The Great Recession has caused many changes to the cost of living in the United States. As the amount of money that consumers have to spend on discretionary spending drops, the demand for luxury goods and services has dropped sharply. As a result, the retailers of these goods have found themselves with an overwhelming amount of inventory that they must clear from store shelves.
The greatest drop-off in prices for these goods, ranging from high-end handbags and designer clothes to luxury cars, came at the beginning of 2009. Even though many stores offered the goods at 75% or more off, their leftover inventory was still high. This resulted in many luxury goods being dumped onto resale and outlet markets. By the end of 2009, many high-end retailers went out of business or drastically cut their numbers of store locations and staff. Retailers’ orders for these types of good fell of sharply, and have yet to see a significant increase.
For consumers, this means a significant number of high-end and luxury products are available for record low prices. Car makers such as Lexus are offering vehicles not only at low prices, but are also throwing in interest-free financing as well. Organic and gourmet food is being marked down by grocery stores desperate to sell their produce and other items before they expire.
Unfortunately for consumers, the recession has also had the effect of causing a rise in demand for essential and necessary goods. As jobs become more unstable and harder to find, many people in the United States have responded by stocking up on essential items and downgrading the types of brands they buy. Lower-end retailers, noticing this trend, have responded by increasing prices on basic staples.
Grocery stores, for example, have lowered prices on gourmet and organic foods in an effort to entice shoppers to continue buying these brands. To make up for their lost revenue on these products, however, many have increased the price on store-brand cereal and bread. As a result, buying the national brand can sometimes be cheaper for a consumer than purchasing the store brand.
Clothing shoppers have found that buying designer clothes from resale chains such as Marshalls or TJ Max can be less expensive than buying clothes from lower-end retailers such as Wal-Mart. Top-end designers have cut prices dramatically to get inventory out the door, while lower-end retailers have responded to increased foot traffic in their stores with higher prices.
Author Resource:
Joe Black is the author of this article on Cost Of Living USA .
Find more information about International Cost Of Living here.
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