American Consumers are Feeling Financially Strong
A look back at the Black Friday consumer spending records might have caught some by surprise. The mainstream media continues to gripe about a“struggling” economy and the “death” of brick and mortar stores, and this does not paint an accurate picture for the American worker and consumer. Luckily, we have consumer behavior data to remind us that things are actually looking positive for our economy at the moment.
Consumer Spending by the Numbers
Consider this: Black Friday saw yet another record-breaking year in online sales - $7.4 billion, in fact. This is an increase of a whopping 14 percent from just a year ago, according to First Trust. Thanksgiving Day numbers were incredibly strong, as well, with an increase of 17 percent in online sales compared to 2018. What’s more, online sales success didn’t come at the expense of brick and mortar establishments, as we are often led to believe. In-person sales of goods and services were strong, too, up 4.2 percent from last year.
You may be wondering whether Americans are simply spending money they don’t actually have, taking on new debt to fund holiday purchases. First Trust reports that consumer debts are the lowest relative to assets since the 1980’s. This good news does not come as a surprise if you’ve been paying close attention to recent data on the American worker. Job growth continues to be robust, with an unemployment rate near the 50-year low. Wages are continuing to rise, and this growth has been fastest for low-income workers. In the private sector, growth is greater than 5 percent over the past 12 months.
In short, Americans are currently enjoying less debt and increased wages and salaries, and this strengthens the economy. Consumer spending accounts for 68 percent of Gross Domestic Product (GDP), so Black Friday and Thanksgiving Day consumer activity is an important measure of American economic health.
More Positive Economic Data
Aside from business-to-consumer sales, the other major predictor of our country’s financial wellbeing is what’s known as intermediate business-to-business sales. These numbers are highly impacted by business innovation and entrepreneurial risk-taking. Economists will tell you to watch for changes in the environment for entrepreneurship in order to predict a recession because this will be impacted even before consumer spending habits. However, business-to-business sales are holding strong at the moment, and First Trust reports we aren’t likely to see this change for at least the next several years. That means current economic conditions should continue to produce record-breaking retail numbers into the near future, so don’t let yourself get caught up in negative news stories about the economy or an impending recession just yet.
Of course, it’s always a good time to think about your own financial health and to proactively plan for the future you want. If you have questions or would like expert advice, let’s start a conversation today.