It is always exciting to see the hoard of people who flock to the stores on the weekend of Black Friday, but it may not be a sign that the economy is back to where it should be.
Why?
Sure, many sources are reporting record turnouts for "doorbuster" sales, despite some stores opening 2-3 hours earlier than they were during the previous year. Though, there are many unanswered questions behind the huge turnout. People can very well be shifting the timing of their purchases because of the perception they would get the bargain. However, please think if the bargains are really bargains. It isn't a bargain if you are not going to use the item (unless you are getting paid to buy the item which is possible and is another story). It also isn't necessarily a bargain if you are buying an old item, which can happen in the midst of electronics sales. Many items typically sell at their standard sale price, so it is not a bargain if you are standing in line for an hour to just purchase an item that you could have purchased anytime you wanted to do so when it is put on sale. Though, don't get me wrong, there are some true bargains out there during Thanksgiving weekend, but it represents a small amount of the items available to buy.
Speaking from the perception of getting a bargain, a survey by the Spectrum Group showed 83% of millionaires do not plan to shop on Black Friday. Millionaires are not as sensitive to price and they will shop closer to the time when they will want an item.
The economy may be helped by holiday spending, but we are still far from normal. Credit card debt is at an all time high. Labor force participation rates are at an all time low. We have a fiscal cliff ahead of us. Despite what politicians have said, we are at least positioned to have payroll taxes increased, which will effectively reduce paychecks by at least 2%. It can very well lead to much tax increases, but we shall see what it will lead to in the coming weeks. If people have less money to spend, they will certainly spend less on discretionary items. After a holiday rally over the next coming weeks, all this would lead to a good probability that the stock market will drop by 30%.
Why?
Sure, many sources are reporting record turnouts for "doorbuster" sales, despite some stores opening 2-3 hours earlier than they were during the previous year. Though, there are many unanswered questions behind the huge turnout. People can very well be shifting the timing of their purchases because of the perception they would get the bargain. However, please think if the bargains are really bargains. It isn't a bargain if you are not going to use the item (unless you are getting paid to buy the item which is possible and is another story). It also isn't necessarily a bargain if you are buying an old item, which can happen in the midst of electronics sales. Many items typically sell at their standard sale price, so it is not a bargain if you are standing in line for an hour to just purchase an item that you could have purchased anytime you wanted to do so when it is put on sale. Though, don't get me wrong, there are some true bargains out there during Thanksgiving weekend, but it represents a small amount of the items available to buy.
Speaking from the perception of getting a bargain, a survey by the Spectrum Group showed 83% of millionaires do not plan to shop on Black Friday. Millionaires are not as sensitive to price and they will shop closer to the time when they will want an item.
The economy may be helped by holiday spending, but we are still far from normal. Credit card debt is at an all time high. Labor force participation rates are at an all time low. We have a fiscal cliff ahead of us. Despite what politicians have said, we are at least positioned to have payroll taxes increased, which will effectively reduce paychecks by at least 2%. It can very well lead to much tax increases, but we shall see what it will lead to in the coming weeks. If people have less money to spend, they will certainly spend less on discretionary items. After a holiday rally over the next coming weeks, all this would lead to a good probability that the stock market will drop by 30%.
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