Recession Shopping: 10 Things to Buy ...
Recession Shopping: 10 Things to Buy Right Now
Introduction
Justin Sullivan / Getty
Cash is king during any recession for a lot of reasons; not least being
that it provides a welcome cushion for any temporary loss of income. If
you've lost your job, or might, this is no time to go on a shopping
spree. But if you feel secure at work and have a little spare cash, you
can indeed be treated like royalty in these difficult times. Spend
wisely now and you'll save a bundle over what things will cost once the
recession lifts — a day that, thankfully, may be approaching faster
than you think. Some bright spots have emerged recently in areas like
housing and consumer spending, hinting that the economy may be starting
to bottom out. For example, sales of existing homes jumped 5.1% and
factory orders rose 1.8% in February. We're not out of the woods by a
long shot. But if you have the urge to cut loose a bit, here are 10
things to buy now — before they get more expensive.
steals are in cashmere and formalwear, according to DailyCandy.com,
which tracks online pricing. Cashmere is considered a luxury staple,
meaning that it is expensive but purchased consistently by a small
group of relatively well-off consumers. That group got a lot smaller
when the recession hit in full force last fall. By then, though,
manufacturers and retailers had already committed to producing and
purchasing what proved to be wildly high levels of the material given
the eroding economy. Now there is a glut of stylish, high-quality
cashmere sweaters, scarves and blankets on store shelves, being offered
at historically low prices as retailers scramble to lighten their
inventory. These prices probably will not last through the end of the
year. As for formalwear, the economy sank so fast that designers were
not able to tone down their styles quick enough to keep pace with the
more somber mood of the country. The prices on dressy tuxedos and gowns
(which will come back into fashion with an economic recovery) have been
slashed about 75%.
and others on the market even before the recession hit. These are the
central components in memory devices that speed up your computer and
can be purchased at places like Staples and Best Buy or online. Now,
with demand plunging during the recession, memory prices have gone into
virtual freefall. "It's almost charity," says Lawrence O'Connor, CEO of
OtherWorldComputing.com, which sells computer components including
memory. "We're at lows we've never seen before." Standard PCs bought
more than 18 months ago typically came with less than a gigabyte of
RAM; they may be running painfully slow with today's more demanding
programs. Rather than buying a new computer, though, you can invest in
more memory to get similar results. To upgrade to two gigabytes may
cost as little as $30 — down from $100 two years ago — and could double
your computer's speed. Get up to four gigabytes for $50 — down from
$200 two years ago. O'Connor predicts these prices will double or even
triple in short order when the economy recovers.
Two years ago the economy was roaring and lobster was a popular
indulgence. Not anymore. Prices have dropped 30% to 50% since then as
the industry has been hit with a staggering one-two punch — a bumper
shellfish crop that filled fish sellers' tanks just as the economy lost
its way and left consumers feeling guilty or unable when it comes to
expensive meals. At Mt. Kisco Seafood in Mt. Kisco, N.Y., owner Joe
Dimauro says his premium hard-shell live lobsters now fetch $13.99 a
pound, down from nearly $20. "They just weren't moving," he says. "Even
the restaurants that buy from us were cutting back." Soft-shell
lobsters like those at Stew Leonard's and other large food retailers
fell to under $5 a pound from about $10 a pound. In recent weeks, the
price has been moving modestly higher — a trend that will surely gain
momentum if the lobster harvest returns to normal and as the economy
recovers.
There is almost never a better time to buy a new car than during a
recession, and this downturn appears to be minting once-in-a-lifetime
offers. "Over the next six to nine months deals will be made like never
before," says Scott Painter, CEO of TrueCar.com, which tracks vehicle
transaction prices. The global auto industry is on its back. It is on
pace to sell just 9 million vehicles this year, down from more than 15
million a few years ago.
economic squeeze has put a major crimp in flying, cruising and staying
at hotels. "But what's bad for the industry is good for consumers,"
says Genevieve Shaw Brown, senior editor at Travelocity. "There are
deals everywhere and on everything." American Airlines and AirTran, for
example, now have certain domestic round trip fares for less than $100.
The average domestic flight is 9% cheaper than last year; international
flights are down 6.5%. Aer Lingus was recently booking round trips from
New York to many parts of Europe for $506 for travel before June 15.
