Black Friday Bounce: Consumer Confidence, Holiday Deals, or Something Else?

There has been a lot in the news Monday regarding positive Black Friday sales numbers. The market responded favorably to the bright start for US holiday sales. Retail sales on Black Friday were 6.6 percent higher this year than last year.

MarketWatch's Nick Hastings raised the question to Bruce Orwall, London Bureau Chief of the Wall Street Journal, regarding if the rise in the market is going to last. Hastings: "Those figures over the weekend, is that just a case here of the US consumer being more confident or is it a case that [retailers] were just slashing prices more?" Orwall responded that retailers have come out of Black Friday optimistic years past only to fizzle out. Orwall also suggested that the bounce from Black Friday retail sales came from online sales rather than individuals shopping at stores and malls. Thus, according to Hastings, the current rise in stocks is "more than likely going to fizzle".

As the Dow Jones Industrial Average shot up 300 points Monday morning, traders who anticipated a kind bounce for Amazon.com, Inc. AMZN, Macy's M, Sears Holdings SHLD, Dillard's, Inc. DDS, and Wal-Mart WMT were surely not disappointed early in the trading day. Even so, comparatively, Kohl's KSS had a healthy spike at the opening, but experienced a quick decline early in trading.

Though Monday's increase in stocks may only be temporary, at the very least it somewhat reflects that the US consumer is still willing to spend money in the middle of a troubling economic situation. But in light of Black Friday, even aside from consumer confidence or retailers' slashing prices, there may be another dimension to the increase in retail sales that some are overlooking.

Even after the holiday season, reality will have to set in sometime. As such, the tone of consumer purchases in the US may be changing. With the prospect of mild economic growth in the US for the foreseeable future and high unemployment, the attitude of consumers (though they may be making purchases) may very well still be negative.

Far from consumer optimism, the rise in retail sales may reflect a situation in the US where consumers are making purchases merely because they can. A materialistic hoarding of sorts in preparation for some possible socio-economic calamity. I personally have noticed this in my own life and with respect to individuals close to me; there is this subtle feeling in the collective consciousness that we should purchase (if only on credit) various goods and services while they are still in existence. In other words, you better buy that TV, laptop, and/or PS3 while there is still commerce flowing within the country, because you don't know if that TV, laptop, and/or PS3 is going to be around next year.

It's as if before we might see Rome burning, consumers are saying, "Eat, drink, and be merry, for tomorrow we die." Buy that book or cd that you always wanted while you still can. Go to that restaurant or diner while it still exists. Watch that movie or TV show while it still exists. I think personally the collapse of Border's Books & Music strongly contributed to this collective-consciousness notion that our sense of American consumeristic culture is fleeting -- akin to a consumeristic shopping panic. The fall of Border's was enough to make one think, "I must buy books...while there are still books to be bought!"

Even in the context of holiday shopping, if you look carefully at the data, you can see that 46 percent of consumers on Black Friday were purchasing "gifts" for themselves, up from 35 percent last year. Aye, 'tis the season for giving indeed. In other words, in taking into account holiday shopping, people still have to buy gifts for family and friends. 46 percent of shoppers were buying for themselves...46 percent! That statistic is a heavy one because it reflects a consciousness in society where individuals are contemplating that the consumer culture in the US is not going to last; thus, we better shop and buy while we still can. As I said, this reflects a sort of materialistic hoarding just in case a disaster strikes; it's not like individuals were without TVs, toys, video game systems, computers, or other various items prior to last Friday.

To contribute to this idea that the collective consciousness is shopping pessimistically, the Drudge Report recently featured a story regarding how stores that sell survival food and gear are experiencing a jump in sales. Where some consumers may fear that the US will face the complete collapse of society in the near future, increased sales do not always reflect heightened consumer confidence or optimism going forward. On the contrary, the recent rise in retail sales may suggest the complete opposite. Far from getting ready for the holiday season, maybe increased retail sales are telling us that consumers are preparing for the worst.