Has the current economy given birth to Schizophrenic Consumers? Schizophrenic Consumers They splurge on high-end discretionary items and cut back on brand-name toothpaste and shampoo. Companies such as Cupertino, California-based Apple, whose net income jumped 94 percent in its last quarter, and Starbucks Corp., which saw a 61 percent increase in operating income over the same time frame, are thriving. Mercedes-Benz is having a record sales year; deliveries of new vehicles in the U.S. rose 25 percent in the first six months of 2010. Lexus and BMW were also up. Though luxury-goods manufacturers such as Hermes International SCA and Burberry Group Plc are looking primarily to Asia for growth, their recent earnings reports suggest stabilization and even modest improvement in the U.S. Source : http://www.bloomberg.com/news/2010-...pads-while-broke-in-new-abnormal-economy.html
The big mistake is the assumption that those consumers are the same who are buying luxury cars while eating Top Ramon soup. In a recession if you have money it is a wonderful opportunity to buy, because prices are usually lower. Thus you have luxury items selling well, but also the cheapest products flying off of the shelves....
They think - I have cash. What can I do with it now to get a good and safe rate of return? Nothing and thats why I buy a new Mercedes.
For Americans, spending money in malls is how they find entertainment. It is called Shopertainment. Pretty sad state of affairs.
Consumer spending, which normally accounts for 70 percent of U.S. economic activity, had previously been estimated to have grown at a 3.0 percent rate in the first quarter. Spending added 1.15 percentage points to GDP last quarter. How is spending production??