StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

U.S. economy

Posted by Stan Collender

Andrew, Pete...Help me out here.

When Wal-Mart this week reported a better-than-expected 3.2 percent increase in same-store sales, many on Wall Street said it was a sign that consumer spending was picking up.

That doesn't seem right to me.

My impression is that Wal-Mart is the shopping equivalent of what economist's call an "inferior good."  This is not a qualitative comment on the store or what it sells but rather an economic observation: people are more likely to shop more often at discounters like Wal-Mart when times are tough and they're watching their pennies.

(ironically, the example that was used when I first learned the inferior goods concept was that consumers would shift from meat to potatoes and rice when their income fell.  In light of the current increase in the price of rice, my guess is that it's no longer included on this list.)

Posted by Andrew Samwick

Via the AP, it seems that thrift is finally catching on in the Under-20 crowd:

NEW YORK - The souring job market and rising costs of the usual teenage indulgences - a slice of pizza, a drive to the mall, the hottest new jeans - are causing teens to do something they rarely do: be thrifty.

It's a far cry from the freewheeling spending of recent years, when teens splurged on $100 Coach wristlet handbags, $60 Juicy Couture T-shirts, and $80 skinny jeans from Abercrombie & Fitch.

Now jobs for teens are less plentiful, and parents who supply allowances are feeling the economic pinch.

Stalwart retailers of teen apparel, such as Abercrombie and American Eagle Outfitters Inc., are reporting sluggish sales, defying the myth that teen spending is recession-proof.

It's even becoming cool to be frugal.

Better late than never, I suppose.  Read the whole thing for examples of how teens are tightening their designer belts.

Posted by Stan Collender

This must be the political equivalent of The Perfect Storm for House and Senate Republicans.


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