Monday, May 11, 2009

Economist's Notebook: Inferior Goods?

From the Portland Business Journal comes this little tidbit on seven industries that are thriving. What does well in an economic downturn? - inferior goods, things we consume more of as a proportion of our income as incomes decrease. Here is the list:

Vehicle maintenance. Auto-repair shops increased sales an average of 2.4 percent over the past 12 months. In contrast, car dealers saw their sales drop 9.7 percent in the same period.
Home remodeling. Sales rose 4.6 percent in the past year for contractors such as electricians, plumbers and heating specialists. On the flip side, home builders saw their sales fall at least 5 percent in the same period.
Food stores. Grocery stores’ average sales increased 6.7 percent in the past year, while sit-down restaurants saw sales fall 3.9 percent.
Specialty schools. In 24 months, technical and trade schools had top-line revenue growth of 7.8 percent, up from 5.9 percent in 2007.
Dentists. The average dentists’ office saw sales increase 7 percent in the past year, up from 5 percent in 2007.
Certified public accountants. The average revenue at accounting firms grew 10.2 percent in the past year, making the accounting industry among the top 20 sectors in the country by sales growth.
Personal-care services. Skin-care specialists, nail salons, barber shops and hair salons saw average sales grow 4.5 percent in the past year.

Now some of these make sense, you fix your car rather than replace it, ditto for your house (though the ability to extract equity has diminished), you eat out less, and buy more food in the store, and you look for new skills in a tight job market. But dentists? I guess CPAs are good at making sure you don't pay too much taxes but this is a little bit of a surprise to me. Finally, I was just discussing over the weekend with my neighbor whether to expect salons to be doing well - they are good substitutes for vacations and thus relatively small treats that we indulge in more in tight economic times (her conjecture), but they are also an expensive luxury items, I would have thought. I guess she was right. People like a little pampering in a stressed out world.

Anything surprise you? Can you explain the dentists?

UPDATE: A student in my class said that "This American Life" covered the dentist thing - apparently it has something to do with grinding teeth from stress. I guess I see the allure of a spa treatment.

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