recent patterns, a 1.4% increase in real personal income suggests a 1% to 1.2% increase in holiday spending for 2012, which is what happened to Black Friday sales (rose by 1%).

Maybe Black Friday sales will prove to be a good indicator of holiday sales this year after all?  We'll know soon.