Friday, January 23, 2009
Where You Won't Shop in 2009
According to this article, 2008 is going to be known as the year that some stores came to an end. Beginning in 2009, stores are going away such as: Circuit City, Linens 'N Things and Mervyn's. Because and this one third of U.S. women surveyed by America's Research Group said that they are planning on sending zero money on clothing this year. In years past, this number has only been four percent. This means that the market is too saturated with stores. Expected closing and bankruptcies for lines such as: Lane Bryant, Gap, and Starbucks. Experts say that some of this is caused by consumers' debt loads and credit access. Howard Davidowitz, chairman of New York-based retail consultant and investment bank Davidowitz & Associates, said,"People are so scared they are starting to save." Most stores will be open but closing hundreds of their branches. Davidowitz believes that there will be little help from the government and that Barrack Obama is only going to make it worse. He said,"We got into this by borrowing and stimulating, now he wants to borrow and stimulate more." What can America do to fix this economy problem? With stores closing because consumers are trying to save money and unemployment at an all time low changes need to happen or America could possibly be looking at her second depression. "I don't think we will live the same way for 10 years," says Davidowitz. He feels America will be changing for the worse.
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This reminds me of the economic phenomena, the paradox of thrift. This states that when people save for the future it is a good individual economic decision. However, when taken collectively, it is a bad economic decision. This is caused by the fact that when millions of consumers save instead of spend the economy slows. Instead of money being spent in the economy it sits in saving assets. This presents a critical problem for our economy, since it is so reliant on consumer spending. So do we want consumers to spend outside their means? No. But do we want consumers to spend outside their means? Yes.
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