The Homa Files

Punch line: Americans are broke and depressed — and also swilling $3 lattes and waiting in line for iPhones.

Go figure.

* * * * *
Highlights from Bloomberg Business Week:The New Abnormal, July 29, 2010

The new abnormal has given rise to a nation of schizophrenic consumers — dollar stores and luxury. They splurge on high-end discretionary items and cut back on brand-name toothpaste and shampoo.

Companies like Apple and Starbucks  are thriving. Mercedes-Benz is having a record sales year.

The irony is that it is often the same people juggling iPhones and venti lattes who are open to switching to off-brand laundry detergents — abandoning Ivory soap and Crest toothpaste for generic brands.

They may also be sneaking into discount retailers for these deals.

“The dollar store is the new Target … You go in there to buy shampoo for a buck so you can go to Starbucks and justify spending $3 for a coffee … you buy cheap towels there before hitting a pricey spa.”

What’s going on?

“Some consumers are probably liquidity-constrained … and aren’t buying iPads.

But 90 percent of Americans do have a job, and maybe 70 percent are confident about them. And maybe half of those have liquidity.”

“Consumers’ brains lack a line that separates spending from saving. Instead they practice a certain amount of thrift to justify blowing a large sum frivolously.”

People are saying, ‘There is still risk. I gotta cut back … but life has to have some normalcy. I have to have some luxuries.”

Full article:
http://www.businessweek.com/magazine/content/10_32/b4190050473272_page_4.htm

This entry was posted on August 3, 2010 at 6:30 am and is filed under Economics, Financial Crisis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.