Black Friday and Christmas impact on economy
Why the first Friday after Thanksgiving is called Black Friday?
The first Friday after Thanksgiving is known by everyone as the day when the market attracts a huge number of consumers by discounting its prices.
The origin of choosing this name goes back to 1966, when The Philadelphia Police Department used this term to describe the level of violence, traffic and crowding in the downtown stores.
2% of all online retail spending in 2014 was accounted on Black Friday weekend. Over 819 million euros were spent online during the Black Friday in only 24 hours. This means that 9.6 euros were spent every second. Amazon was ranked number one, with a total of 5.5 million dollars in sales or in other words 64 items sold per second. Therefore, the 28th of November 2014 was the busiest online shopping day ever in the UK. Despite all these numbers there were plenty of people who were not interested in doing their purchases during that day because of its negative social aspect.
According to Jim Barbour, professor of Economics at Elon University, Black Friday plays a very important role and has wide-ranging effects on the US economy by its size, especially in turnover of online market. In other words, consumer spending is a huge part of what goes in the economy of each country and market goes up to 70% of the US gross domestic product (GDP). As the Harvard economist N. Gregory Mankiw states in his popular textbook Macroeconomics, “the saving rate is a key determinant of the steady-state capital stock. If the saving rate is high, the economy will have a large capital stock and a high level of output. If the saving rate is low, the economy will have a small capital stock and a low level of output.”
We can present a mathematical algorithm for calculating GDP:
GDP = C + I + G + (X – M), where
C = Personal consumption expenditures
I = Gross private domestic investment
G = Government consumption expenditures and gross investment
X = Exports
M = Imports
Black Friday is the biggest consumer spending day of the year.
Regarding Christmas, M Barbour believes that the Christmas holiday has made a general shift and became more and more commercialized. In this trend, Black Friday became bigger and bigger. “In general, we believe the importance of the holiday shopping season for overall economic trends is greatly exaggerated,” wrote HFE’s Chief US Economist Jim O’Sullivan.
Despite its huge positive impact, the Black Friday’s influence is not big enough to pull us out of recession.
By Alireza BARGAHI
Master Of Digital Marketing