By Mark Bennett
Without coffee, my brain is like an unplugged lava lamp.
Well-meaning thoughts languish like lifeless blobs, going nowhere.
But then, ahhhhh — a hot dose of caffeine cooks those unproductive idea blobs into smaller, more manageable blobs, capable of reasoning, rationality and occasionally even, yes, wisdom.
Clearly, coffee contributes to my world. Thus, when shopping for groceries, a bag of coffee is a serious purchase. Scoring some awesome java, at a bargain price, can be the highlight of a supermarket run. (I’m a simple guy.) I scan the shelves like a watchdog until I spot the one — toffee nut bold, $5.69. Touchdown.
That’s why one particular comment caught my attention at Tuesday morning’s Groundhog Day Economic Forecast program on the Indiana State University campus. It summed up post-recession survival in 2010.
“Deal-seeking will be stylish,” Bill Chew, a grocery industry executive, told the crowd of businesspeople wearing suits, dresses and somewhat-concerned facial expressions.
Specifically, Chew was referring to the behavior patterns of people shopping at grocery outlets. That’s because he serves as executive vice president of SuperValu’s Midwest/Southeast division. But that industry’s situation is a microcosm of the larger economy. The recession of 2007 to ’09 changed our culture. It’s not just hip to buy wisely. Except for those working in a few unaffected professions, deal-seeking is necessary.
Chew came armed with a gamut of industry statistics. Most illuminated a shell-shocked U.S. economy where consumers are spending less, even though prices of many goods have flat-lined. Nationwide, grocery prices increased just 0.5 percent last year — the industry’s lowest inflation since 1967. Yet “the sales per customer has decreased drastically,” Chew said.
When people do spend, they’re increasingly choosing less-expensive store-brand items, instead of pricier national brands. They’re picking lesser cuts of meat. They’re going to more than one store, in search of good buys. They’re using coupons again. (Coupon redemption jumped 26 percent last year.) They’re checking items off that shopping list, written on the back of the electricity bill envelope. (Last year, 28 percent of shoppers said they shopped with a list, according to Chew. That number was 17 percent in 2006, the year before the recession.)
The folks who still mindlessly grab a nearly $5 box of cereal have dwindled.
“We don’t believe that is going back to that level this year,” Chew said, “or maybe ever.”
But have Americans completely reformed? Even with 10 percent of the work force unemployed, even after 22 months of hearing the words “collapse” and “downsizing” every single day, even after nights spent sleeplessly counting medical bills and tuition fees, our collective urge to spend impulsively is not gone. Hours after Tuesday’s Groundhog Day event, the National Retail Federation reported that 15.5 percent of shoppers bought a new item, not on sale, in November. Just 4.8 percent of shoppers paid full price in November 2008.
Still, that same retail report emphasized that consumer spending — which makes up 70 percent of the U.S. economy — will lag behind overall economic growth in 2010. Retail sales will rise a modest 2.5 percent this year, the trade group predicted, offsetting a 2.5-percent drop in 2009. But shoppers will “continue to be frugal with their discretionary spending,” National Retail Federation chief economist Rosalind Wells told the Wall Street Journal.
Omens of another anxious year abound. As Groundhog Day forecaster and ISU economist Robert Guell said, the performance of the local economy in “2010 will be positive, but underwhelming.” That sobering outlook centers on last week’s federal government report that the American economy grew at an annual rate of 5.7 percent during the fourth quarter of 2009. That’s higher than the 4.6 percent widely predicted. But it’s also less robust than typical post-recession growth. The gross domestic product climbed by double-digits after the Great Depression, the post-World War II recession and the Reagan-era recession, Guell said.
“So 5.7 percent is not all it is cracked up to be,” Guell said.
The pullback is being felt even in fields once thought to be recession-proof. Education, which represents much of the local labor force, has been hit by consumers’ need to be deal-seekers. Indiana now funds its elementary, middle and high schools with an increase in the state sales tax, instead of through the former property tax system. Fewer sales mean less revenue for the state. As a result, school budgets are being cut. Teachers and staff may face layoffs, Guell said.
A glint of sunshine was seen beyond the Groundhog Day shadows, though. Indiana government tightened its belt long before other states now facing massive debts. “We are nowhere near the California [and] Illinois situation,” Guell said.
Ah, it’s stylish to be a Hoosier.
Now, where’s my coffee?
Mark Bennett can be reached at (812) 231-4377 or mark.bennett@tribstar.com.
