Black Friday tells us a lot about the economy – but it also says a lot about ourselves


IThis is, in case you haven’t noticed, Black Friday this week. Thanksgiving, the American festival on the fourth Thursday in November, hasn’t crossed the Atlantic, but the Friday that bridged the holiday weekend, certainly did. The origins as a shopping day in the United States can be traced back to the 1960s, but what was truly a national event went global thanks to Amazon, which brought the idea to the United Kingdom in 2010. During the last decade it has gone pretty much global, with big sales across Europe and spreading to India – although in China it’s Singles Day, earlier this month, which dominates everything there.

This year, Singles Day sales were up from 2020, but overall activity was quieter than usual. This raises a huge question. Could Black Friday turn out to be a little disappointing this year on both sides of the Atlantic?

There are two reasons why this might. The first and most obvious is that the pandemic continues to run at full speed. The numbers for infections and deaths are not good. Repressive measures are increasing across continental Europe. Events are canceled, trips postponed. Inflation has increased over the past year, with consumer prices rising 6.2% in the US, 4.5% in Germany and 4.2% in the UK. The UK retail price index, the old measure of inflation, is up 6%.

So what will people do? Will they buy now because things will cost even more next year? Or do they have to spend so much more to refuel the car that they won’t spend more on the house?

Sales won’t be great, but they can be a bit flat. There’s a bunch of excess savings – money people couldn’t spend during shutdowns – still in bank accounts. But whether Black Friday turns out to be a new record will say a lot about consumer confidence, the biggest test of real-world confidence this year. This in turn will tell us how strong the various national economies will be during the winter, because as governments reduce their support, it will be up to consumption to get things done.

The second reason for caution is even more interesting. The big choice we all face is whether we should buy goods or services. Do we want more things or do we want more fun?

It’s a gross oversimplification, but you get the point. When the pandemic hit people were unable to spend money on something as simple as going down to the pub. But if they were lucky enough to be able to work from home, they could spend more to make that home a better place to work and perhaps a more comfortable living space as well. This was a loft conversion instead of an exotic vacation abroad. Things have not calmed down completely yet and this winter is not looking good. But the job market has been transformed by the pandemic, encouraging many employees to choose their lifestyle over money – what has been dubbed the Great Resignation. So, has the balance of consumption also changed?

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Of course, different age groups will make different choices. The youngest who have just bought a home will have to furnish it. The fun will have to take a step back there. Families who missed their summer vacation might want to save for something special next year. So not really a Black Friday for them. As always with anecdotal evidence, there is a risk of assuming that what friends and family do is the norm for everyone. As always, there is no hard line between spending on goods or services. We will continue to do both. But the balance of choice – stuff or fun – is something that is really important not only from an economic point of view but also from a social point of view.

Many people would say that the developed world has enough assets to live quite comfortably. Buying cheap clothes and throwing them away after wearing them a few times is bad for the planet. Every time you buy something that you don’t need is not only a waste of money, but also a waste of natural resources.

The moral of it all is that maybe we should hold off Black Friday and spend our money on something else – even if it’s as easy as having a meal with friends we haven’t seen in a while. Either way, this Friday is a test of both the state of the economy – and the choices we make on our own.


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