August 6, 2010

Consumer Reports

I just finished reading the cover story on a recent issue of Bloomberg Business week, entitled "The New Abnormal: American Consumers are Cutting Back. Except When They Are Not."

Basically the article attempts to discuss and gauge the current mood of the great American consumer, to see if how it influences spending patterns and the overall economic health of the consumer goods industry. It questions, but doesn't manage to explain, the seemingly contradictory signs currently coming out of patterns of consumption. Specifically, why is revenue for "luxury" or discretionary brands such as Apple or Starbucks on the rise when shoppers are financially insecure enough to be clipping coupons and switching to store brand toothpaste en masse.

The answer (and I'm sure you know this already, perhaps from personal experience) is simply that humans are not rational creatures, and we make "deals" with ourselves that are more emotional than factual, and have become accustomed to the idea of consumption as a "treat" and reward against the monotony of daily life. Which explains, exactly, why I might have bought a very expensive pair of leopard-print Louboutin boots at the same time that I canceled our household Netflix account (which costs less than $10 a month).

How has your spending patterns changed (if at all) during this recession?

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