Such prices will not stick, Brown says, because United, American and
Delta are cutting routes next fall to get prices back up. Hotels rates
are down too, by at least 15% in places like Chicago, Las Vegas, New York and San Francisco. Many hotels and resorts are offering state rooms and spa credits or even an extra night at no extra charge. Meanwhile, the cruise industry
hasn't been in such discount mode for years and is now reducing
deposits, suspending fuel supplements, upgrading rooms for free,
offering spa and other on-board credits and letting kids travel for
free. Pricing is down about 20%. The deals are so attractive that,
Brown says, "it's a good time for people who have never cruised to give
it a try and see if they like it."
Cash is king during any recession for a lot of reasons; not least being
that it provides a welcome cushion for any temporary loss of income. If
you've lost your job, or might, this is no time to go on a shopping
spree. But if you feel secure at work and have a little spare cash, you
can indeed be treated like royalty in these difficult times. Spend
wisely now and you'll save a bundle over what things will cost once the
recession lifts — a day that, thankfully, may be approaching faster
than you think. Some bright spots have emerged recently in areas like
housing and consumer spending, hinting that the economy may be starting
to bottom out. For example, sales of existing homes jumped 5.1% and
factory orders rose 1.8% in February. We're not out of the woods by a
long shot. But if you have the urge to cut loose a bit, here are 10
things to buy now — before they get more expensive.
Fancy Threads
Just about everything you wear has been discounted. But the biggeststeals are in cashmere and formalwear, according to DailyCandy.com,
which tracks online pricing. Cashmere is considered a luxury staple,
meaning that it is expensive but purchased consistently by a small
group of relatively well-off consumers. That group got a lot smaller
when the recession hit in full force last fall. By then, though,
manufacturers and retailers had already committed to producing and
purchasing what proved to be wildly high levels of the material given
the eroding economy. Now there is a glut of stylish, high-quality
cashmere sweaters, scarves and blankets on store shelves, being offered
at historically low prices as retailers scramble to lighten their
inventory. These prices probably will not last through the end of the
year. As for formalwear, the economy sank so fast that designers were
not able to tone down their styles quick enough to keep pace with the
more somber mood of the country. The prices on dressy tuxedos and gowns
(which will come back into fashion with an economic recovery) have been
slashed about 75%.
Computer Memory
There was a massive oversupply of computer chips from Samsung, Micronand others on the market even before the recession hit. These are the
central components in memory devices that speed up your computer and
can be purchased at places like Staples and Best Buy or online. Now,
with demand plunging during the recession, memory prices have gone into
virtual freefall. "It's almost charity," says Lawrence O'Connor, CEO of
OtherWorldComputing.com, which sells computer components including
memory. "We're at lows we've never seen before." Standard PCs bought
more than 18 months ago typically came with less than a gigabyte of
RAM; they may be running painfully slow with today's more demanding
programs. Rather than buying a new computer, though, you can invest in
more memory to get similar results. To upgrade to two gigabytes may
cost as little as $30 — down from $100 two years ago — and could double
your computer's speed. Get up to four gigabytes for $50 — down from
$200 two years ago. O'Connor predicts these prices will double or even
triple in short order when the economy recovers.
Cameras
Justin Sullivan / Getty
Most people already have a digital camera — 77% of all households,
according to the Consumer Electronics Association — and since no one
really needs an upgrade, camera sales have gone south as times have
gotten tough. To whip up some action, manufacturers from Canon to Kodak
have been offering discounts on everything from modest point-and-shoot
models to high-end single-lens-reflex models (SLRs) and camcorders. At
many retailers, it's now possible to buy a point-and-shoot digital
camera for under $100. Amazon.com was recently selling a General
Electric 10-megapixel digital camera for $180, down 46% from its list
price. Pricegrabber.com was recently selling a Panasonic VDR-D50 DVD
Camcorder for $185, down 38% from its list price. Camera maker Pentax
recently dropped the price of its K20D digital SLR by $200. Such steep
discounts, especially on new technology, are rare and as the economy
recovers you can expect camera prices to float back toward the list
price.
at mom-and-pop furniture stores as well as at giant home furnishing
chains like Linens N' Things, which filed for Chapter 11 bankruptcy
protection last year. Inventory reduction sales on furniture and
decorative items typically lead to 50% to 70% savings and give you the
ability to buy at or below the wholesale price. You can also do well
with second-hand goods. "A quick scan of any community's Craigslist
unearths a seemingly endless supply of high-end used furniture," notes
Dannielle Kyrillos, editor-at-large at DailyCandy.com. Some of the best
deals, she says, are in high-end bedding and towels, which can be found
online at her site and others like Overstock.com and OneKingsLane.com.
