Sunday, October 04, 2009

America On Sale: Great Time To Be A Consumer

ABC NEWS -- There has never been a better time to be a consumer. America is on sale. The Great Recession has caused massive job losses and hardship for millions, but it has also fostered a shoppers' paradise. Anyone who still has the means to spend can find unheard of deals.

Prices on everything from clothes to coffee to cat food are dropping, some faster than they have in half a century. Items rarely discounted — like Tiffany engagements rings — are now. The two biggest purchases most people make — homes and new cars — are selling at steep price reductions.

What's happening now has been building for years. Wal-Mart Stores Inc. introduced "every-day low prices" many years ago. Amazon.com redefined the idea of bargain prices during the late 1990s when it helped introduce online shopping. After the 2001 recession, automakers introduced zero-percent financing to boost sales. McDonald's "Dollar Meals" made fast food even cheaper. But until the Great Recession came along, consumers hadn't seen anything yet.

Hotel rooms cost travelers nearly 20% less, on average, than last year, the biggest decline since Smith Travel Research began collecting data in 1987. Home prices have dropped 30%, on average, from the peak in 2006. In some markets, they're down more than 50%. Homes in parts of Detroit are cheaper than a new car.

Overall, prices are tumbling at the fastest rate in decades. The government's Consumer Price Index, which measures the average price of goods and services purchased by households, has fallen 1.5% over the last 12 months. The reading for July showed a 2.1% annual decline, the biggest since 1950 (see chart above).


5 Comments:

At 10/05/2009 9:32 AM, Anonymous morganovich said...

perhaps, but this is a bogus comparison. during the late 90's, the calculation of CPI was substantially altered to a hedonics based calculation. this adds in an implied substitution effect eg. if steak increases in price, you'll eat hamburger. t

this makes the CPI numbers of the last 12-15 years an apples to oranges comparison with those previous. calculated the old way, CPI has been running 3-4 percentage points higher.

 
At 10/05/2009 10:19 AM, Anonymous U Loco said...

Too bad there's nothing worth buying.

 
At 10/05/2009 11:28 AM, Anonymous Anonymous said...

Great time to have well paid and full time employment.

 
At 10/05/2009 2:57 PM, Anonymous Anonymous said...

There are a lot things worth buying, autos for example are much better than before, refrigerators are better as noted in a prior article, electronics is vastly better. We also have significant evolution in photography where the marginal cost of a shot has gone to essentially zero with digital photography.
This is particularly true if you take a 20 to 30 year time frame rather than 5 to 10. Somewhere in the archives of this blog is a comparison of some appliance prices and hours of work from the 50's and now at its very favorable to today.

 
At 10/05/2009 9:20 PM, Anonymous U Loco said...

Buying something better or new just because it's on sale?

You sound like my wife. No understanding whatsoever of cost-benefit analysis.

I'll just keep my paid-for and fully functional appliances and cars and save my money. If there's something I need, I'll buy it but I'm not motivated by red tag sales like some people.

There's not a damned thing I need that is on sale right now.

 

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