- Tom Silva
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America is Marked Down
Although the Great Recession has created hardships for millions of Americans, it has been the stimulus for a giant sale of consumer items. Houses in some Detroit neighborhoods can be purchased for the price of a new car. Everything from big-screen televisions to clothing are being sold at deep discounts. Hotel rooms cost approximately 20 percent less than a year ago, the largest decline since Smith Travel Research began collecting data in 1987. Even Tiffany engagement rings are on sale.
“This is the new normal,” says Donald Kerpta, president of the Chicago-based Dominick’s supermarket chain which has slashed prices as much as 30 percent on thousands of products. “We aren’t going back.” Karen Wilmes, a Rhode Islander who writes the Frugal Rhode Island Mama blog, says “The deals out there are unbelievable. We can put the money I save toward something else.”
Last year’s financial collapse wiped out 11 percent ($6.6 trillion) of America’s household wealth in just six months. It also ended the easy credit that had driven the consumption that characterized the economy over the last decade. Now, prices are falling at the fastest pace in decades. The federal Consumer Price Index, which measures the average cost of goods and services, has fallen 1.5 percent this year. The 2.1 percent decline in prices recorded in July was the biggest since 1950. Although energy prices have shown the steepest declines, food, appliances, furniture, jewelry, sporting goods, audio and visual equipment, and apartment rents also are falling. Because consumer spending accounts for 70 percent of the U.S. economy, retailers are hoping that the deep discounts will jump-start their businesses.