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Why Black Friday Retail Data Could Be Deceptive

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Daniel Indivigilo at the Atlantic writes:

"Retailers are celebrating a great start to the holiday shopping season this week. Sales on Black Friday and the weekend that followed soared past expectations. This period often foreshadows the strength of overall holiday sales. So will Americans spend far more this year than last year, or is there some other possible explanation for why Black Friday shoppers were so eager to spend?"

Put simply, yes--there could be some other possible explanation.

Indiviglio quotes the following figures from Dow Jones Newswires:

"The number of people who shopped at stores and online between Thursday and Sunday jumped 8.7% to 212 million shoppers, according to a National Retail Federation survey of 4,306 shoppers conducted by BIGresearch. The total amount spent during the four-day weekend reached an estimated $45 billion, with the average spending rising 6.4% to $365.34, the survey showed."

He then points out:

"If you happened to look at any of the retailer circulars advertising the Black Friday deals, then you saw just how deep the discounters were at some stores. There were crazy deals like $10 toasters and coffeemakers. LCD television prices were bordering on ridiculous with 40" TVs at prices below $400.

"So instead of a strong Black Friday indicating lots of additional holiday sales to follow, you might be seeing still stingy shoppers soaking up the insane deals before they're gone, with less intention to shop as freely in subsequent weeks."

It certainly is not outside the realm of possibility, if not probability. Remember what we saw with home sales after the expiration of the $8,000 homebuyer tax credit last April?

According to the Commerce Department, sales of new homes dropped 33% to a record low of 300,000 in May. Sales of previously owned homes fell 2.2%, according to the National Association of Realtors. Applications for loans to purchase homes fell to the lowest level since 1997, according to the Mortgage Bankers Association.

As for how all the Black Friday numbers will ultimately shake out, Indivglio says:

"...American consumers should, indeed, feel a little bit better about their economic surroundings this year. The question is: how much more comfortable? For retailers, there's a big difference between a 2% to 3% increase in sales and a 6% to 7% rise. We'll have to wait until the holiday season is over and all receipts have been counted to know for sure."
POSITION:  No positions in stocks mentioned.