An uptick in shopping sprees seems to indicate that the era of modest consumerism, with increased saving and decreased spending, may have already ended. If so, this shift in consumer behavior only lasted for a couple years, so I suppose it doesn’t really qualify as an “era.”
Ever since the idea of a “new normal” for consumers arose, the big question has been: Just how long would any “recession effect” last? Is the “new frugality” here to stay? Could there be an entire “Recession Generation,” whose spending habits are forever affected by the impact of the economic collapse? Or would “frugality fatigue set in, prompting consumers to reneg on saving habits and return to their spendthrift ways.
If recent retail numbers are any indication, the “new normal” is no longer new, or the norm. The new-new normal appears to be similar to the old normal with lots of instant gratification and conspicuous consumption.
Granted, “normal” is a very relative term in California, but the LA Times reports a recent rise in luxury spending, with consumers proudly doing what might have seemed tacky in 2009—dropping tens of thousands of dollars at a clip on Versace watches, Louis Vuitton belts, and Coach handbag. While the trend is most noticeable in California—part of the reason rich folks shop and buy this stuff is to be noticed—wealthy consumers have picked up the spending pace around the country:
U.S. retail sales overall are expected to rise about 3.5% this year, but the trend is even stronger at the high end, with a projected 7% jump over 2009.
That’s an encouraging sign for the overall economy because affluent shoppers wield outsized spending power. The richest 20% of households account for nearly 40% of total consumer spending in the U.S., said Michael Niemira, chief economist at the International Council of Shopping Centers.
Retail sales rose 0.8% in November from a month before, reaching their highest level since 2007, with spending especially strong on clothing, sporting goods and books, the Commerce Department said Tuesday. More broadly, sales were up 7.8% from a year ago for the three-month period through November.
So, even with a stubbornly high unemployment rate and an economy that still seems neither strong nor steady, consumers are apparently sick of sitting on the sidelines. They no longer feel like playing it safe and saving. This is a description of the scene painted with a very broad brush, of course, and the last couple of years have surely changed the way many Americans spend, or don’t spend.
As for the consumers who have turned the new normal on its head , I’m reminded of a prediction made by In Cheap We Trust author Lauren Weber, who had this to say in a Q&A in the fall of 2009:
As soon as the economy recovers, Americans will cheerfully re-set their consumer appetites a notch or two higher than before. History shows that forced retrenchment rarely has a lasting effect. So I expect to see Hummers and $5,000 handbags making a comeback in a couple of years.
OK, maybe not Hummers, but $5,000 handbags? Sure. And it turns out the comeback of spending on luxury goods is taking place in one year, not a couple.