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Lipstick as an economic indicator

posted 17 Aug 2011, 10:29 by Mpelembe Admin   [ updated 17 Aug 2011, 10:33 ]
There is more than one way to gauge the mood of the consumer including unconventional indicators like lipstick sales, alcohol consumption, and visitors to the local pawn shop, all which point to a consumer that is starting to hunker down again.

USA-CONSUMER SENTIMENT -

  How worried are you about the economy?


A new Reuters/IPSOS poll finds 47 percent of you fear the worst is yet to come.

So we decided to take our own unofficial sentiment poll, and the results may surprise you.

More of you are going for some retail therapy. Mall traffic was up 3.5% at the Mall of America during the first week of August.


Jharrone Martis of Thomson Reuters Proprietary Research.

JHARRONE MARTIS, DIRECTOR OF RESEARCH, THOMSON REUTERS PROPRIETARY 

"One thing our research at Thomson Reuters shows is that no matter how bad the economy is doing, even throughout the recessions, the past recessions, back-to-school season happens every year and parents are budgeted for it."

Shoppertrak says across the country, retail sales were up 2.7%, that's almost triple the rise for the same period a year ago. Clothing and back to school supplies are being snapped up, electronics are not.

Walter Zimmeran of United I-Cap.

WALTER ZIMMERMAN, SENIOR TECHNICAL ANALYST, UNITED-ICAP 

"They're not buying big ticket items. They're not spending on items that they don't absolutely need."

Interesting then, that lipstick is flying off the shelves. You've heard of the lipstick indicator - when times are tough, women still treat themselves to a new lipstick. Well so far this year, department store lipstick sales have surged 13% -outpacing overall makeup sales.


Other shopping trends are less positive. Experts say during the past few weeks, more consumers are using credit cards on 'essentials.'

You're also trying to find some fun close to home, that's why the movie theatres have been so crowded this month.


Kathy Bostjancic of the Conference Board.

KATHY BOSTJANCIC, DIRECTOR FOR MACROECONOMIC ANALYSIS, THE CONFERENCE BOARD

" Well one of the things that you do see, and this is kind of historically been the case, is that you see more people go to movies when things are bad, because they want to feel better, to get away from things. Also movie tickets are still relatively inexpensive compared to other forms of entertainment."


And here's a telling sign… the National Pawnbrokers Association says within the last two months, more pawn shop owners are reporting an increase in middle class and affluent customers using pawnshops. The average pawn loan nationally has nearly doubled in two years, to $150.


If, as our Reuters/IPSOS poll indicates, you think the worst really is yet to come, does that mean Happy Hours cease to exist? Absolutely not. Liquor is recession-resilient, according to the chief economist at the Distilled Spirits Council. He's tracked liquor consumption during every recession going back to 1960 and has found that consumers will still have a cocktail when times are tough, but they trade down.


Rhonda Schaffler, Reuters

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