The RE Biz & "Inferior Goods"

McDonald's, iTunes --
and Real Estate Signs

In economics, the term "inferior goods" means anything that you consume more of as you have less money.

Historically, foods like hamburger (vs. steak), potato's, rice and the like qualified; today, that would be fast-food chains like McDonald's, and all the Dollar store chains that appear to be doing brisk business.

"Inferior goods" applies to other things, too.

So, demand for entertainment is also surprisingly recession-resistant.

That's because people tend go to the movies more, not less, even as they cut back on luxury goods and services.

Or perhaps makes that "download more, not fewer, iTunes."

Real Estate Equivalent

In the real estate business, the equivalent would be good, 'ol-fashioned real estate signage.

Even as Realtors pare back expensive media advertising (how do you think Google makes its billions?), they are stepping up -- or at least maintaining -- their purchases of "For Sale" signs, sign riders, banners and other hallmarks of boots-on-the-ground marketing.

At least, that's the take I got this am from the sign company I've done business with for years.

Surprise Recession Winner: Shoes (& Walking & Hiking)

Random Juxtaposition?

Maggie Nesciur, 30, a waitress, walks up to 90 miles a week around New York's neighborhoods.

--"The Walker"; The New York Times (11/6/09)

As the economy has inspired a back-to-basics mentality, with families dining and vacationing at home, people are focusing on free outdoor activities that require comfortable or rugged shoes.

The cost-per-wear of a pair of shoes is far lower than that of a dress or suit, which can only be donned so many times a week before colleagues snicker. And new shoes spruce up old outfits, a cheaper alternative to buying more clothes.

--"A Not So Guilty Pleasure"; The New York Times (11/6/09)

In what I'm guessing is just a random juxtaposition, today's (online) NY Times features two stories about shoes.

The first is a profile of a New Yorker who like to explore the city's varied neighborhoods on foot (that was my hobby, too, when I lived there). Apparently, she actually walks something like 90 miles a week!

The second is an article reporting that shoe sales are defying the recession, and are actually up.

Hmm, maybe there's a connection . . .

P.S.: Economists call something that experiences rising demand in a recession an "inferior good." No, it's not a moral judgment; it just means that as people have less money, they consume more of it (with most goods, it's the opposite: as you have more money . . . you consume more).

Historically, the classic example was potatoes. Inferior goods today would likely include things like mac 'n cheese, rice & beans, "Hamburger Helper," etc.

I'd also put pets in that category. They're cheaper than a health club membership, and great companions, too!