Intersecting Minds: Education, Business and Technology at the North Carolina State Jenkins Graduate School of Management

Monday Quick Hits | March 23, 2009

… And I’m back from an extended break. Last week we went through a barrage of midterms, quizzes and presentations, and following that lovely stretch, I took an extended vacation down to the beach this past weekend. But I’m back now, on track, and will be resuming a normal blogging schedule. So onto the quick hits:

The big news this morning in business/economics is the unveiling of Timothy Geithner’s “bad asset” plan to help repair the financial system. While the plan is complex, it’s received mixed reviews. Economist Brad DeLong has a glass half-full take, while Paul Krugman has a considerably more negative opinion.

The stock market has taken to the plan and is poised to build on the gains from the last two weeks this morning. Futures currently has the Dow opening about 140 points higher. At least one high-profile analyst thinks the bull market is here to stay.

Pockets of the economy continue to struggle. High-end jeweler Tiffany’s announced a 76% drop in fourth quarter net income this morning. Luxury goods probably will be among the last consumer items to rebound from the recession as the United States undergoes a fundamental shift in consumption habits.

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2 Comments »

  1. Luxury goods are certainly down and out for the near future. And there’s no doubt American patterns of consumption have changed considerably as the flow of money has dwindled, but do you think this is a fundamental and lasting change or rather a temporary reaction to a lack of cashflow? And if this change is fundamental, how?

    Comment by Lisa — March 23, 2009 @ 8:09 pm

  2. Lisa,

    I do think there will be a fundamental change in consumption habits, and I think that for a few reasons.

    First, the economic drivers pushing excessive consumption are gone. American consumers thrived off easy credit and taking equity out of their homes. Now they’re cut off from those sources of funds.

    Second, there’s a psychological component. People are really hurting. 10% unemployment in places and skyrocketing budget deficits at the federal and state level aren’t pretty. And almost everyone knows someone who has been affected. That’s going to stick around awhile, much the same way the Great Depression generation turned into penny pinchers.

    I’m sure there are other reasons, too, but those above came to mind immediately. I believe these new habits could be in place for 10-20 years.

    Comment by Ryan — March 23, 2009 @ 10:20 pm


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