Control Panel: Shopping big for the holidays

Investment Analysis Clubs Macro Economic Trends and Risks
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I’ve been going a little nuts with the shopping. In addition to replacing my hot water heater, washing machine and dryer (vintage 1987), I replaced my sound system (vintage 2010), vacuum cleaner (vintage 1995), desk chair, the low-rent cardboard boxes I used to organize the cables on my desk and even my can opener. I bought a new sweater, a pole to manage the hose for my CPAP machine (and a sweater for the hose itself), and a hook to hang my headphones next to my computer tower. Don’t tell me I bought everything except the kitchen sink or I might buy a kitchen sink. I did buy a can of “Bartender’s Friend” to clean the kitchen sink. Amazon.com has been running “Black Friday” sales all week so I didn’t wait until Friday.

Apparently I’m not the only one.

https://www.nytimes.com/2025/11/29/business/economy/black-friday-spending.html

Shoppers, Drawn by Steep Discounts, Power Through Black Friday

Data on spending this week shows that consumers are shopping big for the holidays despite inflation and economic worries.

By Kailyn Rhone, The New York Times, Nov. 29, 2025

Even at a time of inflation, tariff concerns and economic uncertainty, Americans opened their wallets on Black Friday, chasing deep discounts and stretching their budgets where they could….

Shoppers made an estimated $11.8 billion in online purchases on Friday, a 9.1 percent increase from last year, and spent $6.4 billion online on Thanksgiving… Another metric from Mastercard SpendingPulse, which measures retail sales across cash, credit cards and digital payments, found that online sales on Black Friday rose by 10.4 percent and in-store sales increased 1.7 percent over last year. Apparel and jewelry were among the top spending categories as retailers promoted steep discounts…. [end quote]

The statistics will take a while to come out since the holiday buying season extends through December. How much will consumers spend? How profitable will the retailers be given the steep discounts? How will the spending affect household debt and savings? These Macro factors won’t be clear for months. But a strong Black Friday is a good sign for the economy since consumer spending is about 70% of GDP.

While the METAR is a short-term weather report, the climate of the Macro economy will affect the weather over time.

https://www.wsj.com/finance/investing/uk-budget-debate-us-debt-lessons-38bc52e3?mod=hp_lead_pos2

Is America Heading for a Debt Crisis? Look Abroad for Answers

All that stands between the U.S. and a debt-market freakout is the dollar. Having the world’s reserve currency isn’t the unbreakable shield many assume.

By James Mackintosh, The Wall Street Journal

Politics and debt don’t mix well. Americans would be wise to look across the Atlantic to see how tough things can get…

The U.K. government demonstrated the problem with its annual budget, where it is stuck in a trilemma, unable to please lenders and voters while also doing the right thing for the economy….

[I like this neologism, trilemma. Government bond buyers want lower deficits and better debt coverage, voters want more goodies from the government (including social welfare and environmental protections) which are financed by more government debt and/or higher texes and the economy is stimulated by lower taxes and less regulation. These are all in conflict with each other. – W]

[Snip a description of problems in Great Britain and France caused by the trilemma.]

Already some of the same issues are visible in the U.S.—along with a lack of political will to do anything to prevent the problem from festering. For now, all that stands between the U.S. and a debt-market freakout is the dollar. Having the world’s reserve currency, however, isn’t the unbreakable shield many assume….

There are four overlapping threats to the dollar: supply, China, reserve safety and the pushing away of allies.

Supply is the big one, as the U.S. runs near-record peacetime deficits on top of a bulging current-account deficit. America has to attract a constant flow of foreign capital to finance government and imports, an unstable position….

The risk is that the market senses a shift coming and pushes up Treasury yields in anticipation of foreign buyers drifting away….[end quote]

The statistics will take a while to come out since the holiday buying season extends through December. How much will consumers spend? How profitable will the retailers be given the steep discounts? How will the spending affect household debt and savings? These Macro factors won’t be clear for months. But a strong Black Friday is a good sign for the economy since consumer spending is about 70% of GDP.

The markets have started to break out of their gloomy mood.

The stock averages bounced back over their moving averages. VIX fell. The Fear & Greed Index is still in Extreme Fear but crept up a little. The trade is turning back to risk-on but there’s been a lot of noise.

