Thursday, October 16, 2008

The real credit conundrum

Forget the interbank lending lockdown. The real crisis facing the US is how to convince Americans to keep shopping. Given that debt has underpinned the American economy like no other during the past eight years - Bush inherited a budget surplus but will leave a country nearly half a TRILLION dollars in the red - the prospect of a nationwide spending strike is fuelling the Dow's tailspin. What to do? 

Well, worry not, because the admen are already on the case. When the airwaves aren't screening a negative presidential campaign ad they are bulging with ways that canny consumers can spend money to save money. Sounds crazy but recession advertising is the hot buzzphrase on Madison Avenue. From soup to at-home gyms, plastic surgery to milk, companies are trying to persuade shoppers that they can't afford to stop splashing out. 

Retailers here are desperate to tout their wallet-bolstering credentials. Even Wholefoods, hardly renowned as the bastion of cash-strapped shoppers, has got in on the act. Its ads claim its customers get, "More of the Good Stuff. For less." Stores are brimming with "offers" to help shoppers save money (although shoppers should be warned that Wholefoods current two-for-$5 offer on bagged salad is less than generous when you consider that a single bag sets you back $2.50). 

So far, shoppers are resisting the bait. September's retail sales figures were the worst in the past three years, helping further to unnerve investors. The past week's freakishly warm weather, on the east coast at least, will have piled yet more pain on a struggling retail sector despairing of ever shifting any winter stock. But there is some light at the end of the shopping tunnel. With temperatures set to plummet here in DC by the weekend, one little chap decided there was no time like the present to invest in his first ever winter coat. What with that, a pair of trousers, a Ralph Lauren polo shirt, a long-sleeved T-shirt, a country music star onesie, a St Louis Cardinals t-shirt, a hat and two Obama onesies that he's bought since arriving in the States three weeks ago, Louis's shopping splurges could just help to head off a recession - in babies' stores at least. 

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