Black Friday may be one of the most morally questionable holidays in America. We have dedicated a day specifically for binge buying products (that we probably wouldn’t even use) only because they are marked with a significant discount. But as author Adam Davidson put it, “Black Friday is essentially a one day economic stimulus plan and job creation program.” It’s true—with the current state of our economy, most people spend the year saving on this and that, only to spend Black Friday splurging everything they have saved, thus injecting billions of dollars into the system.
Successful Black Friday sales have given mixed predictions for the year—previously, big sales symbolized a successful year for businesses. However, more recently, big sales have been followed by a slow year. With the economic downturn, people rush to buy everything at discounted prices and immediately start saving up again the next day.
So what if we extended the Black Friday sales? We could stimulate the economy by following Black Friday with a series of smaller sales, convincing people to continue spending. But extended low prices will result in lower profits, which in turn create a vicious cycle of increased unemployment, lower prices, and less spending.
To avoid this situation, after Black Friday businesses could raise prices just enough to convince consumers there is risk of inflation. Under the impression that prices will keep rising, consumers will start purchasing instead of keeping their money in savings, thus putting more money into circulation.
Using inflation as a tool to heal our economy may strike some as absurd, especially since it was one of the main reasons why America is in a recession. But at this point, it's crucial to convince people that they need to spend; otherwise the economy will never be out of risk, as reflected in the uncertain and not entirely promising unemployment numbers. But even though inflation may have caused our current recession, could it bring our economy out of its slump as well?
20 comments:
I believe that any type of spending currently will be helpful to our economy if it does not cause an inflationary spiral. However, the way I see Black Friday sales is that, it is almost analogous to long weekends where families travel, and spend more money that way, and both of these things, people have on average spent less money than before the recession. I believe having more money in the economy will help, but on terms of the whole economy, it's a very temporary thing.
Extending the Black Friday time is an interesting idea; however, in terms of a psychological effect, it's no different than having sales throughout the year. It is simple relabeling of the event.
If we really think about it, Black Friday sales are not as great as its hype. Yes, there are some stores (Best Buy and Target) who give ridiculous sales, but the rest give at most 30% off for the first 100 people who come, or whatever they are doing. Thus, if this is really what is going to save our economy, I don't think it will really work. As I think more and more about this, Black Friday really exemplifies Behavioral Economics. People tend to spend more because they think that what they are buying is a steal. If this helps the economy, I am all for it. To address the point that Amy made about whether we should extend the Black Friday sales or not, I think that that would not be as successful as we would hope because the legacy of Black Friday is that everything is cheap. If there were more days like Black Friday, then people would not have as much of an incentive to spend on Black Friday because they could buy things on Green Monday, or whatever day it would be held on.
The first thing that came to mind after reading this article was competition. I have been in the Black Friday sales in past years and people go all out. Many customers are lured by doorbuster deals and sales. By competition, I am meaning not only customers trying to get the best deals, but also the businesses. Already there are stores trying to open as early as possible so that they can get more customers than other competitors. While some stores are opening at 4a.m. others like Old Navy are opening at 12:01am.
Black Friday is not very safe either since every year we hear about Black Friday crowds injuring people in their rush. This can discourage customers since they want to avoid the traffic and the crowd of people. We are already in a tough economy and people are more pessimistic than in past years. There are people who still want to tighten their belt and save for necessities instead of gifts.
Although, there is a fatigue toward recession and people are tired of feeling poor.
Black Friday happens year to year and if it didn't help last year.. i can't foresee it happening this year. As the holiday season comes into play, yes there will be more spending but it will, as Zhili stated, only be temporary. A high of sorts.
Black Friday is a hoax! Its just a way for all the big fat cat corrporations to make a bunch of money off of brainwashed americans who blow all their money on sales that just suck them into buying junk. I dont think that Black Friday will benifit our economic situation in this country.
I agree with fellow commenter’s that the sales during Black Friday may not be as great as they seem. They mainly promote buying and getting to stores as early as you can in order to try and get the "best deal". Although it does put a lot of money into circulation, I feel that if it was extended or if there were more sales like this, it wouldn't necessarily change people's spending. Working at a retail store, I see that people who want to spend will spend, and those who just want to get cheap clothing are more likely to walk out on a sale.
