The New York Times Validates The Doom Economy
No matter how you spin it, people are out of f***s and the response may be ugly.
Recently, I posted about my Doom Economy Hypothesis, and just days later the New York Times posted… nearly the same concept, just with a different spin.
First, let’s revisit the Doom Economy Hypothesis. Basically, it states that consumers just don’t care anymore and they’re living for today. They’re spending regardless of inflation—because YOLO—and prices keep rising because they’re no longer price sensitive.
Now let’s see what the New York Times had to say in “Economists Warn a ‘Summer of Fun’ Could Lead to Autumn Pain”:
But economists have spotted an unusual trend heading into the summer: Consumers are still splashing out on expensive but fun experiences, from nights out to concerts, despite surging prices.
Economists are seeing something weird in the inflation data. Consumers are splurging on pricey meals, through-the-roof airfare and expensive concert tickets. Some economists in Sweden even blamed Beyoncé fans for driving up prices of hotels and restaurants when they converged on the country last month to see the star kick off her world tour. In the U.S., others have seen a similar effect with hotel prices soaring in cities where Taylor Swift performs.
“It’s fun-flation, if you’re looking for a word,” Holger Schmieding, chief economist at Berenberg, told DealBook. And the data suggests this brand of inflation isn’t receding. “We’re looking at the summer of fun,” he said.
Some call the phenomenon “revenge spending,” the zeal to indulge in experiences now that Covid lockdowns are far in the past. (It helps that many still have pandemic savings to draw on, or have seen their wages surge in the past year.) Grant Fitzner, the chief economist of Britain’s Office for National Statistics, has singled out airfare, concert tickets and computer games as big drivers behind the country’s stubbornly high inflation.
And the only solution is to get the peons to stop having a good time:
A summer of fun could invite a tougher policy response this autumn. “The only way to get inflation down to 2 percent is to crush demand and slow down the economy in a more substantial way,” Torsten Slok, chief economist at Apollo Global Management, told The Financial Times.
The good news, at least for me, is that the Doom Economy Hypothesis appears to be correct. The bad news is that influential economists are now fully aware of what’s happening, and the agreed-upon response is to crash the economy.
Enjoy the ride while it lasts.