The Associated Press released a series of indicators that they claim show that the economy is recovering. What they really mean is that we're more willing now to take risks, which is what people do when they think their bases are safe. One problem with the type of risks the AP identified is that some of these will not help the economy at large continue to recover. You will notice an absence of things that have been previously identified as hallmarks of a strong economy like "housing sales on the rise", "vacations", and "investment in stocks" to name a few.
1. taxis
When people are willing to spring for more expensive transportation, it means they're not pinching pennies to save on the costs to earn a paycheck. I am still coordinating trips to minimize the number of trips I take and to meet people halfway when I can so that we don't drive as much in total. I'm still not willing to spend 10 hours per week on the bus to eliminate my car, and the 12 mile ride from my house to work is uphill almost the entire way, and I don't want to smell like a cyclist when I walk into work. If they are correct, expect SUV and truck sales to rise as well, in spite of higher gas prices, since we're now willing to splurge on how we get there to save time or have increased comfort.
2. exorbitant 'sports'
They report that more people are out golfing and gambling. Golfing tells me two things, that people are spending more time recreating than working (no matter how much they tell you that networking matters, the actual work of a deal must still be done off the course), and that they're willing to drop exorbitant amounts of money to interrupt a good and otherwise free walk. Gambling tells me two things as well. It tells me that people are desperate for quick money, which means they're not sure how long the plateau will last. It also tells me that they're willing to part with their money for entertainment only if that entertainment earns them a profit or benefits, which is the same kind of thing that happens with golfers, or at least they hope.
3. plastic surgery
As our available income increases, we spend more for vanity items. You will probably see cosmetics rise as well as brand name retail shopping for whatever clothing and fashion is currently trendy. I know that lipsuction costs around $6000 in Vegas, and it's faster and easier than a gym membership, even if it's only $25/month. Expect vanity purchases to rise if this proves true.
4. divorce
Finally, the article mentions this strange albeit sensical measure of economic standing. For years, we have heard stories about people unwilling to divorce because of additional financial duress. When you split a household, your expenses become all your own until and unless you find roommates, which is more difficult for women with children. Even if the other person doesn't earn a ton, if you live off of two incomes, you find that you can't live as well or in the places you like after a divorce, and so some people even that I know have decided to put up with things or realized their money problems aren't as bad as long as the economy is uncertain. Couples who decide to divorce now feel they won't lose as much by splitting costs and splitting assets and that things are steady enough to last on their own.
These particular measurements of consumption indicate that people are optimistic about their money. There are probably more, but these are interesting choices because they reveal that we are still as unsure of ourselves. We're still not sure that we are good enough, cute enough, and desireable enough for who we really are, so we buy vanity items. We're not sure how best to 'invest' our money, so we're after quick returns at the poker table or in gold. We're not even sure other people can invest it well, so we don't buy stock or houses or other items that can appreciate in value even if they do not. We buy things that will depreciate, like clothes and cars and cosmetics so we can look prosperous even if we're not. We're not sure about our neighbors, so we don't want to ride with them on buses, and maybe we're not sure of our health, so we don't walk or ride bikes or other things when we travel. We're not sure about our choices of partners, and so we're more likely to put a partner out in hopes of greener pastures.
I have learned that the more things change the more they remain the same. In this time of 'boom', if indeed it is true, wise people still prepare for the next bust cycle, which will inevitably come, whether in a day, a year, or a decade.
People make interesting decisions. They have reasons, but they're not necessarily reasonable in the long run. These things are not long-term solutions to increased economic prosperity. Most of them just make us feel better today, which is ok albeit temporary.
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