Frank, is Black Friday really the biggest shopping event of the year?
Yes and no. In fact, the most important single day for retail sales is usually the Saturday before Christmas.
Is Black Friday only a big thing in the US?
Not at all. China has its “Singles Day”, held on November 11th, which sets the records for most online sales in one day. Canadians do it, too; and now Europe is also jumping on the bandwagon. Same story as Halloween and Thanksgiving. And we shouldn’t forget “Cyber Monday”, the first Monday after Thanksgiving: this day is promoted by online retailers as another day of unique bargains.
How important is it for the retail sector and the economy?
Black Friday is seen as a “sentiment indicator”, i.e. a sign for how healthy the consumer is – originally only for the US, but today, as mentioned before, it’s become a global indicator. Black Friday sales are important for equity markets. Only a consumer who is convinced that his job is safe will be going on a spending spree – and that is only the case if the economy is doing well. Should the consumer fail to show up on Black Friday, this might be a sign that the next recession is closer than we think, with the job market already being affected by weaker manufacturing, which then might spill over into the services sector. By far, the most important element of GDP in today’s economies is household consumption (globally around 60%). Interestingly, even “industrial powerhouses” like Germany or Switzerland are also consumer-dominated economies, but compared to the US or the UK, for example, the share of their total GDP accounted for by manufacturing is simply larger.
And what is the outlook for this year’s Black Friday?
Expectations are that retail spending will continue to grow. Retail equities have had a better run this year than the market as a whole, which means that the positive expectations for this Black Friday have to be met, or otherwise the retail sector will be in for a correction. A very strong Black Friday could further support the equity rotation to more cyclical sectors (upgrading banks, downgrading real estate and utilities). If we get a solid Black Friday, stabilizing global growth, a trade deal, and central banks still experiencing a solid tailwind, we might see a nice Santa rally this year.
Does a happy consumer also make a happy president?
I guess you could say that. The US consumer is in good shape, and Donald Trump will try hard to make sure that things will stay exactly like this. A roaring economy and a happy consumer definitely do support his mission to be re-elected in 2020.