Black Friday had its share of horrors—including the death of that Walmart employee—but emptying stores apparently wasn’t one of them. Despite widespread predictions that diminished consumer spending power would hurt retail the day after Thanksgiving, shoppers around the country seem to have turned out in droves. The question everyone asked, of course, was how much these shoppers were really spending and whether deep discounting would mean slim profits despite heavy buying.
Was this an example of the media refusing to break away from the narrative of the recession? That’s what Matt Philbin argues today.
“As a group, broadcast network journalists are incredibly adaptable,” he writes. “When their grim prophecies refuse to fulfil themselves, they persevere and find the clouds in the silver linings.”
Philbin cites a National Retail Federation estimate that 172 million people shopped in stores or online over the weekend, an increase of 25 million from the year earlier. The same study says the average shopper spent more than $370, a 7 per cent increase from 2007.
“As it turned out, Black Friday was awfully bright for retailers – and consumers, who clearly weren’t feeling as hard-pressed as reporters made them out to be,” he says.
So was the media creating an imaginary retail disaster while ignoring the reality of good news? We’re sceptical. Our own anecdotal evidence supports the idea of deep discounts. Saks, for instance, was selling items at or near cost. With merchandise discounted to those levels, you can experience a “retail disaster” even if there are more shoppers in your stores spending more. Margins get tighter, while your costs remain the same. This can be a good move if you are strapped for cash or burdened with too much inventory, but it’s not exactly the happy indicator that Philbin implies.
The truth will be in the earnings, so we’ll have to wait to see how this plays out. But we’d like to reflect for a moment on what seems to motivate the type of argument Philbin is making. Apparently a certain kind of supporter of free markets—Philbin writes for an institute that says it is “advancing the culture of free enterprise in America”—believes that it is their job to promote bullish market stories. It’s the same kind of thinking that lead many so-called libertarians and conservatives to doubt that we could have national housing downturn.
It should go without saying but we’ll say it anyway. Bullishness is not necessary for supporting free markets, and bearishness does not reveal an antagonism about markets.