How black was Black Friday?

If you tend to avoid crowds, lines, and hassles, you probably spent Nov. 23, Black Friday, doing something other than shopping. And for good reason—the tales of pushing, shoving, and fighting seem to get worse every year.

On the other hand, if you wonder what consumers are up to, you probably pounced on the Black Friday details when they were released by the National Retail Federation®. Supposedly named for the start of the shopping season that pushes many retailers from red to black (loss to profit, a holdover from the days that accounting entries were rendered in red and black), the day's sales figures are considered a bellwether for the Christmas shopping season.

According to the NRF’s survey, consumers spent a total of $59.1 billion over the weekend (note that the survey inquires about spending over the entire holiday weekend, Thursday to Sunday, not just Black Friday). If consumer buying behavior is an accurate gauge of consumer confidence, this was very good news indeed. In fact, this four-day stretch of shopping has improved quite a bit over the past few years:

• 2008: $41.0 billion


• 2009: $41.2 billion (0.49 percent increase)


• 2010: $45.0 billion (9.2 percent increase)


• 2011: $52.5 billion (16.7 percent increase)


• 2012: $59.1 billion (12.6 percent increase)

This isn’t the only sign of life from consumers. The Surveys of Consumers, conducted by Thomson Reuters in conjunction with the University of Michigan, also reveals an upbeat mood. Consumer confidence grew from 78.3 in September to 82.6 in October and held steady at 82.7 in November.

According to the October and November Surveys of Consumers press releases, personal finance was one of the biggest contributors to consumers’ mood; many reported recent income gains in both months. This seems to coincide with the trend in unemployment. As reported by the Bureau of Labor Statistics, the national unemployment rate fell from 8.3 percent in July to 7.9 percent in October.

Are people in the business world thrilled enough to increase their spending nearly 13 percent? It’s hard to tell. First up is the PMI. According to the Institute for Supply Management’s Report on Business®, the PMI was 51.7 percent in October.

This is just 1.7 percent above the break-even point, 50 percent, which is the dividing line between growth and contraction in manufacturing. The PMI has been hovering around 50 since June, with no clear trend. The highlight is in one of the underlying indices, the New Orders Index, which grew from 52.3 in September to 54.2 in October. If new orders continue to pour in, the PMI might get a bit of a boost in the coming months.

The NMI™, a similar barometer for the nonmanufacturing sector, is doing quite a bit better. It was 54.2 in October, and hasn’t slipped below 52.0 in the last 12 months.

The Credit Managers’ Index, an analogous index that reflects business conditions from a credit perspective, fell from 55.3 in September to 54.4 in October—again, not great, but not bad either.

Several other indicators are reasons for mild optimism among both consumers and businesses. Home prices finally stabilized earlier this year, and judging by the number of home construction permits issued, home construction is on firm ground also.

Does this mean that everything is in good order? No. The main fear about the economy right now concerns the impending tax and spending changes scheduled to take place in 2013. Enacted to deal with the growing annual deficits and accumulated debt, the changes to the tax code and spending programs are severe enough to threaten the nascent expansion. If Congress manages to avoid steering the economy off the fiscal cliff, we’ll have a good start to 2013.