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On Black Friday, U.S. consumers ready to start their engines

Damn the torpedoes, say U.S. consumers. They aren't going to let a sluggish economy, a fiscal cliff and an uncertain 2013 get in the way of their holiday cheer – or their holiday spending. Even if it means they may be headed for a cliff of their own.

This Friday, the day after U.S. Thanksgiving, is what is know in retail as "Black Friday" – so named because it serves as the unofficial kick-off of the massive end-of-year holiday shopping season that is supposed to lift retailers' profit-and-loss ledgers into the black for the full year. The day – and the Thanksgiving four-day weekend itself – have become huge for shopping traffic and sales, as retailers launch the season with high-profile sales aimed at luring consumers and getting them into the swing of holiday buying. It has also become a key indicator of the confidence and spending appetite of U.S. consumers – a critical contributor to U.S. economic well-being.

Based on the Thanksgiving-weekend shopping survey from the International Council of Shopping Centers and Goldman Sachs, it looks like Black Friday is going to once again live up to its reputation. The survey, conducted Nov. 15-18 and released Wednesday, shows that one-third of all U.S. consumers, more than 80 million shoppers, expect to hit the stores Friday – roughly in line with last year's number, and well above the recession-era pace of 26 per cent in the 2009 survey. If consumers are nervous about the slowing economy and still-weak labour market, it looks like they'll be hiding it well this long weekend.

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The ICSC-Goldman survey of shopping intentions over the entire holiday season, released last week, is even more optimistic. Twenty-four per cent of shoppers surveyed said they intend to spend "more" or "substantially more" on holiday gifts this year than last – the highest number, by far, since the ICSC began asking the question in 2004. It's more than double last year's level. Only 23 per cent said they expected to spend less – again, the lowest number in the history of the question.

Yet shoppers' enthusiasm smacks more of the season's generous spirit than the colder realities of the consumer sector. As economist Pierre Lapointe of Brockhouse Cooper pointed out this week, U.S. retail sales growth has been slowing all year, and is now at its slowest pace in more than two years. The U.S. personal savings rate – which had become alarmingly low prior to the financial crisis but had risen to much healthier levels during the recession – has undergone a relapse, slipping back to 2008 levels. Consumer credit, meanwhile, has been on the rise all year.

In short, American consumers have burned through their savings and even taken on debt to fuel the post-recession retail-sales recovery, and the money is running out. It will be very difficult indeed for shoppers to live up to those bold holiday shopping intentions. If they do, they may have to dig a deeper hole in their credit cards – and deal with the consequences in 2013.

Either way, there's a reality check coming for the U.S. economy. Even if it does enjoy a Merry Christmas, it may not be such a Happy New Year.

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