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What is 'Black Friday'

Black Friday is the day after the Thanksgiving holiday, which always takes place on a Thursday in the United States. Black Friday is so named because it is the biggest shopping day of the year. The term "black" is an accounting expression for the practice of recording profits in an accounting ledger in black ink; losses are recorded in red ink.

BREAKING DOWN 'Black Friday'

Retailers generally see an upward spike in sales on Black Friday and consider the day to be the start of the holiday shopping season. It is common for retailers to offer special promotions and to their doors during the pre-dawn hours of Black Friday to attract customers.

In history, Black Friday was a stock market catastrophe that took place on Sept. 24, 1869. On that day, the stock market crashed and the price of gold plummeted after a period of rampant speculation.

Black Friday and Retail Spending

Retailers may spend an entire year planning their Black Friday sales. Retailers use the day as an opportunity to offer rock-bottom prices on overstock inventory and move it out of their back rooms. Black Friday is also the day when retailers offer discounts on seasonal items, such as holiday decorations and items consumers typically buy as holiday gifts. Retailers also offer significant discounts on big-ticket items, such as top-selling televisions and smart device brands.

Consumers shop on Black Friday for the hottest trending items, which can lead to stampedes and riots in the absence of adequate security. For example, consumer demand for Cabbage Patch Kids hit a fever pitch on Black Friday in 1983, when consumers engaged in scuffles, fist fights and stampedes in retail stores across the United States to buy the dolls that were believed to be on shortage.

The Black Friday Stock Market Crash

The stock market crash that occurred in 1869 was sparked by gold speculators, including Jay Gould and James Fist, who attempted to corner the gold market. The duo enlisted the help of Abel Corbin, brother-in-law of U.S. President Ulysses S. Grant, whose assistance was needed to convince the president to limit the availability of gold. Their attempt to use the White House to manipulate the price of gold failed, and the gold market collapsed, causing the stock market to plummet.

The term "black" has been used to describe other disastrous days in financial markets. For example, on Black Tuesday, Oct. 29, 1929, the market fell precipitously, signaling the start of the Great Depression. The largest one-day drop in stock market history occurred on Black Monday, Oct. 19, 1987, when the Dow Jones Industrial Average plummeted more than 22%.

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