BLACK FRIDAY SHOPPERS BEWARE

Macroeconomics is the study of national, regional and global economies. It examines the structure, behaviors and decision-making processes of those economies and studies the relationships between national income, product output, consumer consumption, savings, investment, inflation, unemployment, trade and banking. Its counterpart, microeconomics, examines the factors involved in the smaller-scale buying and selling of goods and services. Microeconomic study dissects the laws of supply and demand and examines the economic decision-making processes of individual households and businesses.

On this day after Thanksgiving, commonly known as "Black Friday" here in the United States, shoppers historically begin their Christmas shopping. For many businesses, Black Friday is the day they have the highest volume of sales each year.

I noted the facts listed above because Black Friday provides an excellent example of how something can be great for macroeconomics, but bad for microeconomics.

The U.S. economy will get a shot in the arm if consumer consumption (spending) is high on Black Friday, because economic activity (the buying and selling of goods) generally boosts an economy. However, if consumers overspend on Black Friday, their individual household economies will suffer if their incomes are not sufficient to sustain their level of spending. The larger economy will benefit, but the individual economy will suffer.

That is essentially what happened during the middle to late part of this decade. Consumers were encouraged to spend, spend, spend…which was great for the larger economy, but all that overspending sent vast numbers of individual economies (the economy of an individual household) into a tailspin, and ultimately they collapsed. As the number of collapsed individual economies reached into the millions here in the United States, the collective impact of those collapsed individual economies exerted a substantial negative impact on our nation's economy, forcing the U.S. into a deep recession.

The moral of this economic lesson is clear: In the long run, while additional consumer spending is beneficial for our national economy; massive overspending is not. Shoppers, be careful out there!