Black Friday = New Guitar (and apparently a lot of other stuff...)

UPDATED WITH CONSUMER STATISTICS ON DEC. 7, 2008

Black Friday is the most intense shopping day of the year. Though it may be full of greed and overconsumption, everyone hits the mall. Some stores open as early as 3am on the day after Thanksgiving. And, most can count on people sleeping outside the door before opening. But this year, with the economic crisis and all, will Black Friday fall flat?
I found myself as one of these shoppers. At 8am, I was already in my car and on the 8 East freeway towards east San Diego. My destination? Guitar Center. Lucky for me, Christmas came early as I grabbed a new Fender American Standard Strat. It’s white on black – but I replaced the pick guard with black. It plays beautifully. And man, is it nice to go shopping – especially when everything is 15% off. It would seem that I wasn't the only one racking in the great deals this weekend.
Based on the economic crisis, I assumed that consumers will halt spending – regardless of the deals offered by Black Friday. And it seems only rational. When the economy enters recession, spending slows. It is natural – less money in the bank means less money spent at the store. Yet, Black Friday, and the weekend that follows it, is not a normal shopping day. It is THE shopping day. But my optimism can only stretch so far.
Though, as I entered Guitar Center at 8:20am on Friday, my assumption lost ground. The store was packed head to toe with guitars. Less was I surprised by the quantity of guitars than by the number of people waiting at the register this early in the morning. Apparently 15% is enough of a discount to draw in the crowds. No wonder I had to park three blocks away.
After leaving the store and making it home past the mall traffic, I realized that this weekend was now an American tradition. Regardless of the economy, you can expect Americans to show up for the great holiday shop-a-thon.

As weekend spending totaled over $41 billion, it would seem that I was not the only winner. Statistics show that sales rose 1.9% on Friday and Saturday combined – surprising most. According to the 2008 National Retail Federation survey, over 172 million shoppers went shopping online or in stores during Black Friday. This is an astounding 25 million more people than last year. And, shoppers spent 7.2% more money on items – totaling an average of $372 this weekend.
The interesting note is that Wall Street didn’t do as hoped. Wal-Mart went down 1.4%, Target was down 3.9% and Best Buy lost 1.8%. But, overall, the DOW finished up 102 points (about 1.2%). What is key, though, is that over four trading sessions, it was up about 9%.
All in all, for consumers and the markets alike, it was a green day for our economy. Hopefully it will continue this good trend, but these hopes do rest in the clouds. As we now descend from the largest shopping day of the year, let us hope that Americans did not buy things that they couldn’t afford. Otherwise this crisis may just get worse.

Car Troubles

The American auto industry has hit rock bottom. And today, three of the major Detroit auto makers appealed to the government for emergency assistance. The industry is nearing the edge of collapse. Executives from General Motors, Ford and Chrysler were turned down in their bid to receive $25 billion from the governments $700 billion economic bailout.
According to Senator Michael B. Enzi, a Republican from Wyoming. “We have little evidence that $25 billion will do anything to promote long-term success.” And after four hours of testimony, the outcome remained bleak for the industry – two of the three major auto makers has stated that they could run out of money by the end of the year.
This is a sad time for America. The auto industry is not just an industry, it is a part of our culture. Henry Ford and the American auto industry led the country during the Industrial Revolution. Cars were symbols of the American Dream and a job in the auto industry was often where the dream began for American immigrants. And now, as it is teeters on the edge of the cliff, one question remains: Will the government save this industry again?

The auto industry is one of the leading job providers in the country. And as we face a growing recession in 2008, it would seem that a collapse in Detroit could only worsen the fall. They auto leaders are stuck in the middle of their own recession and adding the current economic crisis broke the camels back. It is necessary that the industry survive - necessary for American culture and the American economy.
The industry hosts 105 automobile plants in twenty different states. And, including the 14,000 car dealers, the automakers employ several million American workers. For the government to refuse assistance to a major industry in this economic crisis is unacceptable. It is the government playing favorites – and that is not what the government should do. Why bailout one part of the economy and not help another sector that is equally important?
Further, it is political suicide that our politicians are refusing to assist the industry, its workers, and therefore their constituents. Yes reforms are necessary, and the future of the industry may seem bleak. But it is better to keep the industry alive than to let it collapse in the midst of our already-unstable economy.

Now, of course there are major issues in the auto industry. The unionization of workers has assisted the failure of these auto makers. Half of the $50 billion that the industry asked for early in November was to be directed to healthcare alone. When a union such as the United Auto Workers (UAW) forces the hand of a company too far, the industry cannot compete successfully in a global market. Remember, Japan produces more cars than America. And being that as it is, American automakers must create business strategies to compete within the global market.
Changes are necessary. We cannot ignore the current crisis – we must assist the auto industry or else face worse economic downturn.