Shoppers Spend, But Is That a Good Thing?

Deep discounts attract consumers, giving retailers a boost.

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It turns out we still have the urge to splurge.

After weak consumer spending in September and October, shoppers surprised analysts by pulling out their wallets on Black Friday and jumping on deep discounts and sales. The National Retail Federation reported that shoppers spent an average of $373 over the weekend, up 7.2 percent from last year’s average of $348.

But don’t let those numbers trick you into thinking consumers are going to jumpstart the economy back into a gilded age. Part of the reason for the impressive turnout was pent-up demand. Shoppers had been cutting back and delaying purchases earlier in the season, so when retailers made appealing offers on Friday, consumers jumped on them. Analysts are still expecting an overall sluggish holiday season of around two percent sales growth.

Whether or not shoppers should be saving their money or spending in order to stimulate the economy depends on your perspective. Consumer advocates recommend reducing the size of gifts this year and focusing on paying down debt instead, while investors eager to see the economy rebound are hoping that shoppers turn out in droves.

What do you think -- will you be Santa or Scrooge this year?

Tomorrow, I’ll post an interview with PriceGrabber.com president Ron LaPierre on the season’s trends and hottest gifts. And if you’re busy shopping online today, don’t forget to look for free shipping -- this Web site can help.