Economics and Shopping on the Magnificent Mile

I was reading the WSJ this morning and as usual it contained depressing news about the recession and the anticipated slow recovery. That then got me thinking about consumer confidence and its record lows. The thought of consumer confidence drove me back to Business Economics MGT 551 in the MBA program. The simplest concept I learnt in that class (and I mean simplest – everything else involved multiple curves and multiple equilibrium points) was that recessionary fears essentially fuel the recession.

Over the weekend, I was paying my routine visits to the splendid stores along Magnificent Mile, Chicago. I wasn’t looking to shop for anything in particular. I was just feeding my soul with the experience. As expected, I found some awesome deals this time of the year. (I’ve frequented stores in all seasons so I know that the best deals are during the end of winter and not between thanksgiving and Christmas.) Banana Republic jackets for $30; Kenneth Cole shoes for $20; 50% off at Nordstrom. WHO CAN RESIST THAT?  

To draw a connection between the paragraphs above – I felt the need to resist the temptation to shop, even with such awesome deals around. The pessimistic job market, weary business conditions and bleak economic outlook has made me reluctant to spend. In any other scenario, I would have considered these deals to be throw away prices. But the need to stretch your dollar’s worth has become ever so crucial.

This fear feeds the recession which feeds job losses and we keep going in circles! It’s discouraging even for a fervent shopper like me!