Another broad bargain area is flat-screen TVs. A Sony 52-inch Bravia
HDTV was recently available on Nextag.com for $1,650 — less than half
of what a 42-inch version cost just a couple years ago.
Most people already have a digital camera — 77% of all households,
according to the Consumer Electronics Association — and since no one
really needs an upgrade, camera sales have gone south as times have
gotten tough. To whip up some action, manufacturers from Canon to Kodak
have been offering discounts on everything from modest point-and-shoot
models to high-end single-lens-reflex models (SLRs) and camcorders. At
many retailers, it's now possible to buy a point-and-shoot digital
camera for under $100. Amazon.com was recently selling a General
Electric 10-megapixel digital camera for $180, down 46% from its list
price. Pricegrabber.com was recently selling a Panasonic VDR-D50 DVD
Camcorder for $185, down 38% from its list price. Camera maker Pentax
recently dropped the price of its K20D digital SLR by $200. Such steep
discounts, especially on new technology, are rare and as the economy
recovers you can expect camera prices to float back toward the list
price.
Stuff for Your House
Going out of business signs have been popping up all over the countryat mom-and-pop furniture stores as well as at giant home furnishing
chains like Linens N' Things, which filed for Chapter 11 bankruptcy
protection last year. Inventory reduction sales on furniture and
decorative items typically lead to 50% to 70% savings and give you the
ability to buy at or below the wholesale price. You can also do well
with second-hand goods. "A quick scan of any community's Craigslist
unearths a seemingly endless supply of high-end used furniture," notes
Dannielle Kyrillos, editor-at-large at DailyCandy.com. Some of the best
deals, she says, are in high-end bedding and towels, which can be found
online at her site and others like Overstock.com and OneKingsLane.com.
Another broad bargain area is flat-screen TVs. A Sony 52-inch Bravia
HDTV was recently available on Nextag.com for $1,650 — less than half
of what a 42-inch version cost just a couple years ago.
Lobster
Owaki / Kulla / Corbis
indulgence. Not anymore. Prices have dropped 30% to 50% since then as
the industry has been hit with a staggering one-two punch — a bumper
shellfish crop that filled fish sellers' tanks just as the economy lost
its way and left consumers feeling guilty or unable when it comes to
expensive meals. At Mt. Kisco Seafood in Mt. Kisco, N.Y., owner Joe
Dimauro says his premium hard-shell live lobsters now fetch $13.99 a
pound, down from nearly $20. "They just weren't moving," he says. "Even
the restaurants that buy from us were cutting back." Soft-shell
lobsters like those at Stew Leonard's and other large food retailers
fell to under $5 a pound from about $10 a pound. In recent weeks, the
price has been moving modestly higher — a trend that will surely gain
momentum if the lobster harvest returns to normal and as the economy
recovers.
New Cars
Justin Sullivan / Getty
recession, and this downturn appears to be minting once-in-a-lifetime
offers. "Over the next six to nine months deals will be made like never
before," says Scott Painter, CEO of TrueCar.com, which tracks vehicle
transaction prices. The global auto industry is on its back. It is on
pace to sell just 9 million vehicles this year, down from more than 15
million a few years ago.
Manufacturers and dealers are
desperate to move their inventory. So incentives are flying.
Zero-percent financing is once again commonly available at GM, Ford,
Chrysler, Volkswagen, Toyota, Nissan and Mazda. Even BMW has an
attractive 0.9% rate on certain vehicles. On top of that, the
government has made sales and excise taxes on a new vehicle bought this
year tax deductible without itemizing. The government is also standing
behind warranties on GM and Chrysler vehicles, should those troubled
car companies be unable to live up to their promises. In addition, it
appears that a cash-for-clunkers program will be approved, giving
certain car buyers an above-market value for their trade in. Aside from
all of this, vehicle prices have been slashed to well below the
suggested retail price. Top deals now, according to TrueCar.com,
include the Mercury Mountaineer SUV at a discount of 19.3%; the Porche
911 (-10.6%) at the high end; Toyota's Camry Hybrid (-9.4%) and
Highlander Hybrid (-8.7%); and among compacts the Kia Optima (-30.8%)
and Ford Fusion (-23.5%). Prices could start to firm by the end of year
as weak dealers go out of business and carmakers cut back production,
constricting supply in the face of likely pent up consumer demand.
