Blog : Raising the Black Friday Flag

by Ed Zwirn on November 29th, 2013

Full disclosure: I hate shopping. Don't get me wrong, I like buying things for myself (and being able to buy these things) and I like wearing and/or playing with my purchases after buying them. But I am one of those who pulls the covers over himself in bed at the mere mention of Black Friday.

But tempted as I may be to ignore that which does not appeal to me, the magnitude of the annual consumer spending frenzy that starts immediately after the Thanksgiving dessert is dished will prove to be a market mover in the coming week, as definitive news from the retail front begins to trickle out.

There is reason for optimism about consumer spending. The National Retail Federation in early October predicted that holiday-driven sales in November and December would rise 3.9% to $602.1 billion, above and beyond the 3.5% growth actually seen for those months last year. The forecast is higher than the 10-year average holiday sales growth of 3.3% recorded by the trade group.

In another bullish consumer spending indicator, credit-data tracker Experian Automotive reported last week that low interest rates, available credit and competition among lenders has driven auto lending to record levels. Outstanding auto loan balances reached a record $782.9 billion in Q3, up about $103 billion from a year ago.

And so far this lending appears to be solid, with 30-day loan delinquencies actually falling to 2.58% from 2.67% during the same period.

You may have already participated in one of those infamous Black Friday mob scenes that keep sensible people like me away from shopping venues, not just on the day after Thanksgiving but for pretty much the rest of the year, at least until an appliance breaks or a pair of pants splits open.

But if you are one of the millions who have already hit, or plan to hit, the shopping trenches this weekend, you may very well get a chance to form your own estimate of the annual holiday shopping frenzy. My guess is that we'll see a strong start to holiday shopping, and I am content to wait for the reports to come out rather than test the proposition for myself.

For now, the evidence seems to be that despite only marginal job market improvement and minimal earnings increases (for those lucky enough to have jobs) Americans are in the midst of a healthy spending upsurge. Call the recent stock market performance a bubble all you like, but this bubble is part of a larger bubble being pumped up by a broad public. Good news on the holiday sales front can not only serve to push stocks higher, but also to validate the bulls and indicate that the current rally still has legs. I'll let you know what I think after I get up from my long winter's nap.