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The False Dawn of Black Friday

There's been some excitement about the Black Friday sales numbers: "Black Friday sales hit record"; "Report: Black Friday Sales Break Record"; "Black Friday Sales Rise 6.6% to Record High"; and so on. When the market jumped on Monday, gains were attributed, in part, to healthy holiday sales. Frankly, the speculation is worthless. As Chao Deng, a reporter for, wrote last month, "nobody really knows" why the markets move up or down. What was famously said of Hollywood by William Goldman is also true of market observers: Nobody knows anything. This goes double for Black Friday numbers, which are notoriously unreliable.

The accuracy of the reporting is actually the lesser problem. That Black Friday numbers are given such outsized attention is the greater sin. By shining such a bright light on them, we're simply polishing the rind even as the fruit continues to rot. To be blunt: Who cares if millions of Americans are buying heavily discounted products when the European Union teeters on the brink of solvency? Unfortunately, the tendency to dwell on a such a slight story, even as the larger, more depressing story has already engulfed it, is totally predictable.

The media and its consumers crave a narrative twist, however illusory. It's a problem not limited to economics reporting. For example, every six months a headline screams that President Obama has "a Jewish problem," which wasn't true in 2008 and isn't true now. And yet, the stories persist, because 'Jews vote Democrat' -- like the drumbeat of stories on our continually moribund economy -- is a narrative bore. But that's the reality.

If we have to dwell on a single economic indicator, I suggest the data on new home sales:

Builders sold fewer new houses in the U.S. than forecast in October, delaying a recovery as the industry heads for the weakest year on record.

Sales increased 1.3 percent to a 307,000 annual pace, data from the Commerce Department showed today in Washington. The median estimate of 70 economists surveyed by Bloomberg News projected a 315,000 rate. Demand is on pace to reach 301,000 this year, less than the 323,000 homes sold in 2010 that were the fewest since data-keeping began in 1963.

As Bloomberg News notes, the massive number of distressed, inexpensive properties coupled with crappy employment numbers is blunting the incentive to buy new homes. This isn't small beer: residential construction accounts for a chunk of the GDP. And only when foreclosed homes wash out of the system -- in two years, by most estimates -- will that sector begin to recover.

Until that happens, however, diminishing home values will continue to sap Americans of their wealth. No level of Black Friday sales -- boosted, to some degree, by the horrifying resurgence of lay away programs -- will alter that narrative.