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Foot-traffic assessments don’t properly separate browsers from buyers, says Fusion IQ CEO Barry Ritholtz.

John Gress/Reuters

Over the next three days, investors will pore over Black Friday sales data for clues about what the numbers mean for the economy and stock market.

Here's a tip: Don't waste your time.

A look back at the past few years suggests Black Friday sales figures offer little, if any, insight about where the economy is headed. You're better off going shopping than taking heed.

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Consider 2008, when the National Retail Foundation estimated that U.S. consumers spent $41-billion (U.S.) over the course of the Black Friday weekend, up 18 per cent from 2007.

That suggested a vigorous recovery was imminent. As the world now knows, that didn't happen.

On Dec. 1, 2008, just one day after the NRF released its Black Friday numbers, the National Bureau of Economic Research announced that the United States had been in a recession since December, 2007 – a downturn that didn't end until June, 2009.

A few months later, in November, 2009, when the world was taking its first steps to recovery, ShopperTrak and the NRF, both of which conduct shopping surveys before and during Black Friday, said sales inched up about half of 1 per cent on the all-important retail weekend.

Investors who took those numbers to heart would have expected a tepid economy ahead. In fact, U.S. GDP grew strongly, posting a 3.9-per-cent gain in the first quarter of 2010.

One problem with Black Friday numbers is the speed with which they're produced. Because they're released so quickly, early sales surveys can't directly measure sales, relying instead on less direct assessments like shopper-intention surveys and foot-traffic calculations.

The accuracy of Black Friday's early consumer spending surveys can't be compared against actual U.S. retail sales data because the U.S. Department of Commerce only releases sales figures for whole months.

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Barry Ritholtz, chief executive officer of Fusion IQ, a New York investment tool firm, is a long-time skeptic of early survey results. Not only are they released too early to compare to actual sales numbers, he says, but their measurement techniques are simply too indirect.

Foot-traffic assessments don't properly separate browsers from buyers, Mr. Ritholz said. And he's even more critical of surveys asking shoppers how much they plan to spend – which is how the NRF produces parts of its results. "Humans are terrible at forecasting their own behaviours," he said.

ShopperTrak's specialty is retail traffic data – it's got more than 50,000 cameras to anonymously count shoppers at retail locations worldwide. Its sales estimates are derived from an algorithm that uses its own traffic numbers, stores' square footage, historical government data and a variety of other data points.

Bill Martin, ShopperTrak's founder and executive vice-president, says his company's data provide assistance for retailers to prepare for possible outcomes, and aren't necessarily meant to be an economic indicator. "It's a projection – not unlike the weather," Mr. Martin said – though those projections help retailers prepare for the holiday season.

The National Retail Foundation conducts polls of 3,000 to 10,000 people about their plans and experiences shopping over the Black Friday weekend.

Representatives from the NRF were unavailable for interview before publication, but have suggested their surveys' results reflect the economy.

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Chief executive officer Matthew Shay said in a 2011 press release that the company's numbers that year were "a promising sign for the economic recovery." That year, NRF estimated a 16-per-cent rise in Black Friday weekend spending – almost the same growth as in 2008, when its strong economic numbers contrasted with what turned out to be a dismal economic environment.

This kind of unpredictability is why skeptics like Mr. Ritholtz are so vocal. "I'm always reluctant to extrapolate much from a single day," Mr. Ritholtz said. "It's a more a function of how aggressively retailers are discounting than anything else."

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