Black Friday: Binge shoppers drag US back to its bad old ways

How people shop says a lot about their character. And just how desperate they are for cheap deals says a lot about the state of their mind - and the state of the economy.

The binge-shopping that happened over the extended weekend all across the US, from Black Friday until Cyber Monday, is being touted as a symptom that the US economy is perhaps on the mend. The US, which overdoses on consumption, is driven in large measure by the holiday shopping from Thanksgiving until the Christmas-New Year’s Day. And the fact that US householders, who had been scarred by the 2008 financial crisis and had put away their credit cards and were paying down their debts, were now back to their shop-till-they-drop ways, has given rise to a curious sense of optimism that all is well.

But in fact, the frenzied hunt for cheap deals, and the desperate measures that shoppers resorted to to beat others to the counters, paints a rather more bleak picture of the US economy. It showed up a down-and-out nation where pinny-pinching has become something of a national obsession, and the indecorous pushing and shoving - and much worse - when they were out shopping for much of the Thanksgiving Day weekend resembled rather more the stampedes we’re used to seeing in underdeveloped countries when freebies are given away.

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[caption id=“attachment_537189” align=“alignleft” width=“380”]  The binge-shopping that happened over the extended weekend all across the US, from Black Friday until Cyber Monday, is being touted as a symptom that the US economy is perhaps on the mend.AFP[/caption]

As this blogger ranted, after posting a video of a woman spraying squirting pepper-spray on another shopper in order to beat her to a video game, “every Black Friday, we get yet another heaping helping of pure unadulterated ignorant mentally deficient bottom-feeding fat-saturated sheeple mani. Every year it gets worse… “In his opinion, “at least half the population” of the US “needs a good smack upside the head.”

The irony is that Black Friday deals are something of a myth, as the Wall Street Journal observed. The best time to go deal-hunting, the newspaper observed after observing pricing data for typical holiday gifts, “almost never involve standing in the freezing cold all night” in the way that shoppers across the US did over the weekend.

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The Journal found that in many cases, gifts were often priced below Black Friday levels at various other times of the year. The retail industry has effectively turned Black Friday into a “marketing bonanza by carefully selecting items for deep discounts” while continuing to price other stuff at levels that won’t eat into the profits.

But more seriously from a macroeconomic point of view, the shopping binge showed that US households are perhaps reverting to their bad, old ways of living beyond their means, which is what fed the US house bubble that crashed in 2008, dragged the US economy to a brink of Depression and spread contagion around the world.

Data put out by the US Federal Reserve in September showed that in the second quarter of this year, American household debt rose at the fastest rate in more than four years. And total domestic debt grew at the fastest pace in nearly three and a half years, which showed an increased willingness to borrow. ( More here.)

Even when there was some positive news on the US household debt front, a closer study established that it happened for reasons that are flagging yet more warning signs.

For instance, Moody’s Analytics noted in October that the combined amount that US households owned on home mortgages, credit cards and other outstanding liabilities fell to about $11 trillion, about the same level as it was in 2006, two years before the financial crisis.

But as this Time magazine report observed, the decline in household debt, however, did not mean that Americans had changed their ways. According to Mustafa Akcay, an economist at Moody’s Analytics, nearly 80 percent of the deleveraging was caused by defaults” - and only 20 percent of the decrease came as a result of “voluntary deleveraging”.

The irony of all this frenzied shopping happening right after Thanksgiving was not lost on commentators. “Only in America are people ready to kill each other for things they don’t need and can’t afford, after spending the day before being ‘grateful’ for things they already have,” said the blogger Zerohedge.

For three years after the 2008 financial crisis, US households, which had fallen on bad times, discovered thrift, held back from wasteful consumption - and worked hard to repay their debt. But like reformed alcoholics who have fallen off the wagon, they’re now back to the bad, old ways of addictive borrowing and spending. Given the catastrophic consequences of the last consumption bubble that burst, this is bad news for the US economy - where much macro restructuring of national debt levels is still be done. Nor will the global economy be immune to any shocks to the system arising from this spending binge.