The concerns about black Friday sales are quite serious, but also incomplete. The serious nature of the decline in black Friday sales that have been reported so far will only become obvious if that data is supported by weak data from cyber Monday and the days that immediately follow.
Thus far, only part of the data is in our hands and more data will be needed in order to surmise the health of the consumer during this holiday shopping season.
However, looking ahead we can absolutely agree on something. Although we do not have all of the data in our hands yet, we do know that if the forthcoming data suggests weakness like what we have been provided thus far major concerns will surface, and those concerns might surprise everyone.
My eyes are peeled and I am watching closely, but here is the general expectation I had going into this holiday shopping season. The consumer is usually quite fickle, especially when budgets are tight, but the economic data recently suggests that the consumer should actually be much less frugal then he seems to be. Of course, we have employment data that supports this notion and we have other data that suggests that our economy is in relatively good shape. This does not even include the appreciation of asset classes like housing and real estate, which only add comfort to consumers when they look to make holiday purchases.
That data is absolutely important to consider, but the most important data going into this holiday season in my opinion is actually the price of gasoline. Gasoline prices, and US oil prices (NYSEARCA:USO) of course, have been coming down aggressively. On a personal basis, instead of paying $100 to fill my tank, it only costs slightly over $70.00 now. The sticker shock that might have been there recently is not there anymore and in fact consumers who have been used to paying higher prices for gasoline now have relief that should translate into freer pocketbooks.
Notwithstanding all of the other evidence, the decline in gasoline prices should provide consumers with additional money that they could use to spend during this holiday season, but thus far we have not seen that. Thus far, the consumer looks tight, he seems to be budget conscious, and unless cyber Monday and the days that immediately follow offset what black Friday has already shown there will be material concerns about the consumer that may not have existed a few short days ago.
Reasonably, however, we could also have a much savvier consumer and we have had in years past and instead of fighting huge crowds at shopping malls many of them may simply have opted to purchase online and save themselves the headache. We are yet to find out, but my eyes are peeled and I will offer forthcoming analysis as the Data surfaces.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: By Thomas H. Kee Jr. for Stock Traders Daily and neither receives compensation from the publicly traded companies listed herein for writing this article.