I make a majority of my own necklaces. In fact one of the small businesses I visited for "Small Business Saturday" was a beading store. I enjoy selecting the beads, usually glass, stone, or minerals, and creating a one-of-a-kind design. I like to see how the colors, spacing, and shapes combine together.
I thought of this analogy this long weekend while many were watching and reading to see how consumers would react to shopping the weekend after Thanksgiving, the traditional kick-off for buying for Christmas. Three news articles caught my attention and I think they are related and need to be "beaded" together.
The first one, appeared in my local paper but it is an AP story and I saw other papers around the U.S. printed it too. In summary, Black Friday--the Friday after Thanksgiving--had sales up 7% from 2010.
Now you have to put it into context because 2010 wasn't great, but it means shoppers bought more than last year. Also, online shopping was up 24.3% on that day alone. Most experts expect a drop after Friday with a total increase for the season of about 3% overall.
See: http://hosted2.ap.org/OHCO/8ef5320729ce4298abefc1903704c7d5/Article_2011-11-26-Holiday%20Shopping/id-8f0cc46e22f8451a99054ea1a8cc9371
The second one is about corporate income versus employee income. There are 3 parts to gross domestic income: money earned by people, by business, and by government agencies' purchases. Employee compensation in the 3rd quarter this year accounted for its smallest share since 1955. Businesses made up their largest share since 1950. Another evidence they are holding on to their cash reserves. The article said savings are down and the prediction of 3% increase of holiday spending is about half of the increase from last year. This was in my local paper from Bloomberg News.
See: http://www.dispatch.com/content/stories/business/2011/11/26/corporate-income-outpacing-workers.html
The third article is about 20 states who borrowed $23.6 billion from the federal government for their unemployment insurance benefit programs when theirs went dry. Borrowing also includes interest and when a state can't pay the feds back in time, there is a penalty as well. All programs depend upon a tax that businesses pay, therefore most states will raise this tax in order to pay the loan, interest, and penalty back. It is estimated there are 14 million Americans unemployed, with approximately half of them receiving unemployment insurance benefits. It is more complicated than this, but I am just summarizing what the article says at this point.
See: http://www.dispatch.com/content/stories/business/2011/11/27/states-sell-bonds-to-repay-jobless-insurance-to-feds.html
Ok, I do not have an economics degree, I do not work at a financial institution, nor do I have a large portfolio. I am just a beader who sees these stories as threaded together and I have some questions.
1. If those who are at the top of these companies know that 70% of our economy depends upon consumer spending (not that I agree that it should be that much), why are they not giving their employees raises?
2. Are people going out to shop on Black Thanksgiving (yes, some stores opened that night), knowing there are just a few of something advertised at outrageous prices because they don't have money, and will only be shopping for very practical gifts the rest of the shopping season?
3. Where is our economy heading, anyway?
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