Don't By Fooled by the Cyber Week 2022 "Head Fake"

After lackluster October and November, some are touting Black Friday sales but economic signs still show a coming recession next year.

A few data points I would temper any optimism with:

- Adobe reported 2.3% increase y/y in Black Friday spending. And it sounds great to say that Black Friday spending reached a record.

Know what else is at record levels compared to the last 25 years? Inflation.

Speaking of.

- You should shave at least 6-8% off any reported sales improvement due to the effects of inflation. If prices are higher, then buying the same thing this year cost more than last year. Most reports have consumers reprioritizing spending.

Still feeling good about those record Black Friday sales if they were otherwise set to be negative 5%?

- The effects of interest rate hikes take 12-18 months to fully take effect, according to most economists, and the Fed didn't even start raising rates in earnest until March 2022.

Using this as a benchmark, the middle of next year could be a low point. Though the middle of the year is always a bit slower for many businesses with consumers traveling and no major holidays, save an Amazon Prime Day.

- Most retailers reported soft October sales that continued into November. Black Friday alone isn't going to make up for things.

- Shopify is always good at hyping its results, reporting a 17% increase in Black Friday sales over the same period last year, but notably, it did not report same-store sales.