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Econometer: Was the record $38 billion holiday spending a good sign for the US economy?

Phillip Molnar, The San Diego Union-Tribune on

Published in Business News

Retail spending on Black Friday and Cyber Monday shattered last year's totals despite many consumer sentiment surveys that say people are worried about the economy.

Consumers spent $38 billion from Thanksgiving to Cyber Monday, up 7.8 percent annually, said Adobe Analytics. Even adjusted for inflation, Adobe said growth was "driven by net-new demand, not simply higher prices."

Some analysts in a CNN article argued we shouldn't read too much into holiday spending. Some arguments were that consumers were stretching dollars during sales, and would pull back after; and consumers are going for cheaper alternatives. One troubling sign for future retail spending is national credit card debt, which crossed $1 trillion for the first time this year.

Still, many retailers celebrated the holiday spending as much better than expected and a sign of a healthier economy than people think.

Q: Was the record $38 billion holiday spending a good sign for the U.S. economy?

David Ely, San Diego State University

 

YES: The Commerce Department reported that personal consumption expenditures slowed in October and the University of Michigan's consumer sentiment index has been declining for several months. Against these concerning data patterns, healthy spending by consumers at the start of the holiday season is welcome news. Of course, we need to wait for additional data to determine whether the Black Friday and Cyber Monday spending levels are sustained throughout the holiday period.

Ray Major, SANDAG

YES: The post-Black Friday profit surge is good for retailers, but consumers may be enjoying their last hurrah as mounting credit card bills, high-interest rates, inflation, and possible economic slowing in 2024 take effect. It will take consumers more than seven years to pay off these purchases because they are carrying larger balances and are paying only the minimum amount on cards with interest rates exceeding 25 percent. This will have a dampening effect on the economy in the new year.

Haney Hong, San Diego County Taxpayers Association

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©2023 The San Diego Union-Tribune. Visit sandiegouniontribune.com. Distributed by Tribune Content Agency, LLC.

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