Retail Down on Black Friday – No Surprise with 26 Year High Unemployment Rate Expected to Hold

The initial results from Black Friday show overall spending up by one half a percent, and consumers spending 8 percent less than last year. The effect on Black Friday retail sales should come as no surprise with the unemployment rate at at a 26 year high, and economists projecting this figure to hold: (Bloomberg)

“The economy is recovering, but at a distinctly subpar pace,” Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, said in a note to clients. “Growth looks too sluggish to lower the 10 percent-plus unemployment rate to a meaningful degree anytime soon.”

Fear is another factor in the decrease in consumerism with the threat of job losses, an ever weakening dollar and rising costs of living, there is an aura of an element of risk involved in shopping this season.

A recent television ad by Stop and Shop Supermarkets speaks to the general feeling that pervades the season: the concept - a mother and son adjusting to these “hard economic times” and enjoying a simpler life; less entertainment (such a movies), and learning to shop effectively. This message is resounding with American’s who have seen their paychecks reduced with rising costs and, depending upon the State, increased taxes. Consumers cut back, look for bargains, and two deep discount retailers, in particular, Wal-Mart and Target, seem to be staying above the norm as a result.

With families strapped for cash, and tightening credit or skyrocketing interest rates on credit cards are also adding to the decline. The new unemployment figure will be out on Friday of this week, depending upon the results, the balance of the retail “season”, may continue to look lackluster.