Being that I have recently purchased a car, lost half my retirement savings, and rented a house, I feel poor right now. And yet, like the rest of America, I am feeling the powerful lure of the ridiculous sales our nation's merchants are putting on. Yesterday, my housemate suggested that flat screens are so cheap, we might want to get another one. Between the two of us, we already have five televisions (including one that, bizarrely, comes with the house, being affixed to the bathroom ceiling. No, I'm not kidding.) But they're SOOOOOOOOOOOOO cheap!!!
I don't think I'm the only one who's noticed the pathetic desperation of the sale come-ons in my email box. In years past, Christmas sales were a way to steal your custom from more rapacious rivals. Now it just seems like Macy's is begging. "Please, take this unsalable crap off my hands! I'll throw in a toaster! Okay, okay, how about a toaster, free shipping, and a coupon for a half priced entree at Fridays? What about that? No? Pleeeeeeeeeeeeeeaaaaaaaaaaase."
And I suspect that this is shaking loose some of the money that has frozen up. Because even though I feel poor, it almost seems like losing money to pass up these deals. As Ta-Nehisi said on Black Friday: My e-mail was deluged with deals, and I almost bought 42" flat-screen for like $500. And then I got to thinking. Why? Was I even shopping for a TV? Or was I just enticed by the possibility of getting over?" There's some part of our brain that treats bargain items, even bargain items we don't need, as an investment rather than an expense. Okay, you've spent $500, but you've got $1000 worth of television!
The problem with this is that utility is a relative, not an absolute. The market price is (sort of) an average of the item's utility, not a measure of its utility to you. For us, the utility of another flat screen television is almost certainly less than almost anything else we'd spend the $400 on. We didn't get the television. But I still feel kind of like I'm missing out.
But you can't base an economy on this feeling (though Lord knows, we've tried!) I'm sure all the bargains and loss leaders are generating some consumer spending. But I'm still willing to bet that most retailers will report horrific margins and a terrible year for profits.