FRIDAY, March 29, 2024
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Black Friday shopping chill points to wider fears of slower consumer spending

Black Friday shopping chill points to wider fears of slower consumer spending

Retailers are bracing for a dark day this Black Friday, as shoppers continue drifting online for purchases, or worse, sitting on their wallets amid fears the economy is slowing.

Nerves among national names such as Macy's and J.C. Penney in part reflect longstanding trends pushing potential customers out of brick-and-mortar stores. "For the first time, the majority of U.S. consumers - 54% - say they will do most of their holiday shopping online, according to data from PricewaterhouseCoopers, a professional services firm," The Washington Post reports..

And only 36% of shoppers plan to shop on Friday, down from 51% in 2016, a PwC report finds. "Retailers have been touting bargains for weeks. With more shopping moving online, it has only become easier to compare prices, and so the lure of doorbuster deals is losing its grip on shoppers," CNBC's Lauren Thomas writes. "That only means more bad news for a group of retailers that has long been dependent on the shopping holiday to push them 'into the black,' or toward profitability: America's department stores." 

But consumer confidence has also taken a hit in recent months, a potentially troubling indicator for an economy that has relied on that spending as other categories of economic activity have stumbled. The Conference Board just reported that its measure of consumer confidence fell in November for the fourth month in a row. Lynne Franco, the private research group's senior director of economic indicators, chalked up the slump to fears of a softening labor market. "Growth in early 2020 is likely to remain at around 2%," she told the Wall Street Journal. "Overall, confidence levels are still high and should support solid spending during this holiday season."

Some other economists agree the reading offers little reason for gloom. "Despite the moderate pullback over the past several months, the consumer confidence reading remains high," the team at Oxford Economics writes in a note. "A still-strong labor market and near-record highs in equity prices will continue to support consumers' attitudes and should make for a joyful holiday shopping season."

But there are other warning signs about consumer activity. Ian Shepherdson of Pantheon Macroeconomics points to delinquency rates on auto loans that are sharply rising. "Anything other than a clear rebound in auto buying intentions in November would be a worrying sign, especially given that sales in October were soft," he writes. "November's results depend on the Black Friday weekend, but we are a bit trepidatious at this point."

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