Black Friday has been seen as a day to save the economy for a very long time. it was seen this way during the great depression and it will probably be seen this way the next time there is a down turn too. My problem with this theory is that we have been in a recession for a few black Fridays already and it doesn't seem to have helped all that much. I'm not saying that the sales don't help out the companys tremendously they just don't really help the economy in the long run.
Even if Black Friday sales are not all as great as businesses make them seem, many people still purchase a lot of goods, therefore contributing a sudden amount of money into our economy. The effects of this are temporary, but it is an interesting idea to drag out the motivations people have to spend so much for a little while longer after Black Friday. In regards to raising prices after to convince consumers there is inflation risk, I do not think this will help much since prices are expected to go back up after that Friday anyway.
I agree with tommy that black friday doesn't help our economy that its only for big corporations to make more money on their products. If we were able to extend black friday it would only be for couple of days out the year and that wont really do anything for economic situation.
I'm pretty much in agreement with the previous comments. While I think that Davidson raises an interesting point with his quote (“Black Friday is essentially a one day economic stimulus plan and job creation program” ), I don't see Black Friday as being impactful enough to provide a significant, lasting boost to the economy. The lower prices/supply-demand curve effects induced are highly temporary; moreover, we're talking about change on the macroeconomic level for a single and thus very short-term event. It's an interesting idea and clever application of economic theory, but I think Black Friday has (historically) been too small in the grander scheme of things for those to really be effective.
What is the difference between Black Friday and Cyber Monday? Its just one is in person and one is done online. I think the day is more about the hype than the actual savings. Although I personally go more for the feel of it, I have seen news articles about people already camping out in front of Best Buy for these sales. If this is behavioral economics at its best, I say businesses would probably have already gotten together to create more of these crazy binge buying days. I think the reason black friday is so successful is because of this seemingly exclusive one day buying steal day. Its more of just price confusion than anything.
I'm not sure if I completely agree with this. I mean yes, Black Friday could cause temporary relief to our economy, but once black friday is over we'll just end up going back to the same reserved spending pattern.
Even though Black Friday is a short, one day event, it still helps to circulate money that otherwise would be stagnantly saved. The fact that Black Friday is only a one day event is actually why it is so attractive. The psychological effect that it has on the public is profound. The idea that on Black Friday, every store nationwide will slash their (marked-up) prices by 40% or 50% or even 60% lures in otherwise rational people who would save their money. People believe that they are actually saving money by spending money on Black Friday. The title of this post is "Could Black Friday Be A Start To Saving The Economy?" not "Could Black Friday Single-highhandedly Fix the U.S. Deficit and Save the Entire Economy?" My answer to the rightful title of this post is yes;yes, Black Friday could be a start to saving the economy. Black Friday sales provide movement in the economy on a national scale. That movement in the economy will reach producers who will have more capital and will be able to produce even more goods and services which could create a positive cycle in our economy.
I slightly disagree with Kenny. Yes, consumers are more inclined to spend more due to the influence of discounted prices, and because more consumers are spending, companies and businesses hire workers to keep up with the sudden demand. However, it's not exactly "we've made a sale, now we have more money and can hire more workers to sell even more." There are fixed costs that need be paid, and with so many discounted prices, meeting the equilibrium price would seem to be a little less likely. Furthermore, there are the employees that must be paid, and once again, discounted prices make it a little harder to pay those variable costs. Once employers notice this, layoff begin to occur, leaving people without a job and thus, unwilling to spend money. So really, money has simply shifted from the hands of one money-hoarder to another. Concerning the extension of Black Friday, running the risk of lower profits and increased unemployment, as stated by Amy's original post, to gamble with inflation seems like too big of a risk, having the potential of leaving businesses, and thus people, in an even worse condition than started out.
I agree that while businesses "explode" with people buying everything they can because there is the incentive of a much lower price than almost any day in the year.
I also think that this is a possible method for companies to quickly get rid of either surplus products or products that they may not want anymore, and still profit a little bit from it.
I think that raising the prices a little bit after the "initial" Black Friday day might help a little bit. But by extending the length but if the results of the initial Black Friday date leads to low profits, and subsequent days could just lead to the same thing, how many days do we need to really stimulate the economy, and maintain that in the long run?
Black Friday has become a major event in America and marks the beginning of the holiday season. Regardless of the amount of sales, consumers feel inclined to spend their money at this time because of the upcoming holidays.
