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Black Friday: The Holiday Surge in U.S. Consumer Debt and Spending

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Black Friday: The Holiday Surge in U.S. Consumer Debt and Spending

Black Friday

Visualizing the surge in U.S. consumer debt and spending

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Next week, Black Friday and Cyber Monday will kick off the start to the U.S. holiday shopping season, during which consumers are expected to spend a total of $655.8 billion this year.

With the average bill coming in at $938.50 for holiday spending, where are people finding the extra cash?

We looked back at the last five years of Equifax data to see how consumer debt correlates to holiday purchases.

There’s Credit In Store

One way consumers take advantage of Black Friday deals is through the issuance of store credit. Specifically, Black Friday traditionally sees a noteworthy surge in signups to private label cards – the kind redeemed at stores like Macy’s.

Each year, roughly half a million Americans are signing up for new accounts on Black Friday:

Private label cards issued2012201320142015
Prior 10 days (Avg.)130,312153,605164,341162,006
Black Friday463,292485,512502,805491,873
Following 10 days (Avg.)167,144181,454182,320181,903

Furniture and department stores are among the biggest providers of this type of credit to consumers. Here are the five-year averages by industry for the months of November and December:

New store credit issued (Nov/Dec)$ millions
Furniture851
Department stores790
Jewelry451
Electronics365
Clothing241

Charge it, please

This bump in activity doesn’t stop with new signups for store credit. The average balances on store cards and credit cards both jump noticeably in the months following the holiday season:

MonthStore Card Balance (5-Year Average)Credit Card Balance (5-year Average)
August$291$1,717
September$293$1,720
October$296$1,709
November$298$1,707
December$313$1,742
January$320$1,756
February$308$1,710

Every year is different, but the data always follows the same trend.

Stocking up on Black Friday deals is not cheap, and extra dollars spent eventually make their way onto the credit card statement with the cost of interest added on.

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Chart of the Week

How the Modern Consumer is Different

We all have a stereotypical image of the average consumer – but is it an accurate one? Meet the modern consumer, and what it means for business.

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How the Modern Consumer is Different

How the Modern Consumer is Different

There is a prevailing wisdom that says the stereotypical American consumer can be defined by certain characteristics.

Based on what popular culture tells us, as well as years of experiences and data, we all have an idea of what the average consumer might look for in a house, car, restaurant, or shopping center.

But as circumstances change, so do consumer tastes – and according to a recent report by Deloitte, the modern consumer is becoming increasingly distinct from those of years past. For us to truly understand how these changes will affect the marketplace and our investments, we need to rethink and update our image of the modern consumer.

A Changing Consumer Base

In their analysis, Deloitte leans heavily on big picture demographic and economic factors to help in summarizing the three major ways in which consumers are changing.

Here are three ways the new consumer is different than in years past:

1. Increasingly Diverse
In terms of ethnicity, the Baby Boomers are 75% white, while the Millennial generation is 56% white. This diversity also transfers to other areas as well, such as sexual and gender identities.

Not surprisingly, future generations are expected to be even more heterogeneous – Gen Z, for example, identifies as being 49% non-white.

2. Under Greater Financial Pressure
Today’s consumers are more educated than ever before, but it’s come at a stiff price. In fact, the cost of education has increased by 65% between 2007 and 2017, and this has translated to a record-setting $1.5 trillion in student loans on the books.

Other costs have mounted as well, leaving the bottom 80% of consumers with effectively no increase in discretionary income over the last decade. To make matters worse, if you single out just the bottom 40% of earners, they actually have less discretionary income to spend than they did back in 2007.

3. Delaying Key Life Milestones
Getting married, having children, and buying a house all have one major thing in common: they can be expensive.

The average person under 35 years old has a 34% lower net worth than they would have had in the 1990s, making it harder to tackle typical adult milestones. In fact, the average couple today is marrying eight years later than they did in 1965, while the U.S. birthrate is at its lowest point in three decades. Meanwhile, homeownership for those aged 24-32 has dropped by 9% since 2005.

A New Landscape for Business?

The modern consumer base is more diverse, but also must deal with increased financial pressures and a delayed start in achieving traditional milestones of adulthood. These demographic and economic factors ultimately have a ripple effect down to businesses and investors.

How do these big picture changes impact your business or investments?

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Central Banks

Visualizing the Snowball of Government Debt

See the latest levels of government debt, based on the IMF’s most recent data. Where does your country sit in the snowball?

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Visualizing the Snowball of Government Debt

Over the last five years, markets have pushed concerns about debt under the rug.

While economic growth and record-low interest rates have made it easy to service existing government debt, it’s also created a situation where government debt has grown in to over $63 trillion in absolute terms.

The global economic tide can change fast, and in the event of a recession or rapidly rising interest rates, debt levels could come back into the spotlight very quickly.

The Debt Snowball

Today’s visualization comes to us from HowMuch.net and it rolls the world’s countries into a “snowball” of government debt, colored and arranged by debt-to-GDP ratios. The data itself comes from the IMF’s most recent October 2018 update.

The structure of the visualization is apt, because debt can accumulate in an unsustainable way if governments are not proactive. This situation can create a vicious cycle, where mounting debt can start hampering growth, making the debt ultimately harder to pay off.

Here are the countries with the most debt on the books:

RankCountryDebt-to-GDP Ratio (2017)
#1Japan237.6%
#2Greece181.8%
#3Lebanon146.8%
#4Italy131.8%
#5Portugal125.7%
#6Sudan121.6%
#7Singapore111.1%
#8United States105.2%
#9Belgium103.4%
#10Egypt103.0%

Note: Small economies (GDP under $10 billion) are excluded in this table, such as Cabo Verde and Barbados

Japan and Greece are the most indebted countries in the world, with debt-to-GDP ratios of 237.6% and 181.8% respectively. Meanwhile, the United States sits in the #8 spot with a 105.2% ratio, and recent Treasury estimates putting the national debt at $22 trillion.

Light Snow

On the opposite spectrum, here are the 10 jurisdictions that have incurred less debt relative to the size of their economies:

RankCountryDebt-to-GDP Ratio (2017)
#1Macao (SAR)0.0%
#2Hong Kong (SAR)0.1%
#3Brunei2.8%
#4Afghanistan7.0%
#5Estonia9.0%
#6Botswana14.0%
#7Russia15.5%
#8Saudi Arabia17.2%
#9DRC18.1%
#10Paraguay19.5%

Note: Small economies (GDP under $10 billion) are excluded in this table, such as Timor-Leste and Solomon Islands

Macao and Hong Kong – both special administrative regions (SARs) in China – have virtually zero debt on the books, while the official country with the lowest debt is Brunei (2.8%).

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