Macro Commentary
It is an American tradition to give thanks at this time of year. Thanksgiving was initially celebrated by the colonists in Plymouth after their first harvest in the New World. History records that the event occurred in October 1621 and lasted for three days with attendance by 53 colonists and approximately 90 Wampanoag Native Americans. Though celebrated through the subsequent years, Thanksgiving was not made an official holiday until President Abraham Lincoln in 1863 during the middle of the Civil War as a way to help heal a wounded nation. Coincidentally, President Franklin Roosevelt sought to heal the nation again as he proposed to move the holiday forward in 1939 as a way to spur retail sales during the Great Depression (a plan humorously called “Franksgiving”) but settled on the fourth Thursday of November in a bill passed in 1941.
This last point in history about consumption is interesting, because that is something with which Thanksgiving is often associated. Other than the estimated 46 million turkeys consumed on the day, Americans consume a lot of everything. An estimated 46.9mm people travel at least 50 miles to reach their Thanksgiving destination. Over 30mm Americans watch the professional football game that day. But, for President Franklin and all the retailers, people spend money. Last year, over 151mm people shopped over Thanksgiving weekend as we approach the year-end holidays. According to a survey by the National Retail Federation, approximately 40% of all holiday spending occurs this weekend. At first look, 2016 does not seem to be an exception. The most recent report on consumer confidence in the US showed the index hitting a six-month high this week – a pop from the pre-election preliminary reading. While some journalists may try to interpret this as a political statement on the election, we do not. It is simply a reflection of the fact that a long and emotional process reached a conclusion…for now. Whether sentiment is maintained depends on the political process which is slowly taking center stage in the policy world away from the central bank. We will have to see how the rest of the show gets underway.