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W
May 15, 2009 4:49 PM
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We're sending help immediately, Mrs. Fletcher.

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Quake 'n' Shake
May 15, 2009 4:50 PM
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Am I wrong in assuming that our economic growth these past 15-20 years has been fueled largely by people buying crap that they really don't need?

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9 replies
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Shoelace
May 15, 2009 6:50 PM
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@Quake 'n' Shake: The advertising industry, every day, manipulates people into thinking that they want or need things that they don't. The credit industry helped the spending to skyrocket. Our culture tends to admire people with new, fancy stuff.

I can only hope that the people who were spending out of hand and now have to cut back will try to keep their new habits after things have stabilized.

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JayDeEm
May 15, 2009 7:32 PM
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@Shoelace: In response to your second paragraph. I fall squarely into this category. I have a decent chunk of credit card debt now, amassed partly out of stupidity, incidentals (several trips all over the country to attend a funeral, wedding, 80th birthday and other family stuff) and the occasional necessity, none of which I could afford at the time.

I have been chipping away at it slowly but steadily for about 6 months now and probably have a couple of years to go before it's completely gone. The point is that somewhere in all of this a light went on in my head, things needed to change. I completely cut out any impulse purchases by applying the 'wait a week and see if you still want it' rule. I know now that it is okay to tell people that you can't attend some family event (funeral's generally being the exception) and I try to plan ahead for anything else that might come up.

As you said, hopefully everyone learns one way or another about managing their finances responsibly. Let's hope that for most, this can come in the form of advice from parents or even better, a mandatory class for all high school seniors. Falling on one's face is also very effective, but has some nasty side effects.

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GuinevereRucker
May 15, 2009 10:44 PM
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@JayDeEm: It also seems to me that there's a copious lack of education on basic financial responsibility in schools. My wife and I both work at schools.

I would add to this a lack of civics. Most kids have no idea how the government works, and are disinclined to care.

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NeverLetMeDown
May 15, 2009 5:54 PM
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@Real Cheese Flavor:


Well, our entire economy is based on people buying what they don't \"need\" - we've covered food and basic shelter a long time ago. The issue is more people buying what they can't _afford_, and taking on unsustainable levels of leverage to do it.

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GuinevereRucker
May 15, 2009 10:41 PM
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@NeverLetMeDown: Nicely said. I welcome the economy falling on its head if it helps us return to our roots - that which was important to US citizens a hundred years ago. We've replaced their values with materialism. That needs to change, and maybe a failing economy will help!

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Real Cheese Flavor
May 15, 2009 6:14 PM
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@NeverLetMeDown: Exactly my point. There were tons of people out there buying homes they can't afford with loans they never should have been issued in some horrible combination of unchecked shady banking practices and the societal pressure that if you don't own your own home you're a complete failure at life.

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KyleOrton
May 15, 2009 5:22 PM
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@Quake 'n' Shake: More importantly, that they can't afford too.

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Jonbo298
May 15, 2009 4:51 PM
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@Quake 'n' Shake: Effectively, yes. The accessibility of credit \"hyperinflated\" the economy and now we're at the crash. It was overdue.

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shadowkahn
May 15, 2009 6:27 PM
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@Jonbo298:

I've said for more than a decade that a credit based economy could not be sustained, despite W and Clinton claiming the economy was growing. I knew I was right, but I wish I had been wrong.

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dragonfire81
May 15, 2009 5:09 PM
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@Jonbo298: You are exactly right. Marketers and salespeople have repeatedly driven home with us the message \"you need this AMAZING STUFF NOW NOW NOW!!\" Hence we get a society reliant on credit and a debt disaster waiting to happen.

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Quake 'n' Shake
May 15, 2009 4:51 PM
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@Quake 'n' Shake: And that the era of buying crap is seemingly over for now. (Should have added that too)

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Saboth
May 15, 2009 4:51 PM
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Now we just need food prices to drop...not just things like HD tvs.

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1 replies
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Etoiles
May 15, 2009 4:53 PM
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@Saboth: Yeah. Although I have seen that sales have gotten more frequent and a bit better in price reduction on several things I buy at my local supermarkets, those \"sale prices\" are only bringing them back in line with prices I considered to be acceptable a year or two ago. And all of the products that shrank when gas spiked up to $4 - $5 per gallon last year have STAYED shrunk.

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curtisawa
May 15, 2009 4:52 PM
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So is the fall since last year when the prices all shot up due to the oil bubble or down from more like two or three years ago? Because if prices are down just because of the price of transportation it will have no impact on companies who produce them as their margins are unaffected.

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minsky
May 15, 2009 4:57 PM
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I still don't see these supposedly 'lower' prices when I go out and buy something. Gas has just shot up again, food is still expensive, where are these fabulous low prices? As others have said, probably on stuff I don't buy, like consumer electronics.