Although I agree that business' attempts to surge of money back into the economy by creating Black Friday sales is somewhat beneficial, I can't help but feel that we are beginning to rely on it too heavily as an economic stimulus. Consumer spending does help, but there is much more that needs to be done to boost our economy out of this recession.
This also raises the concern that Americans may be becoming economically irresponsible when splurging so heavily on this nationally recognized day of shopping and spending. Since consumers feel inclined to shop during the holidays, it is likely that they will overspend and not stay within their means, creating debt problems and, at the extreme, poverty. Of course we cannot blame Black Friday alone for the consequences of overspending, but we can conclude that it may have some misleading influence on the spending habits of Americans by encouraging them to buy, buy, buy.
Finally, referring back to the original post, I agree with some of the previous posters who stated that creating a false inflation in an attempt to increase spending is a risky gamble, probably one that could potentially have horrible economic repercussions if it failed. I believe that there must be numerous, less severe and misleading ways to increase spending in America.
I disagree with the statement that Black Friday could be a start to saving the economy because it is only a temporary thing. It is only what maybe a couple of days of people splurging and buying things for the holidays but once that is all over, Americans go back to the normal pattern of everyday life where they will not spend as much or close to nothing just so they can save for the holidays again. Black Friday happens once a year and although it does put in a lot of the money back into the economy, it is not something to rely on.
I think that in order to stimulate the economy again, people need to spend money and get money into circulation. However, with the down state of the economy, people are less willing to spend and end up saving more and more, thus prohibiting money from entering the economy. I think Black Friday does a good job of getting more money into circulation by tempting people to buy things with large sales and reduced prices, but I don't know if just one day a year is enough to allow the economy to fully recover.
I would just like to say that this article spurred a very interesting experiment. Last night at midnight, my sisters and I ventured out into the world of materialism and saw American consumerism at it's best. I had never been black Friday shopping before and so I decided to be as hard core as possible and stay out all night. I had no idea that arriving 20 minutes early for the doors of Target to open would place me approximately 1,500 people away from the door. An article from the Christian Science Monitor said that this year, consumers were planning on spending 80% less than in previous years. If this was in fact a realistic statistic, I am amazed. In reply to a comment made by Kathryn earlier, I learned that people waiting in line for Black Friday are in fact serious shoppers not likely to flake on a purchase. Most people were waiting for a specific deal which made them more likely to purchase something they would not ordinarily purchase any other day. My original thoughts were that Black Friday would have no effect on the economy as a whole because it is one day of frivolous purchases. After experiencing the madness however, I believe that the amount of money added into circulation by this one day could truly have some effect. I thought that because online shopping has increased in popularity and accessibility, there would be exponentially less people shopping. Everyone knows that Black Friday shoppers either crave bargains, or shop for the experience. Either way, online shopping is not an adequate substitute for the satisfaction and mayhem provided on Black Friday.
Having Black Friday passed already, and working in retail since Black Friday, this article sparked my interest. Like what had been said before I do agree that Black Friday could be a push to the saving the economy. It had been argued that Black Friday had been thought to be the economy saver each year, and look our economy still hasn't been saved. But unlike every other year, we had the newest trend which seemed to be opening at midnight. I hadn't seen this in the past years of the trend of opening early. However the mall (which is where i work) only opened at 5. and still a flood of people were lined up to get in and shop. On Thanksgiving i went to Sacramento to have dinner with my family that resides there. On my way home Thursday night we must of passed at least 10 Targets. and Maybe 4 Wallmart. Even from the Freeway i could see lines coming out of the doors and wrapping around the entire store of Target. Wallmart's Parking Lot was mass chaos, their where lit up headlight everywhere, Mass amount of cars. I'm surprised there wasn't a major accident. i can't even imagine the type of sale that would warrant driving to Walmart at 7PM (while your supposed to be eating a nice dinner), waiting 2 hours just to find parking, then getting in a huge line to wait another 3 hours just to get into a store at 12 and shop a little. At the store i work at i didn't understand the rush of people that came into our store, buying a lot of things just because it was 40% off, when it had been 40% off 2 days before, and will be 40% off 2 days after too. People go nuts for these deals, but only because that's what the rest of the people are doing. They want to be part of craziness of black Friday, just to feel apart of something. The deals and the crowds advance each year, that's why i think that Black Fridays could be a push to a better Economy. Just thought i should share some personal testimony.
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