Treasury yields have been declining with noise. The Chicago Fed’s National Financial Conditions Index (NFCI), which provides a comprehensive weekly update on U.S. financial conditions in money markets, debt and equity markets, and the traditional and “shadow” banking systems, is stable and very loose. Financial stress is climbing toward neutral from very low.

The options market expects the fed funds rate to be cut in December by 0.25%. The options market expects the Federal Reserve to ignore the strong economy and inflation.

The Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 was 3.9 percent on November 26. The Cleveland Fed’s Inflation Nowcast shows CPI inflation over 3% in 4Q25.

Gold, silver and copper are rising. USD is in a rising trend after hitting a low in September. Bitcoin may have hit bottom after its recent dramatic fall. Oil is stable while natgas popped. Winter is coming.

The METAR for next week is sunny. The stock and bond markets are rising in parallel.

Wendy

https://stockcharts.com/freecharts/candleglance.ht…

https://stockcharts.com/freecharts/candleglance.ht…

https://stockcharts.com/freecharts/candleglance.ht…

https://www.cnn.com/markets/fear-and-greed

https://stockcharts.com/freecharts/yieldcurve.php

https://www.chicagofed.org/research/data/nfci/curr…

https://fred.stlouisfed.org/series/STLFSI4

https://www.atlantafed.org/cqer/research/gdpnow

https://www.clevelandfed.org/indicators-and-data/i…

https://www.cmegroup.com/markets/interest-rates/cm…

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With gdp growth presumably high near 3.9% and inflation running near 3%, seems weird that the Fed is inclined (based on recent FOMC member comments) to cut rates.

They must believe the labor market is weak.

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Let’s take a look.

4-Week Moving Average of Initial Claims (IC4WSA)

Continued Claims (Insured Unemployment) (CCSA)

The initial and continuing claims aren’t concerning but the average weeks unemployed is creeping up. It’s higher than any recession going back to 1950 except for the Great Financial Crisis of 2008. That must be why the Fed is worried. Unemployment describes people who are actively looking for a job. The Labor Force Participation Rate includes everyone, including people who are not actively looking for a job.

Wendy

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Like Wendy, I’ve recently bought a few things. I specifically timed the purchase of a new TV on sale at Costco to be within a month of Black Friday. Sure enough, the price dropped a hundred bucks and (upon request) Costco credited my account for $100. I am sitting on a router I just bought on Black Friday sale at Best Buy with an eye towards returning it (and re-purchasing it) if its price drops on Cyber Monday. Coming up is “Travel Tuesday”, when I expect to check if any of my upcoming trips, paid in frequent flyer points, will have dropped in price (if so, I can cancel, get my miles back and rebook at the lower price).

WHile my current router is fine, there have been significant changes in the security standards available today that didn’t eight years ago, and, while the new one offers all sorts of theoretical performance benefits, it’s the security benefits that made me pull the trigger. Our major “capital” expenses this year were a new mattress and a new refrigerator - both had reached “end of life” and both replacements were purchased at Costco.

I will likely “rotate” my 2001 car over the next year or two. The VSC and “check engine” lights have started popping on. If it’s the timing belt (it shouldn’t be, as I went through that root canal about 25K miles ago), ce la vie, as the repair on this car is horrendously expensive. The car handles fine, so it’s likely a sensor - again expensive to change. It could also be something wrong in the emission system, but, in NYS, a car that is 25 model years old or older is exempt from the emissions testing portion of the inspection program, so I’m not going to stress over that possibility. Luckily, Wendy lives on the opposite coast, else driving the car with her in it would, I suspect, remind me of the episode on “The Big Bang” when Sheldon was suitably upset to be riding with Penny in a car that continually had the “check engine” light on (until it eventually croaked).

Anyway, I was keen on waiting until I could get an autonomous car which would chauffeur me around in my dotage, but I may be forced to jump the gun.

Jeff

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Still a wait for consumer purchase of true autonomous, the product is not ready yet, and almost certainly not in 2026.

Waymo is expanding their autonomous taxis, but still in only 6 cities for consumers. That number should about double in 2026.

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