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gStein_*|bringing starpipe back|*
May 17, 2009 5:31 PM
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@minsky: i just bought a laptop for $400, marked down from $699 (from best buy, but it was $100 cheaper there than on newegg or anywhere else. and i waived the \"consumer protection plan\")

i've been looking at a new computer for about 9 months now, almost bought a netbook several times, but $350 on underpowered garbage vs. $400 on something actually powerful? hm...

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sponica
May 15, 2009 5:17 PM
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@minsky:
@DoctorMD: The landlord dropped the rent for our apartment by 300 bucks a month mid lease. And in Gowanus/Park Slope Brooklyn (depending on the realtors), that's a decent amount.

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edwardso
May 15, 2009 6:47 PM
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@sponica: due several condos being vacant with lower rents I was able to get my rent down $75 and I was happy, $300 would have blown my mind

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sponica
May 15, 2009 7:07 PM
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@edwardso: It's an old pre-war building that's probably been bought and paid for. Who knows why it dropped, who cares why it dropped? All I know is that our lease doesn't end until Sept 30 and we got a letter the other day saying we'd be receiving a preferential rate decrease for the remaining 4 months. Not really mid-lease, but still...that's 300 bucks a month we can stash away for something else.

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DoctorMD
May 15, 2009 5:07 PM
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@minsky:

That's because the gov't cut energy, food and housing out of the inflation index. Couldn't hide the actual inflation numbers any other way.

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bohemian
May 15, 2009 5:03 PM
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@minsky: The only \"deals\" I have seen are for 4 star hotels in big cities. Groceries, gas and utilities are all up or still up in price. All of the excuses for high food prices appear to be gone now yet the cost of food is still going up.

Honestly I have not seen much in the way of lower prices on other categories of tangible purchases either.

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shadowkahn
May 15, 2009 6:29 PM
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@bohemian:

Well, you have to buy food. They know that, so food isn't as vulnerable to market conditions as a TV, which you can live without.

Good bargains in cars right now, for those who have the cash. I've seen 3 year old low-mileage Acura TL's going for 11 grand. Helluva buy.

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RonDiaz
May 15, 2009 4:58 PM
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I wish I knew where all this deflation was. I would welcome it. The stuff I need food, energy, rent, continue to reign high. Only thing down is gas and it's heading back up. I don't care if the price of HDTV's collapsed...I'm just trying to get by.

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grapedog
May 15, 2009 5:00 PM
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The market will correct itself.


It doesn't matter how much people(ie: government/wall street peon's) try to F*** with it...it's going to self correct.

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shepd
May 15, 2009 5:01 PM
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\"When oil prices go up to near $150 and then fall sharply, your going to have an impact on CPI,\" said Bob Brusca, an economist at FAO Economics in New York.

Copyediting, FTL.

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3 replies
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oneandone
May 15, 2009 6:53 PM
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@shepd: Maybe Bob actually said \"your\" and they transcribed it correctly.

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Sean Masters
May 15, 2009 5:14 PM
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@shepd: They probably had to fire their copyeditors. Bad economy, and all ;)

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rdm
May 15, 2009 5:13 PM
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How about tickets for semi-luxurious items (like concert tickets)? We very rarely get good concerts around here but this summer Tool is coming and Dennis Miller and Bill Maher, but tickets for all of them are at least $70 each. I wonder how long that will last (and you can bet parking at the venue will be $20).

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NeverLetMeDown
May 15, 2009 5:56 PM
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@rdm:


At least $70? Let me move to where you are. Most tix for big shows in New York City _start_ at $80 and go up from there.

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Adam Stewart
May 15, 2009 5:15 PM
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The prices that matter haven't fallen a single bit. From the article:

\"Meanwhile, prices excluding food and energy, the so-called core CPI, rose 0.3% in April, after a 0.2% rise the month before. Economists were expecting a 0.2% gain. Core consumer prices were up 1.9% on an annual basis.

The increase in core CPI was due to a 9.3% rise in prices for tobacco and smoking products, which jumped 11% in March. Retailers have boosted tobacco prices in response to a federal tax hike that went into effect April 1.

Excluding tobacco prices, core inflation rose 0.2% in April, according to Aaron Smith, senior economist at Moody's Economy.com.\"

This basically says that if you exclude food and energy prices, both of which were very high last year due to the oil bubble, prices are actually up 1.9% over last year. The bulk of that was because of a rise in tobacco products, and if you exclude the tobacco price increase, they are still up 0.2% from last year.

Prices aren't falling. At least, the prices that matter to the economy aren't. And prices that have fallen, Energy and Food, would actually HELP consumers do more discretionary spending, thereby creating jobs.

