After a washout summer, with stubbornly high interest rates taking their toll and the spectre of tax rises on the horizon, one might expect people to be tightening their belts as the gloom sets in.
Not so, according to Barclaycard. The public has in fact upped spending on small luxuries, such as pastries and cosmetics, in what the card provider has dubbed the “sweet treat economy”.
No, not the sweet treat economy. It’s the Lippy Effect:
The lipstick effect is the theory that when facing an economic crisis consumers will be more willing to buy less costly luxury goods.[1] Instead of buying expensive purses and fur coats, for example, people will buy expensive cosmetics, such as high-end brands of lipstick.[2] The underlying assumption is that a certain portion of consumers will still buy luxury goods even during a bad economy. When consumer trust in the economy is dwindling, consumers will buy goods that have less impact on their available funds.
Everybody likes a little treat. When the treats are a £10/£30 lipstick, not a new purse then we’ve a shit economy. So, Barclaycard hsa just given us a leading recession indicator.
Not so leading, in the sense that if people are already doing this then the recession is already here, but leading in that it’s before other economic indicators.
Well, mebbe, of course. We never know how much something like this is real and how much is something cooked up by Barclaycard’s PR department to get a bit of coverage….
Is it so much a recession indicator as an expectation that the government is intent on everyone owning nothing and being happy, and marching steadfastly towards Venezuelan conditions?
I guess that’s also a recession of sorts, but an entirely self-inflicted one, rather than just an economic cycle thing.
Well, judging by the people I know they are battening down the hatches in expectation of a 1970s style winter
My luxury will be a petrol generator
It’s rather tragic isn’t it? The womenfolk of Britain ‘treating’ themselves to a Chanel lippy so they can feel a bit special for five seconds in the 3rd world shitshow which is modern Britain.
Trends in luxury:
2024: petrol generator (more luxurious than diesel?)
2025: log burner
2026: shotgun
2027: logs
2028: baked beans
Do the lipstick statistics all those male women’s footballers who look like Les Dawson fell into a tray of makeup?
*include
Talks about “stubbornly high interest rates” AKA “normal” and doesn’t mention inflation for some reason.
Pastries and posh bakeries are somehow a thing recently among the southern middle class. Or at least the media thinks they are because all their friends go there.
To me, it looks like trying to hang a story off unrelated observed trends without much understanding. The mainstream media in a nutshell.
The Dallas Fed had a blog post last week about the jump in sausage meat orders. Processors presumably expecting more customers to start substituting bangers and mash for steak and whatever goes with steak.
There’s no substitute for a Spud though.
Is US steak any good these days? When I first went there it was rubbish, presumably because they didn’t hang their meat properly.
It was the same in Oz two decades later – most of the steak was poor stuff. We found one Italian restaurant, and one restaurant chain, who sourced their steak properly.
We asked the Italians where they bought their steak: “from the Scotch butcher”, thus promoting a burst of national pride.
When I used to frequent Gallaghers (just off Times Square) in the 90s, they had a glass window onto the street where you could see their USDA Prime cuts maturing, usually for 28 days. At our local fine dining (sadly lost a few years ago), the chef/proprietor, who trained at Maxim’s, advertised grass-fed steak from Tennessee, and mighty fine it was, too.
“Steak” in the US is usually 32 oz of chemically predigested mincemeat held together by a surprisingly large and convoluted structural web of connective tissue that you have to prise the edible morsels from. Served with gravy made from whatever the US version of Bisto is, and embittered with large amounts of caramel food colouring. They do at least make an effort to cremate in a nice checker pattern.
Yes, of course good is available, but not widely.
Did wonder if I was seeing a reverse hemline index over the last few weeks.
That would suggest women are constantly treating themselves with new clothes despite occupying 7/8 of the marital wardrobe.
Oh, wait …
More like 17/16…
It was a bit odd, but it struck me that that over the last 10, 20 odd years, there was little value in standing out..
But with a different economic regime, maybe that was changing.
Cracking pins tho’
A more conventional explanation is that wage increases have been above inflation for a while now, savings have risen since lockdown (albeit from very low to just low), unemployment is still under 5%, and the economy has undergone a (relative) mini-boom over the past two quarters. Thus people have espied an opportunity to spend a bit.
Naturally, The Telegraph isn’t having any of this. But the “gloomy news” it trundles out to imply that the populace are actually self-indulgent morons is bollocks, although it’s typical that this is the line readily adhered to by the usual far-sighted Prophets of Doom on here. They’ll all be fighting over baked beans by 2028! You heard it here first!
(There may well be a recession down the line pretty soon, incidentally, but that will be due to the US economy’s impending nose dive rather than anything much happening over here.)