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Online sales shoot up 22 percent, to $1.25 billion

By Bill Cromwell
Nov 30, 2011
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Perhaps the economy isn't in such bad shape after all.

Less than a week into the holiday shopping season, consumer spending has soared by double-digit percentages and shows no sign of slowing down, with Cyber Monday setting an all-time record for online spending earlier this week.

This surge comes after months of dire economic news and downbeat predictions from analysts, who forecast that consumer spending would be up only slightly this holiday season, pointing to the continued high unemployment and long-struggling housing market.

Yet consumers have defied those predictions, spending aggressively in the days after Thanksgiving.

Cyber Monday set a new web spending record of $1.25 billion, just the second time ever that the internet has surpassed the $1 billion mark and up 22 percent over last year, according to comScore.

Some might argue that Cyber Monday is unique, driven by e-tailers pushing highly discounted offers to draw shoppers in.

But this trend isn't limited to just one day. Spending has been up the entire month, indicating that people haven't just been waiting to buy until the big deals came along.

During the first 28 days of November, online spending was up 15 percent over last year, to $15 billion.

The reason may be that consumers are in fact much more willing to spend than many economists had anticipated going into the holiday season.

And indeed that appears to be the case. The latest report from the Conference Board found that consumer confidence jumped from 40.9 in October to 56.0 in November, and people's outlook on jobs and the state of the economy was markedly better than the previous month.

That new confidence likely led to more people hitting the malls and, once there, spending more.

Fourteen million more people were out at the stores on Thanksgiving weekend than last year, totaling 226 million, and they spent an average of $398.62, up from $365.34 last year, according to the National Retail Federation.

Looking at those numbers, some economists attribute the bigger numbers to earlier store opening and deep discounting. They argue that spending will tail off over coming weeks, once people have blown the money they budgeted for the holidays.

But that assumes entirely rational behavior on the part of consumers, and history argues that if there's one time of year consumers are less than rational it's during the holidays, which suggests the spending will go on through the rest of December and then pick up again with the post-holiday sales.

That should be a boon to media sellers. Retailers advertised their holiday sales and special hours heavily in the weeks leading up to Black Friday, especially on spot television and online.

That strong spending should continue as long as consumers continue to shop, and could also last into the new year, if the post-Christmas sales are as strong as the pre-Christmas ones.

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