Black Friday and Cyber Monday, Economic indicators!

25 November 2022 Amega

When you hear Black Friday and Cyber Monday you automatically think of great discount deals! On one hand, you’d be right; but for those versed in Economics or the financial markets, it is also something more: Both events are big indicators of a country’s economic health, inflation, and monetary cycle!

To further elaborate, let’s begin with economic health. Since both events offer huge discounts, they attract consumers to spend. And as we know, consumer spending is a sign of a healthy economy. Spending money on products that are not needed immediately, means an availability of funds that can be spent on secondary needs, which also promotes the notion that the general economy is strong.

Alternatively, a lack of consumer spending on these secondary needs shows a lack of money, or at least a focus on priority-need spending, which is a sign of negative earnings, pointing at high inflation levels, or even hyperinflation, which in turn signals a possibility for a recession.

As for the Monetary cycle, as the phrase suggests, money is supposed to eventually return to its starting point.

If a disruption or slowing down to the cycle occurs, the first signs of a recession appear.

To explain it more simply, both Black Friday and Cyber Monday are what we call “sentimental indicators”. This means, that consumers will spend if they believe their source of income is secure for the future and the economy has a steady movement.

On the opposite hand, a fear for job security and an unstable economy are factors that would hold back consumer spending. In turn, this could lead to less demand for goods and services, which would also stifle production.

It can be argued, that this also has an effect on the equities market. A large number of Economists and Financial Analysts alike, claim that negative, or low impact on both events carries a negative movement in the stock market as well, one reason being the creation of a negative sentiment, which causes investors to withdraw cash out of their stocks, out of fear for an impending downtrend in the markets.

The aftermath of Black Friday and Cyber Monday, however, whether positive or negative is only temporary, as the record shows. In some cases, so much so that it can be argued whether it had an impact on the markets at all.

Since both events have crossed the borders of the United States where they were incepted, to now become world-wide phenomena, no one can argue the importance of the outcome of both events, especially for developed countries which are household-economy driven (economies that depend significantly on household spending).

With the current state of Global economies, perhaps we should take a close look at this year’s Black Friday and Cyber Monday events, as they could be good indicators of what the New Year might hold for us.

And with a reliable broker like Amega, opportunities could be lying in wait, just around the corner…

By Neofytos Hadjineofytou

Amega

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