Holiday Spending Hits New Highs, Sort Of

As they say in retail circles, TGIBF: Thank God, it’s Black Friday.

Despite fears of weakening consumer sentiment and flashing warning signs of a broad pullback, US shoppers showed up in force over the major holiday shopping weekend. Still, this wasn’t precisely a no-holds-barred shopping spree we’re talking about.

Buy Now, Think Later

The headline numbers are undeniable. Adobe Analytics estimates that shoppers spent $6.4 billion on Thanksgiving Day and $11.8 billion on online platforms alone on Black Friday, both figures setting records. Preliminary figures calculated by Mastercard, meanwhile, showed sales were up 4.1% year-over-year. But Mastercard’s data is notably not adjusted for inflation, up 3% year-over-year in September, according to the US Bureau of Labor Statistics. Furthermore, Salesforce data shows that total order volume, or the number of completed purchases, fell 1% on Black Friday this year, while the average selling price of Black Friday goods rose 7%. 

In literal terms, American shoppers are spending more for less this season. And in another sign of underlying stress, shoppers are increasingly choosing to avoid paying for their purchases all at once:

• In a press release on Monday, buy now pay later firm Klarna reported a 45% year-over-year increase in sales volume from November 1 through November 28, with growth across all product categories.
• Overall, Adobe estimates that US shoppers will complete $20 billion worth of transactions via BNPL services this holiday season, up 11% from last year’s levels.

Data Dump: The National Retail Federation is expected to release more comprehensive data today, while Adobe Analytics also reports that Cyber Monday online sales hit a record $14.2 billion yesterday. And Friday will deliver a double data dump: the missing September Personal Consumption Expenditure Price Index from the Department of Commerce, a.k.a. the Fed’s favored inflation gauge, and the University of Michigan’s Consumer Sentiment Index reading for December, which could provide an indicator of just how much holiday cheer is left. Caveats aside, some experts still see more than enough reason to feel optimistic. “Don’t bet against the US consumer. It’s been solid,” TD Cowen senior equity research analyst Oliver Chen told Bloomberg. “We are seeing spending. We’re seeing a consumer that does have plenty of anxiety, that’s looking for great deals. That being said, the consumer still has money, wants joy.”