The Economic Fallacies of Black Friday: 2020 Edition

Tomorrow, shoppers across America will participate in the largest shopping day of the year: Black Friday. The National Retail Foundation usually releases an estimate of how many customers will be shopping during the five-day weekend from Thanksgiving Day to Cyber Monday, but the usual crowds are cause for great concern with a resurgent Wēnyì casting a dark shadow over this year's holiday shopping season. In 2019, there was an estimated consumer base of 165.3 million shoppers[1], with an actual result of 189.6 million.[2] Given the circumstances, it is difficult to guess how many there will be this year.

The usual holiday season forecast that the NRF releases on October 3 was not released, as National Retail Federation Chief Economist Jack Kleinhenz described the effort as “assembling a jigsaw puzzle without all the pieces.” He said on October 1,

“Completing a puzzle is highly probable given patience, having all the pieces and having the picture on the box to guide assembly. But it's not the same when attempting to fit pieces of the economy together in today's environment. Many of the pieces are missing.

We are waiting for new data and are still assembling puzzle pieces for the 2020 holiday season. I am cautiously optimistic about the fourth quarter in terms of the economy and consumer spending, but the outlook is clouded with uncertainty pivoting on COVID-19 infection rates. The recession appears to be behind us and the re-opening of the economy over the past several months has created momentum that should carry through the fourth quarter. The test is whether consumer spending will be sustained amid wildcard puzzle pieces including policy surprises, the election and a resurgent virus.”[3]

The NRF estimated that total sales for the 2019 holiday season would be between $727.9 billion and $730.7 billion, a growth of 3.8 to 4.2 percent from 2018[4], with an actual result of $730.2 billion or 4.1 percent growth.[5] This year's estimate was released belatedly on November 23, and is between $755.3 billion and $766.7 billion, an increase of between 3.6 and 5.2 percent.[6] Applying last year's statistics to this year, we may expect total sales of $764.7 billion. The NRF estimates that retailers will hire between 475,000 and 575,000 seasonal employees, compared with the actual 562,000 they hired during the 2019 holiday season versus an estimate of 530,000 and 590,000.[4,6] We may therefore expect that retailers will actually hire about 528,300 seasonal employees.

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References

1. McGinty, Mary (2019, Nov. 15). “More than 165 million people expected to shop over five-day Thanksgiving weekend”. National Retail Federation.
2. (2019, Dec. 3). “Thanksgiving weekend draws nearly 190 million shoppers, spending up 16 percent”. National Retail Federation.
3. Shearman, J. Craig (2020, Oct. 1). “NRF chief economist 'cautiously optimistic' but says holiday sales will hinge on 'wildcard puzzle pieces'”. National Retail Federation.
4. Shearman, J. Craig (2019, Oct. 3). “NRF forecasts holiday sales will grow between 3.8 and 4.2 percent”. National Retail Federation.
5. (2020, Jan. 16). “NRF says 2019 holiday sales were up 4.1 percent”. National Retail Federation.
6. Shearman, J. Craig (2020, Nov. 23). “NRF expects holiday sales will grow between 3.6 and 5.2 percent”. National Retail Federation.
7. Inman, Danielle (2020, Oct. 21). “Consumers Prioritize Spending on Family, Friends Ahead of Holiday Season”. National Retail Federation.
8. McGinty, Mary (2019, Oct. 24). “Holiday shoppers plan to spend 4 percent more this year”. National Retail Federation.
9. Maximus, Nullus (2019, Nov. 29). “The Economic Fallacies of Black Friday: 2019 Edition”. Zeroth Position.