Travel
In some respects, this is post 9/11 redux for the travel industry. Theeconomic squeeze has put a major crimp in flying, cruising and staying
at hotels. "But what's bad for the industry is good for consumers,"
says Genevieve Shaw Brown, senior editor at Travelocity. "There are
deals everywhere and on everything." American Airlines and AirTran, for
example, now have certain domestic round trip fares for less than $100.
The average domestic flight is 9% cheaper than last year; international
flights are down 6.5%. Aer Lingus was recently booking round trips from
New York to many parts of Europe for $506 for travel before June 15.
Such prices will not stick, Brown says, because United, American and
Delta are cutting routes next fall to get prices back up. Hotels rates
are down too, by at least 15% in places like Chicago, Las Vegas, New York and San Francisco. Many hotels and resorts are offering state rooms and spa credits or even an extra night at no extra charge. Meanwhile, the cruise industry
hasn't been in such discount mode for years and is now reducing
deposits, suspending fuel supplements, upgrading rooms for free,
offering spa and other on-board credits and letting kids travel for
free. Pricing is down about 20%. The deals are so attractive that,
Brown says, "it's a good time for people who have never cruised to give
it a try and see if they like it."
Country Club Membership
Okay, this isn't for everyone, and the club you aspire to may still beplenty expensive. But deals are out there like never before. If you've
long wanted to belong to a private club but never joined because of the
stiff initiation fee — they can run to $50,000 or more — or didn't know
any members to sponsor you, now may be the time to strike. The private
Glenwood Country Club in Old Bridge, N.J., recently advertised on local
radio for new members to walk in and join without an initiation fee and
no monthly spending minimums. Hundreds of other clubs across the
country are offering similar inducements, delaying, discounting or
waiving fees to bring in new members to replace those leaving in droves
as their corporate memberships have been pulled or their own finances
took a severe hit. An estimated 15% of private clubs report serious
financial challenges and of those nine in 10 have tried luring members
with deep discounts, according to the National Golf Foundation. There's
no telling how long these bargains will last. When executives feel
secure again they'll head back to the country club — and many of them
have only suspended, not given up, their memberships.
Housing
Joe Raedle / Gettywhen the bubble burst it took down the whole economy. Well, as housing
recovers so too will everything else. Dire forecasts persist. Some
argue that home prices will not begin to recover before 2011. But this
is a long-term investment. What's a few years — especially if you can
drive a hard bargain now? Besides, there are modest signs that the turn
could come much sooner, and when it does the deals will go away. Prices
have fallen by 50% or more in parts of Florida, Nevada and Arizona.
That's a stunning discount which when coupled with low mortgage rates
makes housing today more affordable than it has been in many years. You
can now buy the median house with 37% less income than you needed two
years ago. Meanwhile, the government is offering up to $8,000 in tax
credits this year for first-time buyers — an amount that would cover
nearly half of a standard down payment on a typical home priced at
$165,600. You can get below-market financing on new homes from builders
like Toll Bros. (recently offering a 3.99% 30-year fixed rate mortgage)
and Lennar (3.625%), and you can find deep discounts in the foreclosure
market. Vacation properties have undergone an equally dramatic decline.
Beach houses that once cost $3 million are now available for $1.5
million, according to the National Association of Realtors. The typical
second home now runs $150,000, down from $204,100 at the peak, NAR
reports.
Stocks
No, it's not a dirty word, and yes, they are cheap. If you owned stocksthrough the downturn you understand just how cheap they have become —
falling, on average, more than 53% from peak to trough. That alone does
not make the market a bargain. More important is how far prices have
fallen relative to corporate profits. But there, too, we see the market
is offering a steep discount. If you have more than five years to hold,
now is a great time to dip back into stocks. Consider a broad index
fund like Fidelity's Spartan Total Market Index Fund or Vanguard's
Total Stock Market Index Fund. In both cases, the prices of these funds
relative to the earnings of the companies in the index have dropped
more than 40%. "The total market funds have a lot of appeal when just
about everything in the market is cheap, like now," says Russ Kinnel,
director of research at fund research firm Morningstar. You get great
diversification and the lowest investing fees anywhere. These funds
could get even cheaper. But they are a simple, smart way to get and
stay invested for the recovery.
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