It’s the week of Black Friday, which means everyone’s going to be buying a lot of things they don’t need for no real reason other than “it’s cheaper–maybe.” Most of the time people advertise massive and great savings for Black Friday–that’s how they get you into the door. When you turn your brain on though, you don’t save money by spending it. Saving, by definition, is money you don’t spend. On a technical level we’ve already answered the question, but obviously people are going to argue that you might be spending less than you otherwise would. So let’s humor that definition of saving. Do you actually save on Black Friday?
Further Reading: The History of the Black Friday Shopping Holiday
How Much Do People Spend Yearly?
Maybe the first metric we should look at is yearly consumer spending. How much do Americans spend on just stuff? Total average spending in 2019 for Americans amounted to about $63,036. It dropped to $61,334 in 2020. Might sound like Americans are either weirdly wealthy or just super willing to open up their wallets, but that’s not the cause. Consumer spending accounts for some 70% of the American GDP. This includes housing, food, healthcare, and other essentials on top of the non-essential stuff.
So really the question you’re asking is “how much do people spend on non-essentials?”
The answer is substantially less, but still quite a bit. It requires some moralizing as to what one considers “non-essential,” and you’ll often see the figure of $18,000 spent by the average American yearly on non-essentials batted around. It’s also used to make the blanket statement that Americans are bad with money–which is definitely true for some. It does feel icky to read these stats in articles that simultaneously start trying to tell you how to spend your money while brushing off poverty related issues that we’ll put under the umbrella of “the poor tax.” It’s a lot to unpack, but basically it’s expensive to be poor.
Honestly, whatever estimate you use won’t really matter.
By the way, boots.
You’ve probably heard of the “boots theory of socioeconomic unfairness.” Same deal. You have two workers who need to wear boots. They can buy two pairs. One is more expensive, but lasts a long time (let’s say a year). The other pair is cheaper, but doesn’t last a long time (let’s say a month). Someone who has more money on hand can buy the expensive pair up front, while a poorer individual might not be able to afford the expensive pair. They’re forced to churn through cheaper boots, and over the course of a year buy 12 pairs of boots–with a total cost being more expensive than if they had just bought the more expensive pair.
Prices Aren’t Even Cheaper
Yeah, you read that right. It turns out that things don’t actually get cheaper around Black Friday anyway. The exact same discount prices may be offered by retailers year round, and it actually turns out retailers just kind of plan for Black Friday in advance. Prices for goods creep up over the course of the year, only to tank right around the Fall-Winter. On average, prices come down during Black Friday (nice if you shop), but comparable deals can still be found elsewhere and year round if you have an ear up–especially in the weeks preceding the day where everyone gets trampled in a mall.
Retailers are also guilty of inflating their discounts to make their deals more appealing. This is mostly done by posting misleading “compare” prices, like comparing the discounted price to a super high price from like 5 years ago. Don’t think retailers don’t know how to tweak the numbers to get you to spend too–the advent of online shopping has machine learning collecting all our spending data right now. Doorbusters are harder to track, but the promise of a super steep discount is often what’s used to get people through the doors. Chances are they’ll buy enough to offset any lost revenue from a doorbuster sale.
Black Friday spending is projected to increase between 8.5% and 10.5% from 2020, with an average spending per person around $1,000. If you assume people spend $18,000 a year on stuff they don’t need, Black Friday alone would be like 5.56% of that yearly spending on one day.
Speaking of sales, who doesn’t have a sales tax? Test yourself here.