Karla Young
Mr. Carter
Macro Economics
28 November, 2011
Black Friday The Friday after Thanksgiving is known as “Black Friday,” a marketing and media phrase used to describe the shopping frenzy that occurs on that one day. Black Friday traditionally has signaled the beginning of the Christmas shopping season. In examining the origin of the term “Black Friday,” the earliest known published newsletters which made reference to the term was in 1961. Rick Romell, a reporter with the Milwaukee Journal Sentinel, wrote that the term “Black Friday” got spun positive, remained little used for more than a decade and then exploded. This one day shopping blowout puts retailers “in the black” profit wise for the year. Bonnie Taylor-Blake, neuroscience researcher at the University of North Carolina suggests that the “Black Friday” tag originated with Police in Philadelphia, who each year faced massive headaches as fans in town for the Army-Navy game combined with swarms of holiday shoppers to create a traffic-clogging mess. The term spread outside of Philadelphia and really gained traction around 2004. The term has now become part of mainstream conversation and is in itself a “holiday.” The question-does a successful Black Friday boost the economy? Some market commentators argue that retail sales for Black Friday have a history of being greatly exaggerated. But even if the 16% increase over last year is accurate, can the US consumer maintain these elevated spending figures? And, are the spending figures even indicative of any real economic growth? For example, in 2008, Black Friday sales came in particular well, but we still had the historic market meltdown in the months surrounding the shopping days. One could also argue that the majority of holiday spending is on goods, rather than services. But the modern U.S. economy and job base is far more dependent on services than manufacturing. Ian Shepherson, chief U.S. economist for High Frequency Economics wrote that “retail spending accounts for only about 44% of total consumption. So if people choose to spend more on holiday gifts but offset that by spending less on discretionary services like restaurants and movie tickets, (a consequence of the condition of scarcity), then retail sales numbers will overstate the big picture.” Also, because of other factors weighing on the U.S. economy, unemployment at 9%, expiration of the payroll tax holiday, and the end of long term unemployment benefits, the jump in holiday spending so far this year, “just isn’t that important” nor is it a key economic indicator.