The economy is booming. At least this is the indication given off by shoppers according to early returns from online purchases.
According to a CNBC article, online shoppers spent $7.4B in online sales on Black Friday, the second largest single day ever after last year's Cyber Monday of $7.9B. It is also estimated that this year's Cyber Monday will blow that number out, coming in around $9.4B. This according to Abode Analytics which tracks 80 of the top 100 online retailers.
The question is what does this all mean?
Online sales are up 20% over last year. It is evident that shoppers are more willing to pull out their phones than go stand in line. Will we see a decrease in the sales from the physical stores because of this shift?
Also, we know the online world favors a different set of players. In the United States, these numbers are to the benefit of Amazon, Wal-Mart, and Target. Those are three companies that excel at the online game as compared to many of the competitors. Department stores such as Macy's and JC Penny have not fared as well.
With numbers like this, it is hard to argue the consumer is not strong. This is the reason many of the bulls point to when citing the belief of higher side moves. The United States economy is constituted with 70% coming from the consumer.
Shoppers have already spent $4.2 billion online on Thanksgiving Day, a 14.5% increase from last year and a record high, Adobe said Friday. Some of the most popular purchased items include Disney’s “Frozen 2” toys, video games such as FIFA 20 and Madden 20, and electronics such as Apple Airpods and Samsung TVs.
https://www.cnbc.com/2019/11/30/black-friday-shoppers-spend-record-7point4-billion.html
This is not a number that shows a struggling consumer. Of course, there is always the question of debt and how will all this spending be paid. There are people out there who are still carrying the debt from last year's holiday shopping spree. Now, they are only adding to it.
Is the economy booming or is this more "smoke and mirrors". Honestly, it is hard to tell. My view is we have a tremendous debt issue that bulls conveniently ignore. The central banks have shown their only solution to this is to keep issuing more debt at attractive rates. Perhaps, this will end up as the means to keep it all going. It defies any lick of financial sense but, hey, maybe they are the smartest guys (and girls) in the room.
Then again, maybe it is nothing more than kicking the can down the road. We do know, most American consumers enter the holiday season with little regard for what they spend. It only becomes an issue when the credit card bills roll in during January.
For now, it is all sunshine and lollipops, so keep spending.
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