It is, in case you hadn’t noticed, Black Friday this week. Thanksgiving, the American festival on the fourth Thursday of November, has not crossed the Atlantic, but the Friday that made a bridge to the holiday weekend, certainly has. Origins as a shopping day in the US go back to the 1960s, but what was really a domestic event went global thanks to Amazon, who brought the idea to the UK in 2010. In the past decade it has gone pretty much global, with big sales across Europe and extending to India – though in China it is Singles Day, earlier this month, that tops everything there.
This year, sales on Singles Day were up on 2020, but the whole business was more muted than usual. That raises a massive question. Might Black Friday turn out this year to be a bit of downer on both sides of the Atlantic?
There are two reasons why it might. The first, the obvious one, is that the pandemic is still running strongly. Numbers both of infections and deaths are not good. The clampdowns are increasing across continental Europe. Events are being cancelled, trips postponed. Inflation has surged over the past year, with consumer prices up 6.2 per cent in the US, 4.5 per cent in Germany and 4.2 per cent in the UK. The UK retail price index, the older measure of inflation, is up 6 per cent.
So what will people do? Will they buy now because things will cost even more next year? Or do they have to spend so much more on filling up the car with fuel that they won’t splash out on more things for the home?
Sales won’t be terrible, but they may be a bit flat. There is a pile of excess savings – money people could not spend during the lockdowns – still sitting in bank accounts. But whether Black Friday turns out to be a new record will say a lot about consumer confidence, the biggest real world test of confidence this year. That in turn will tell us how strong the various national economies will be through the winter, because as governments reduce their support the onus will be on consumption to keep things moving.
The second reason for caution is even more interesting. The great choice that faces us all is whether we should buy goods or services. Do we want more stuff or do we want more fun?
That is a gross oversimplification but you see the point. When the pandemic hit, people were unable to spend any money on something as simple as popping down to the pub. But if they were fortunate enough to be able to work from home, they could spend more on making that home a better workplace and maybe a more comfortable living space too. It was a case of a loft conversion instead of an exotic holiday abroad. Things have not yet settled down completely, and this winter does not look cheering. But the job market has been transformed by the pandemic, encouraging many employees to choose lifestyle over cash – what has been dubbed the Great Resignation. So has the balance of consumption been changed too?
To keep up to speed with all the latest opinions and comment sign up to our free weekly Voices newsletter by clicking here
Of course different age groups will make different choices. Younger people who have just bought homes will need to furnish them. Fun will have to take a backseat there. Families who missed their summer holiday may well want to save up for something special next year. So not much of a Black Friday for them. As always with anecdotal evidence there is a danger of assuming that what friends and family are doing is the norm for everyone else. As always, too, there are no hard lines between spending on goods or on services. We will go on doing both. But the balance of the choice – stuff or fun – is something that is really important not simply from an economic perspective but from a social one too.
Many people would argue that the developed world has enough goods to live quite comfortably. Buying more cheap clothes and then throwing them away after they have been worn a couple of times is bad for the planet. Every time you buy something you don’t need is not only a waste of money, but also a waste of natural resources.
The moral of all this is that maybe we should hold back on Black Friday and spend our money on something else – even if that something else is as simple as a meal out with friends who we haven’t seen for a while. Either way, this Friday is a test both of the state of the economy – and of the choices we make ourselves.