Comparing Apples to Oranges
Home & Textiles Today Staff -- Home Textiles Today, December 13, 2010
"I don't understand why 2007 is being used as a yardstick for ‘normal' when the events of 2008 (not to mention everything that followed) demonstrated it was anything but."
CAN WE STOP comparing everything to 2007? As I write this, some cable TV yammerer just remarked that retail sales are down - compared to 2007.
A quick reminder: 2007 was the year when the bubble economy in the form of an overheated housing market and insane levels of consumer debt was hitting peak. I don't understand why 2007 is being used as a yardstick for "normal" when the events of 2008 (not to mention everything that followed) demonstrated it was anything but.
It's not normal for middle-class people to buy and flip multiple houses simultaneously. It's not normal for mortgage companies to extend credit without inquiring about a loan-seeker's job status and annual income. Until the shenanigans that crashed the economy got going, it was not considered normal for reputable financial institutions to package up a bunch of amorphous crap and sell it to investors.
We might as well make comparisons to 1999 - another crest-of-the-bubble era when any mope with a couple of bucks to spare could fall out of bed and rack up big gains in the stock market.
I remember the (fairly young) head of an Internet startup describe in 2000 how the venture capital group that funded his outfit initially granted him $250,0000 - then came back and offered $1 million, then $3 million, then $6 million.
I think it was about a year later that the business collapsed - along with many other internet startups of the era. Of course, that recession was cakewalk compared to the latest one.
I don't want to get all "new normal" here. And while it's painful in the interim term to see consumers retreat to what used to be considered common sense behavior - keep your debt to a minimum, don't buy more house than you can afford, don't purchase more stuff than you really need - ultimately, it is to the good.
Now that retailers are starting to talk about expanding their store portfolios again, it's also good to see most of them doing so at a more measured pace than they did during the '90s and the aught years. With more sales continuing to shift to the Internet, perhaps that level of restraint will become permanent.
Jennifer Marks EDITOR-IN-CHIEF
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