Yesterday when addressing the nation, and taking what appeared to be a victory lap for something - it wasn't exactly clear what, maybe soaring prices, empty shelves or panic over yet another viral pandemic - Joe Biden said that consumer spending has recovered... only that wasn't true because a look at the past three days shows just the opposite picture: spending was flat on thankgsiving compared to last year, down on Black Friday (as was everything else to be fair), and - according to Adobe's digital economy index - was also down for the first time ever on Cyber Monday, when consumers spent a total $10.7BN, or 1.4% less compared to 2020. Expectations from Salesforce.com were for another $11BN total.
A brief rundown:
In total, 179.8 million people made online and in-store purchases during the Thanksgiving weekend, trailing behind last year’s figures as consumers spread out their holiday shopping throughout the season, according to the National Retail Federation. Still, the number exceeded the NRF’s initial expectations by more than 21 million. That figure was 186.4 million in 2020, and 189.6 million in 2019.
Whereas Thanksgiving weekend, especially Black Friday, was once seen as the kickoff for the holiday shopping season, the pandemic and supply chain woes have prompted consumers to start shopping earlier, said NRF President and CEO Matthew Shay.
“The Thanksgiving weekend, and Black Friday in particular, are closer to half time now than to kick off,” Shay said. Data released separately on customer foot traffic and on online sales indicate that both e-commerce and bricks-and-mortar stores are on pace for a record holiday season.
Sales on Thanksgiving day were at the low end of Adobe’s prediction. The firm expected consumers would spend $10.2 billion-$11.3 billion compared with last year’s $10.8 billion.
Black Friday sales also disappointed, falling to $8.9 billion this year, from $9 billion last year, according to Adobe Digital Insights, which tracked more than 1 million visits to retail websites. Of note, digital Black Friday sales fell for the first time, with shoppers back in stores this year after last year’s pandemic shut-ins, according to Adobe Analytics data. Adobe reported $8.9 billion in sales versus a forecast of $9.5 billion. In-person visits climbed 48% from a year ago while trailing 2019 traffic by 28%. However, that came as retailers spread traffic peaks with early holiday deals.
Cyber Monday’s online-only sales also disappointed, dropping 1.4% this year, as consumers spent a total of $10.7 billion, down from $10.8 billion last year. According to CNBC, this year’s tally marks the first time that Adobe has tracked a slowdown in spending on major shopping days. Adobe first began reporting on e-commerce in 2012, and it analyzes more than 1 trillion visits to retailers’ websites.
That said, to get a more complete picture one has to look at a broader timeframe as the Thanksgiving spending frenzy is now dead: according to Adobe, from Nov. 1 through Cyber Monday, consumers in the United States have spent $109.8 billion online, which is up 11.9% year over year, Adobe said. And on 22 of those days, consumers purchased more than $3 billion worth of goods, another new milestone, it said.
Adobe also anticipates digital sales from Nov. 1 to Dec. 31 will hit $207 billion, which would represent record gains of 10%, however that prediction will likely prove far too optimistic: while Americans have clearly spread out their purchases across the entire month rather than waiting for Black Friday or Cyber Monday deals, there is another big reason why spending will be frontloaded - simply said, Americans are shopping early because they have to shop start earlier. Many products, especially in consumer electronics and in larger-ticket items, are back-ordered. It might already be too late to go Christmas shopping if the aim is to have presents under the tree.
In that case then, as Hot Air notes, the shopping curve may bend downward sooner and more sharply than Adobe projects.
That’s not the only reason that Cyber Monday shopping may be down or why shopping curves may start declining more sharply. We see another big factor every time we go to the pumps, although we might not know the amplitude of gas-price inflation. The Wall Street Journal settles that point, and makes another about the way it’s eating into family finances:
U.S. gasoline prices have climbed about 50% in a year with drivers paying an average of $3.40 a gallon for regular, up from $2.27, according to data from price tracker GasBuddy. This year’s rise is on pace to be the largest percentage increase in at least a decade. …
For Mrs. Gould, filling the Caravan’s roughly 20-gallon tank costs somewhere around $70. She’s also paying higher prices at the grocery store and even their occasional stops at McDonald’s—part of a broad increase in consumer prices that is making it harder to budget.
“Unfortunately, there is just not a lot we can do about it,” said Mrs. Gould, who is spending around one-third of her family budget on gas. Though her husband’s compact gets better mileage, it cannot fit two wheelchairs.
The hit from higher gas prices comes in two directions. First, it costs 50% more to fill the tank, which is a big deal for working-class families with smaller amounts of disposable income. Less directly, fuel-price increases drive higher prices for goods at the market, especially for fresh vegetables and meats, which are the basis of better diets. Groceries and gas are eroding the disposable income for working- and middle-class families and setting up incentives for discounted and less health fare.
In this environment, we can’t expect robust holiday shopping, even with inflation making it look better than it really is. If fuel and food prices continue to climb at this rate, we’re looking at a bleak Christmas season.