By: DailyForex.com
The retail business adage that “the customer is king” is an important concept when making prognostications on the direction of an economy. In the USA, for instance, something like 70% of the nation’s output is consumed by the domestic market and naturally, the consumer is a key part of this; consequently, their sentiment is a relevant economic indicator of future demand (or the lack of it).
Last Friday, the first after the US Thanksgiving holiday is known as Black Friday and is traditionally regarded as the start of the season of end of year spending leading up to Christmas and the New Year period. The retail industry looks at sales receipts over the Thanksgiving weekend (and the following Monday – dubbed Cyber Monday) to give them a clue as to likely demand over the festive period. Sales over the weekend were stronger than over the comparable period in 2011 by a healthy 13% according to the National Retail Federation (NRF). According to NRF, Americans spent $59.1 billion over the weekend with 247 million visits to stores over the weekend (the US population is approximately 200 million people). The average purchase total increased from $398 (2011) to $423 this year. Cyber Monday receipts were said to be up by between 20 and 27% over the 2011 figure.
The latest consumer confidence survey for November has recorded the best level since February 2008 with a reading of 73.7. The more optimistic mood has been linked to recent improvements in the US employment situation. Taken with another survey which showed that October had seen the best figures for machinery and equipment purchases for five months, it seems that America is feeling more bullish about its future. This mood of optimism will not last unless Republican and Democrat politicians can resolve their differences over tax increases and spending cuts and avert the nation plunging over the “fiscal cliff” on New Year’s Day.