Studies of U.S. spending habits suggests Americans are foregoing expensive trips to theme parks and staying closer to home.John Raoux
When times are tough, Americans buy, well, nail polish.
Leonard Lauder, chairman emeritus of cosmetics company Estée Lauder, coined the phrase "the lipstick index" during the 2001 recession to capture the phenomenon of consumers finding solace in small luxuries when times are rough.
During the 2001 recession, lipstick sales soared. But it hasn't held true so far in the most recent slump, according to the most recent issue of Time Magazine. Lipstick sales have been on a downward slide since 2007.
Sales of nail polish, on the other hand, are up 65 per cent since the first half of 2008.
Economist David Rosenberg said the trend of Americans seeking out smaller pleasures in these uncertain times is showing up in a number of other purchases. It's the "era of frugality," he writes in his daily commentary Tuesday.
Gone are the theme park trips, spa visits and pricey foreign cars. Instead, video games, farmers markets, bulk food stores, private brands and sticking close to home are in.
"The spending patterns are shifting," Mr. Rosenberg says. "Spending on games, sporting goods and hobbies -- home-made fun -- is up, but the outlays on expensive and frivolous speedboats and expensive foreign-made cars are down."
The number of farmers' markets in the U.S. is up 64 per cent since the recession. Use of shopping coupons is also way up (Americans redeemed 3.3 billion of them in 2009, up 27 per cent from 2008.
Perhaps most significantly, the average American adult is spending 2 per cent less now on goods and services than four years ago, after adjusting for inflation.
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