Season’s Beatings

“Black Friday” Woes

As has become customary, US shoppers have been engaged in lively skirmishes in shopping malls across the country last week, fighting it out over assorted deeply discounted “must have” gadgetry.

Here is a video showing a selection of 2015 Black Friday brawls (even small kids are getting robbed of their merchandise):

A selection of 2015 Black Friday brawls

However, it seems that in spite of the enthusiasm on display in the video, the hearts of shoppers were not really in it this year. As reported in the press, Black Friday sales fell by a rather noticeable 10%.

The headline that “sales fell as Americans opted to buy more online” is in a way a bit misleading. It seems to suggest that online sales actually made up for the decline in brick and mortar sales. This was not the case as the following chart by Zerohedge reveals:

Rising online sales were unable to offset the decline in brick-and-mortar store sales.

Let us briefly consider what this means. When the oil price collapsed in late 2014, the general view was that lower gas prices would lead to a sharp increase in consumer spending. It is clear by now that this hasn’t happened. Apparently consumers continue to suffer from the debt hangover left in the wake of massive overconsumption during the preceding boom periods as well as the housing bubble and bust. Incomes are weak, and fixing damaged balance sheets still takes precedence over increasing debt-funded consumption.

As Mish noted in a recent comment on Black Friday, only car sales are still going strong – this is however largely a function of a sub-prime financing boom egged on by ultra-low interest rates. How this boom in sub-prime lending in this sector will end should be clear (it won’t end well).

Retailers definitely cannot be happy about the recent trend: