What the Financial Crisis Means for Spam, Psychics, Hosiery & More
By Diana Wolf
It's hard to find something not impacted by our current financial crisis. Here are 12 examples of what the recession means for specific things, from Spam to sex addiction.
It looks like meat, it tastes like meat, but it's a far cheaper substitute for meat. It's Spam! And it's booming. Though Hormel's share price has fallen with the overall market, Spam sales are soaring as the economic crisis leaves consumers strapped for cash. Interestingly enough, Spam, the "crazy tasty" mix of ham, pork, sugar, salt, potato starch and a sodium nitrite, was invented during the Great Depression and became a staple for Allied troops overseas in the 1940s.
2. Marriage and Divorce
Breaking up is hard to do, especially in this economy. While it may be too early to know the impact of the crisis on divorce rates, it appears divorces may have slowed down since the financial crisis began. That's because despite most arguments being over financial issues, it may just be too expensive to pay the legal fees of a divorce and support two households. In fact, during the Great Depression, divorce rates dropped sharply, though they picked back up immediately thereafter.
The plunge in commodity prices has taken a toll on recyclers. In fact, the whole movement may come to a halt as oil and metal prices fall. Used newspaper, used cardboard, and scrap metal prices have also seen a drop, partially due to dwindling home construction and slower automobile production. Some recyclers are closing their doors, and in the UK entire city councils are abandoning their recycling efforts, as they are no longer economically feasible.
"There is no rhyme or reason to the way the market is trading," says a personal trader. "When conditions are this volatile, consulting a psychic can be as good a strategy as any other." Psychics, astrologers, palm readers and "professional advice-givers" say business is booming as clients come to them seeking financial guidance. Clients will typically pay $75 to $1000 for an hour's worth of insight!
5. Holiday Parties
Just as you suspected, companies are cutting back on their holiday galas. ABC News announced the cancellation of its annual celebration. American Express did the same and then some "“ announcing the cancellation of 2009's celebration as well.
But what about the caterers? 56% of party planners say that their corporate holiday party numbers will be off more than 10% this year compared to last. They're scrambling to come up with innovative, more somber types of gatherings like luncheons, pot-lucks, and receptions rather than galas, caviar, and glam.
6. Used Car Sales
The used car business is flourishing! Specifically, used car companies that offer buy-here/pay-here financing for lower credit individuals who have been locked out of traditional lending.
But if used isn't your thing, it may still be a decent time to buy new. That's because even steady growth car makers like Honda and Toyota have seen 24% and 32% declines, respectively. Car dealers are desperate to get rid of inventory and are offering invoice and below invoice prices. Look for dealers that have a lot of inventory, because they'll likely offer the best deals.
7. Iceland Tourism
Looking for a good holiday or spring trip? Look to Iceland!
Once an economic success story, this small country is now, well, bankrupt. If you were attune to Fannie and Freddie and the big Wall Street break-up, you may have missed Iceland's fall. Its three largest banks were oversized and highly leveraged, and seemed ready for collapse in early October. Iceland's currency, the krona, is essentially valueless, and foreign trade has come to a halt. Luckily, the IMF and its Nordic neighbors have stepped in, lending $2.1 billion and $2.5 billion respectively to help the country recover.
But tourism appears to be on the rise. Airfare search engines report a 400% increase in Iceland flight searches. A recent search of round-trip flights from New York found tickets at a record low of $471.
8. College Endowments
Ivy League schools aren't immune to the financial crisis. Since many college endowments are invested in alternative asset classes, which have lost value, they're seeing unprecedented losses. Many college and university endowments are projected to have decreased by 30% this fiscal year. For Harvard, that may mean an $11 billion drop.
That may mean a decrease in financial aid "“ especially because lenders can no longer sell their securitized loans in the secondary market to get new money to offer new student loans. Despite Congress' Ensuring Continued Access to Student Loans Act of 2008, which authorizes the Education Department to buy federal student loans from education lenders for the 2008-09 and 2009-10 school years, there's a chance financial aid may fall short.
9. Lipstick & Hosiery Sales
The Lipstick Indicator is an economic theory proposed by Leonard Lauder, the chairman of EstÃ©e Lauder Companies. The theory states that a direct relation exists between rising sales in tubes of lipstick and a falling financial market "“ the worse the economy, the more women indulge in small purchases, like $10 tubes of lipstick. There are conflicting reports as to whether Lauder's theory is holding up this downturn. Perhaps hosiery sales will supplant lipstick as the indicator of choice. Overall hosiery sales rose 2.3% this year, with Spanx seeing a 77% increase in sales compared to last year.
Very few sports have been hit harder by the economic crisis than NASCAR. From ticket sales to souvenir sales to team sponsorship from large companies, racing is reeling. That's because an average NASCAR team relies on corporate sponsors for 80% of its budget. That's four times the percentage of an NFL franchise's budget. And many of those corporate sponsors, including the Big Three "“ GM spent $578M in sports advertising in 2007, including NASCAR "“ are facing high-profile hard times of their own. As a result, some NASCAR teams, including Chip Ganassi Racing and Dale Earnhardt Inc., have merged in an attempt to attract corporate sponsors.
11. Personal Maintenance
According to the International Health, Racquet and Sportsclub Association, gym memberships have been on the decline since 2007. There's no sign that these former gymrats are instead opting for cosmetic surgery "“ 53% of plastic surgeons of the American Society for Aesthetic Plastic Surgery say business has slowed.
12. Sex & Sex Addiction
Will the financial crisis spark a baby boom? It just might. According to the Telegraph, sales of sex toys, pregnancy tests, maternity clothes, and baby equipment are soaring. But that's not the only place sex may have increased. Jonathan Alpert, a Manhattan psychotherapist, has seen a big jump in the number of Wall Street workers who seek help for the sex addictions. Apparently, the economic crisis has sparked "maladaptive coping mechanisms" among bankers, according to Jodi Conway, a sex addiction therapist in New Jersey.
Read more of what Diana learned today here.