MARK-TO-MARKET: Economy upgraded, shoppers break holiday records – Quad City Times

A lot is riding on this year’s holiday season given the recent pullback in America’s economic growth. U.S. economic growth fell from a robust 3.1% annualized rate in the first quarter to 2% in the second quarter. On the plus side, the Department of Commerce recently upgraded the economy’s third-quarter growth rate from 1.9% to 2.1%. The upward revision, combined with positive commentary by the Federal Reserve, signals the U.S. economy should continue to grow at a solid, yet modest, pace.

The main driver of the U.S. economy is the American consumer. During our current economic pullback, consumer spending has been the near-exclusive contributor to economic growth. With softness in business spending and manufacturing, among others, Wall Street is counting on the American consumer this holiday season to continue driving the economy forward. And with the latest holiday shopping results, the American consumer is living up to these lofty expectations.

According to the National Retail Federation, 189.6 million Americans shopped online or in-store during the Thanksgiving holiday weekend — the five days from Thanksgiving through Cyber Monday. For perspective, this represents almost 58% of America’s population. In their spending fury, shoppers spent, on average, $361.90 over these five days — up 16% from 2018.

On a more granular level, the data illustrates how e-commerce continues to reshape the retailing landscape. E-commerce is defined as any sale executed via computer, tablet or smartphone. According to Fiserv, on Black Friday, sales at traditional “brick-and-mortar” stores increased by 4.2% over last year. However, Adobe Analytics reports online shoppers spent a Black Friday record $7.4 billion — a massive increase of 20%.

On Cyber Monday, online shoppers spent $9.4 billion — up more than 19% from 2018. With Americans spending more than $6.5 million every minute, this represents the single largest online shopping day in history. Online retailing powerhouse Amazon also reported its largest shopping day in history.

In total, the November through December retail holiday shopping season is expected to reach $730.7 billion, up 4% from last year. This amounts to, on average, $1,047.83 per American shopper.

As I’ve previously opined, a successful five-day Thanksgiving shopping weekend doesn’t guarantee a successful holiday season. Last year, shoppers broke similar records on Black Friday and Cyber Monday. Unfortunately, retail sales quickly declined for the rest of the holiday season. And for retailers, having the bulk of your holiday sales come from heavily discounted shopping days like Black Friday and Cyber Monday results in lower profits.

The final outcome of the 61-day shopping season lies ahead. The big question for retailers is whether consumers will continue their spending blitz — with fewer promotional discounts — for the remainder of the year. Retailers are off to a good start, but the finish line is still 23 days away.