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In an effort to keep consumers spending, US retailers are stretching their Black Friday deals over several weeks, as recent data indicates that the spree fueling economic growth appears to be slowing down. Brands like Walmart, Amazon, Target, and Macy’s have already rolled out hefty discounts under the Black Friday banner, well ahead of the actual day.
However, despite these early sales, general merchandise unit sales saw a 3% drop compared to the same time last year, according to Circana, a company that tracks retail sales data. The National Retail Federation predicts winter holiday sales in the US to almost hit $1 trillion in November and December, with an average spend of $902 per person. Nonetheless, spending growth seems poised to rise by just 2.5-3.5%, marking the slowest rate since 2018.
“We’re witnessing extended incentives as retailers aim to catch consumers over a longer period,” says Gregory Daco, chief economist at EY Parthenon. Daco notes that this holiday season may see moderate sales growth as volumes increase at a subdued pace, hindered partly by reduced pricing power for retailers.
Retailers are offering discounts and promotions primarily targeting those with lower incomes, while also hoping to attract wealthier shoppers during this extended sales period. Meanwhile, headline inflation, though lower than historic highs seen in recent years, continues to frustrate consumers, as pointed out in a University of Michigan survey this week.
Lately, consumer spending has been a major force behind America’s strong economic growth. Yet, consumer confidence is still below historical averages, according to sentiment surveys. Adding to the uncertainty is the potential for another round of tariffs under Donald Trump’s upcoming presidency, which economists warn could escalate inflation, thereby dampening sentiment further.
Roland Fumasi, a food and agribusiness analyst at Rabobank, highlights that Trump’s return could result in higher inflation, slower GDP growth, and greater budget deficits. Should tariff increases occur, we might see inflation spike again, affecting economic growth negatively. However, Fumasi notes that tax cuts and deregulation by a Republican-led Congress could counter this, though they’d also swell the budget deficit and exacerbate inflation, especially if coupled with decreased immigration.
The time around Black Friday is crucial for stores selling consumer goods, with the period between Thanksgiving and Cyber Monday being particularly significant for annual sales revenue. According to NRF chief economist Jack Kleinhenz, while household finances seem well-positioned to support significant spending this holiday season, shoppers are likely to be more mindful of their purchases.
Brian Cornell, Target’s CEO, noted this week that consumers are becoming savvier, focusing on discounts and stocking up when deals arise. Due to flat sales forecasts for the fourth quarter, Target held an “Early Black Friday” event in early November and followed it with “Black Friday deals” lasting until the month’s end, slashing prices on items like Christmas trees and headphones.
Walmart kicked off its “Black Friday Deals” on November 11, with another wave starting Monday, featuring discounts on TVs, iPhones, toys, and jeans. Meanwhile, Amazon’s “Black Friday Week” began on Thursday, and Home Depot’s “Black Friday Savings” will run from November 7 to December 4.
Additional insights contributed by Will Schmitt in New York and Madeleine Speed in London.
