Retailers have a lot riding on Black Friday
SCOTT DETROW, HOST:
OK. So we have polished off our Thanksgiving dinner and put the leftovers in the fridge, and that means the holiday shopping season is officially here for real.
(SOUNDBITE OF MONTAGE)
UNIDENTIFIED PERSON #1: Get Black Friday deals now at Target.
UNIDENTIFIED PERSON #2: Thousands of Black Friday deals are coming to Best Buy.
UNIDENTIFIED PERSON #3: (Singing) Twelve a.m. sale, hours till morning, been online since yesterday. Breath smells bad.
I need coffee. Five-hundred-dollar early bird special. Shop today.
(Singing) It's Black Friday, Black Friday. Got to go to Kohl's on Black Friday.
DETROW: Whether or not you miss the alleged good old days of lining up at the crack of dawn to get that Tickle Me Elmo or 50-inch smart screen TV or whatever, or nowadays you play it safe and do your shopping from the comfort of your own home, it is the time of year when many Americans are on the lookout for deals on holiday gifts and stuff for themselves. Let's be real about that. But that's only if they feel like they have the extra money to spend.
KATIE THOMAS: You know, people love Black Friday because they know it's the biggest breadth of discounts.
DETROW: Katie Thomas is with the Kearney Consumer Institute and studies consumer buying habits.
THOMAS: What we've seen really in the last year or so is very much like a wear-now, buy-now mentality, which means that because people are tight on money, they actually tend to wait until they feel like they really need something.
DETROW: The arrival of Black Friday and holiday sales provides the perfect excuse for many people to buy what they've been eyeing all year long as we ramp up to December. Consumer spending is a huge part of the economy, and it sends a strong signal about how Americans feel about the financial health of the country. And how they feel about that really matters because the amount consumers spend during the holiday season could make or break some retailers.
To talk about all of this, we called up NPR business correspondent Alina Selyukh to find out what Black Friday shopping says about where the economy has been, where it might be headed and what the biggest difference is in consumer moods and consumer optimism now compared to a year ago.
ALINA SELYUKH, BYLINE: There are some big changes, some things for the better, some things for the worse. And in the good news, the economic context has changed in these ways. Unemployment last year was 3.5%. Now it's 3.9%. We're still sort of at record lows. That's really good news. Inflation back last year was 7%. Now it's 3.2%, so that's cooled dramatically. Gas is a lot cheaper. A trip to the grocery store no longer feels like you just set your wallet on fire by buying, like, lettuce...
SELYUKH: ...And some eggs. In bad news, people are repaying student loans. Again, that's restarted. We are draining savings accounts, and we're charging a lot to credit cards. Our collective debt as a nation has topped a record $1 trillion, and more people are falling behind on bills.
SELYUKH: So just to put some numbers on those vibes that we're in right now.
DETROW: But those are some good vibes, and those are some bad vibes.
SELYUKH: Some meh vibes.
DETROW: And some meh vibes. So what does all that mean? Any sense, at this point, what that means for the holiday season?
SELYUKH: Yeah. The big question all year for retailers was whether people were going to start scaling back. For months, we've been hearing about people really prioritizing food and necessities over, like, fun stuff. But then you get these other data points about people going out to restaurants and bars, more than 8% more this year than last year. And we went out a lot last year, so the bar is pretty high. And now survey suggests more people than ever plan to shop this holiday weekend.
The National Retail Federation says people are planning to spend about the same amount as last year on decorations, candy and snacks and actually more on gifts. People are saying they plan to spend more on gifts this year than last year by an average of about $34. An average holiday budget, according to the NRF, is $875, slightly more than last year. And it's almost the same as it was in 2021, which, if you recall, was a totally crazy year for shopping.
DETROW: Yeah. I guess I'm surprised that it seems like all of these forecasts are so dramatically in the positive, in the big, in the more direction.
SELYUKH: It is a bit of a peculiar year in that way, and I guess we'll see if that is how things play out. There is something to be said about the fact that the categories that have particularly struggled this year - sporting goods, electronics and clothes specifically - are kind of those things that people buy for the holidays. And so overall holiday spending is expected to grow, like I said, about 3 to 4%, which is kind of in line with what we've seen over the past decade. It's much slower growth than we saw at the peak of the pandemic, but growth nonetheless.
DETROW: It's interesting, right? We kind of cheer more spending here. You know, if you're a store, you certainly want to see people spending more and more. Spending is good for the economy. But at the same time, you just talked about the fact that people are dealing with student loan debt for the first time in years, and that credit card debt is at an all-time high.
DETROW: How are people thinking about that, if at all, as they approach the holiday season?
SELYUKH: A lot of the economists will say that it's important to remember that more people are getting higher wages right now. So overall, as a country, we are getting higher pay. And also, on the credit card bills - I did ask this question of Katie Thomas. She runs the Kearney Consumer Institute. It's like a think tank inside the consulting firm Kearney. And this is what she had to say.
THOMAS: Traditionally, what we find and what we're still hearing this year is people like to spend on the holidays. Once again, they like to buy good gifts, and they like to buy for themselves because they know what's the best price of the year. It's just a time of the year people are in spending mode. And while we have had a lot of, like, challenging news around the wallet. We've seen, of course, inflation start to stabilize a bit, and people are employed, and wages are good. So what I think the biggest risk is - consumer credit card debt going up, credit card delinquencies going up. But that's, I think, going to be a new year problem, right? I think people are going to spend through the holiday season, and then they're going to have to, you know, figure that out in 2024.
SELYUKH: So it's the good old shop now, face the consequence later season. Like me personally, I'm off to buy some new jeans. And that credit card bill is the future Alina problem.
DETROW: Well, present 2023 Alina Selyukh, I appreciate you coming in to talk about all of this.
SELYUKH: Thanks for having me.
DETROW: And good luck to future you.
SELYUKH: Indeed. Transcript provided by NPR, Copyright NPR.
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