“Black Friday” in the United States will be overshadowed by persistent inflation

A year ago, retailers faced product shortages in the wake of distribution delays and factory closures due to the COVID-19 pandemic.

To avoid a similar situation, the sector made Christmas imports this year, but was left vulnerable to oversupply as consumers cut back.

“Shortfalls were the problem yesterday,” said Neil Saunders, managing director of consulting firm GlobalData Retail. “The problem today is that there are too many things” for sale, he said.

Saunders explained that retailers have been running low on inventories in recent months, but the oversupply is creating exceptional conditions for bargain hunters in areas such as electronics, home equipment, and apparel.

Jewel Henderson is always checking out what’s on sale, “but more now,” she explains, walking out of New York’s Old Navy clothing store, four bags in hand.

He said the prices were “good”.

The high costs of gasoline and household staples like meat and grain are an economy-wide problem, but they don’t burden everyone equally.

“Clearly, lower-income (consumers) are more affected by higher inflation, because they spend relatively more on commodities,” said Claire Lee, an analyst at Moody’s.

The price increase is subsiding little by little. But still, on November 10, the CPI was 7.7% for 12 months, which is high for Americans.

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So far, American consumers have been resilient in the face of the various crises they have experienced since the start of the pandemic, spending more than expected, even as confidence indicators reflected their concerns.

Part of the explanation lies in the unusually strong savings many households benefited from government aid during the pandemic, when consumption was at record low levels due to restrictions imposed to combat the spread of the virus.

But the cushion is starting to shrink: After peaking at $2.5 trillion in mid-2021, US savings has slipped again to $1.7 trillion a year later, according to Moody’s.

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And consumers with annual incomes of less than $35,000 are the first to be affected, with a 39% drop in their savings during the first six months of the year. As a result, consumer credit is on the rise, according to data from the Federal Reserve (Federal Reserve, the central bank).

“We’re seeing continued pressure,” said Michael Witinsky, general manager of the low-cost chain Dollar Tree, which sees a “shift” in consumers “focusing more on their needs and trying to make sure they have enough cash to finish the month.”

Retailer earnings reports in recent days have given a mixed picture of consumer health.

The Target supermarket chain was hit hard, as it faced a sharp drop in its sales in October, which could herald a weak holiday season.

“We have consumers dealing with very stubborn inflation quarter after quarter,” CEO Brian Cornell said on a conference call with analysts. “They’re very careful, very vigilant, and they’re like, ‘OK, if I have to buy, I want it to be a good deal.'” “

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But competitor Lowe’s, the decorator, is optimistic, pointing to a “strong” third quarter with no signs of weakness. “We don’t see anything like a drop in purchases,” said CEO Marvin Ellison.

Consumers like Charmaine Taylor, who frequently check airline websites, are watching. By now, Taylor had seen her travel aspirations thwarted by the exorbitant prices of plane tickets. The woman who works as a childcare worker is not sure how much money she will be able to spend on gifts for her family this year.

“I’m trying to buy some gifts,” Taylor said in a park in Harlem earlier this week. “I don’t know if I can do that. Inflation is hitting hard.”