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Wednesday, April 7, 2010

Clothes, Cars -- and Homes?

Improving Consumer
Sentiment Buoys
"Medium Ticket" Items

American consumers are finally coming out of hiding.

After months of penny-pinching amid the recession, new figures —showing an improving job market, rising factory output and increased retail sales — suggest that consumers are no longer restricting their budgets to necessities like food and medicine. They are starting to buy clothes, jewelry and even cars again.

--"Upbeat Signs Revive Consumers’ Mood for Spending"; The New York Times (4/7/2010)

If necessities like food and medicine are at the bottom of the consumer "food chain," and discretionary items like clothing and jewelry are in the middle, what's at the top?

Big ticket, "capital" items like cars and homes -- purchases that depend not just on consumers' current financial condition, but their confidence about the future.

Keep an eye on that "trickle up" effect (see, "Trickle Down" Economics to "Bubble Up?").

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