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Ritholtz: The Black Friday Hoax

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This is the time of year when Americans gather with family and friends to give thanks. A bounteous feast is the time to express gratitude for our good fortune. We count our blessings, humbled by the fortuity of our circumstances, grateful for whatever it is we have. 

Once you get that over with, it’s time to go shopping.

At least, that seems to be the message of retailers, as they intrude further and further into the holidays. This year, a growing number of retailers are actually open on Thanksgiving Day, including Wal-Mart, Kmart, Sears, Target, Kohl’s, Staples and Macy’s. (A Facebook page has called for a boycott). Being open on Thanksgiving smacks of desperation, and you should do nothing to encourage the excesses of this antifamily, antifootball behavior.

It is all part of the plan. The manipulators at the National Retail Federation and elsewhere work hard to create a sense of consumer frenzy. Thus, I have dubbed the season between Thanksgiving and Dec. 25, “Shopmas.”

Almost every year, the NRF forecasts a huge increase in holiday retail sales. Each year, the forecast is way off target. Aside from the terrible track record, there are other reasons to ignore the survey. As we noted earlier:

The methodology employed by the NRF survey is defective . . . The surveys bear no correlation relative to actual future retail sales. The conclusions reached (and repeated ad nauseum) are not supported by the data.

There are several reasons for this: First, people have no idea what they spent last year. No clue whatsoever. A surveyor stops someone on the way into a mall or other retail locale, asks them a few questions, the answers to which range between wild guesses and complete fabrications.

The annual event has devolved even further than the usual smoke and mirrors we discussed last year. As we said then, the NRF survey, bad methodology and all, is usually what the NRF pushes out to the media. However, in 2013, the people the NRF surveyed said they would spend 2% less than in 2012. Unhappy with those results, the NRF de-emphasized the survey, substituting an internal forecast of an increase. Note this wasn’t because the survey is always wrong, but because it was negative. Instead, the NFR pushed its own holiday forecast of a 3.9% increase in sales. This year, the NRF’s Holiday Consumer Spending Survey forecast is for an increase of 4.8%. Somehow, the NRF’s own holiday sales forecast wasn’t mentioned.

Why was that? When the holiday survey suggests a sales increase, that becomes the screaming headline we see everywhere. When the survey is weak, as it has been the past few years, the organization pushes an entirely separate, never-negative, NRF forecast. Thus, the NRF uses whichever data source generates the desired forecast.

The NRF doesn’t make it easy to find the results of its past predictions. Many of the links on the site that point to past surveys are broken, missing or simply not available. There is no historical data available in an easily accessible spreadsheet such as one might find at sites such as the Bureau of Labor Statistics or the Commerce Department. It took a bit of sleuthing, but we managed to put together the past decade of NRF holiday surveys:

The abysmal track record is why every year, I exhort investors to ignore this data series. It has no correlation to actual retail sales, tells us nothing about retail profits and gives us no insight into the holiday season.

I have become a curmudgeon on this. The NFR’s methods are as intellectually dishonest as anything you will find in finance. As you gather with friends and family for the holidays, be present in the moment. Focus on your blessings and ignore the retail industry’s attempts to generate a holiday shopping frenzy.

You will be much better off for it.

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