Last week’s initial reports on Black Friday retail sales, thanks to the National Retail Federation, are a case study in how to obtain meaningless data and then put it to bad use.

The NRF reported a 3.5 percent drop in spending from a year ago, to $289.19 per person over the Thanksgiving weekend. This information was based on asking consumers how much they figured they would spend this year vs. a year ago.

It looks like this is turning out to be wrong.

It is too early to have the final retail sales data, but we do have some early numbers based on actual sales. First Data Corp., a point-of-sales transaction processor, said data from almost 1 million merchants show that sales so far this holiday shopping season are up 9 percent from a year earlier. Furthermore, sales of electronics and appliances rose 27 percent. First Data also found that the average transaction grew by more than $41 year over year.

First Data noted that its analytical methodology “is based on actual consumer transactions rather than surveys or speculation.”

The company has access to this information because it processes credit- and debit-card transactions.

But let’s be clear: This doesn’t necessarily mean that all holiday retail sales are up 9 percent. This is because First Data doesn’t track cash purchases. These are still a significant part of retail sales. This is especially true for lower-income consumers, who tend to have less available credit.

Other forces are at work. With online commerce growing at double digits for years, a big chunk of that 9 percent gain reflects the shift away from brick-and-mortar retailers (though to be sure, some of them are one and the same).

One other point: The First Data information is drawn from 940,000 merchants who participated in the program. They may or may not be representative of the retail industry or the sales environment as a whole. If a disproportionate number are in stronger economic regions (mostly western states), or hotter retail sectors, or are more successful retailers, that could skew the results.

In other words, the First Data report is preliminary analysis, nothing more. But at least it relies on real data and not some squishy and anecdotal information like consumer recollections of spending a year ago or foot traffic in shopping malls.

All of which should remind readers of these reports from the National Retail Federation that there is nothing in them that’s a basis for an investment decision.


Barry Ritholtz is a Bloomberg View columnist.