While Black Friday can be an amazing stimulus for one day, it can be destructive if it goes on too long. The main problem with an extended period of price discounts is that if companies end up with lower profits from smaller margins, they may need to fire even more people, thus raising unemployment even further and making shoppers even less likely to spend. If they go on too long, deep discounts could also lead to one of the scariest phrases in economics, “a deflationary spiral,” in which consumers and businesses are in a miserable stalemate — not spending, not hiring. When everybody expects prices to keep falling significantly, things get worse. Why shop today if everything will be cheaper tomorrow? Why build a new factory and hire workers if profits are just going to fall?
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