If anything, the high prices last year were caused by a self-sustaining fallacy: \"Wow! Consumer spending is up! Let's invest in oil!\" People are now paying more for oil, which drives up the amount of money that people were spending so...\"Wow! Consumers are spending even more! Let's invest in oil!\". Eventually, people are spending all their money on oil, energy and food.

So, despite the fact that we've been in a recession, people were spending more money on energy, which was hiding the fact that we were in a recession for most of 2008. Eventually the self-sustaining fallacy must break when there is no more money to spend on oil...hence the fall of the price of oil.

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RonDiaz
May 15, 2009 6:25 PM
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@Adam Stewart: I WISH I COULD LIVE WHERE FOOD AND ENERGY PRICES HAVE FALLEN.

Seriously, the utilities here in the Midwest just asked for 8-18% rate hikes on electricity and food isn't down a dime. I'm sick of hearing about deflation, it's hogwash.

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bobert
May 15, 2009 5:23 PM
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A nice motel I stayed at last night in Silicon Valley was almost $50 a night cheaper than this time last year - $61 versus $109.

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ryan89
May 15, 2009 6:17 PM
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@bobert: A hotel I normally stay at in downtown Chicago usually goes for $150-200 a night. Last month I got it for $109 a night.

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ADismalScience
May 15, 2009 5:24 PM
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Core CPI is up. For my money it's time to stop worrying about deflation and start worrying about inflation. And since the inflation-causing liquidity hasn't been enough to stimulate job creation or industry, I'm not exactly sanguine on our prospects.

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Outrun1986
May 15, 2009 5:57 PM
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I don't think any drop in electronics is to be seen as revolutionary or as in a sign that the economy is going down. Companies are still making new products every 6-10 months and people are still buying them. Electronics will always drop in price, has anyone ever seen the retail (not secondary market) price of a video game system or TV go up in price as time passes?

To be fair though, food prices have come down a bit in my area on some essentials. Milk is now 1.99 everywhere and it was over 3$ for a period of time last year (or was it the year before, I cannot remember). Last year at easter I paid 1.79 a dozen for large eggs with no sales in sight at any store, but now the same dozen of large eggs costs .99 and sales for .79 are common. Cereal is up but generic cereals are 1.99 a box on a routine easy-to-find basis. These haven't been shrunk either. There haven't been any spikes in the price of commonly used meat at least from what I can see. I think a pound of yummy store-brand ham from the deli is actually down a bit from this same time last year.

I am also paying less for clothes than any other year, as no one is buying and everything gets shifted to the clearance racks very fast. Yes MSRP clothes prices have gone up, however NO ONE pays full price for clothing, no one. However I am still paying less, there have been years in the past when I could not find one suitable pair of jeans for under 20$, but this year I ran into more 6$ pairs of jeans then I could use and had to choose wisely.

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JollyJumjuck
May 15, 2009 6:36 PM
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I don't see any price drops in anything, either. Except for the usual sale prices on items (and even then the \"sale\" prices aren't as low as they were a year ago), the price on everything from gas to food has climbed and shows no sign of dropping. Electronics are dropping in price, except for the Nintendo Wii which is still selling at launch price 2.5 years after introduction (although they grudgingly dropped the price by $30 for 3 whole days before it rocketed back up again).

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Outrun1986
May 15, 2009 8:23 PM
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@JollyJumjuck: A lot of the sale prices are getting scammy, as in they are pricing a pair of jeans at 80$ MSRP but immediately knocking the price to 40$ by luring you in with a 50% off sale. Then that particular pair of jeans is always on sale. The original price becomes so high that the sale price just then becomes what the original price would have been years ago. Almost no clothing is ever actually sold at the MSRP price that is listed on the tag (that is why I say no one pays full price for clothing). Regardless your still paying 40$ for that pair of jeans.

This is just an example, you have to train yourself not to buy everything that's on sale just because its on sale. A sale isn't necessarily a good deal. You have to consider the product, get the after-percent offs price and then decide if the product is worth that price to you.

However even with the scammy clothing sales, I am still paying less for clothing than I did a few years ago and it doesn't seem like the quality has gone down either.

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RonDiaz
May 15, 2009 6:27 PM
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@Outrun1986: I will agree milk and butter prices are way down here, only foods I have seen drop in price though.

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microcars
May 15, 2009 6:37 PM
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I want to know why retail gasoline prices have gone from $2.09 to $2.65 by me (north of chicago)

that is almost a 30% increase in a MONTH!

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AngryK9
May 16, 2009 3:33 PM
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Exactly what prices have fallen? All I see around here are prices going up, up, and up some more.


I guess it's only the non-essentials that are dropping.

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asherchang2
May 17, 2009 10:49 PM
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And yet college tuition continues to increase and Panera Bread skimps on item size while jacking up its prices -_-;

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