Cheapskates, Pessimists, & Food Trucks
The unexpected beneficiaries of the bust.
In a recession, most economic sectors face hard times. Economists call this phenomenon "comovement," and it is considered one of the most fundamental features of business cycles. Nonetheless, there are exceptions to most general principles, including this one. There are, in fact, many winners — not one — from the great crash of 2008, sectors that have shown signs of prospering in tough economic times and, more importantly, have shown signs of prospering because we have been in some tough times. If there is one strand that holds these disparate entities together, it is that all understood the zeitgeist of the downturn and knew how to profit from it. Consider the following:
—L’Oréal, one of the world’s major cosmetic manufacturers, enjoyed robust sales even in 2008. A study recently published in the Journal of Personality and Social Psychology suggests that women buy more lipstick in tough economic times to make themselves more attractive to men.
—In Greece, as the eurocrisis has progressed, booksellers report robust demand for downers, according to the New York Times — particularly the works of German philosopher Arthur Schopenhauer, a thinker renowned for his pessimistic attitude toward life.
—According to consumer research groups, diaper sales slow in difficult times, but it seems demand for diaper rash ointment goes up. The reason? Families are either changing diapers less frequently or using lower-quality diapers, thus necessitating the ointment.
—Had a Korean taco lately? If food carts are increasingly your workday lunch destination, you’re not alone. This $1 billion industry has grown 8.4 percent annually in the United States since the recession, according to market researcher IbisWorld — if only because they are cheaper than typical restaurant meals.
—In 2009, stores selling religious goods did a brisk business in St. Joseph statues, according to the New York Times. It is reputed that burying such a statue on your property helps you sell your home.
It’s often suggested that, in the long run, the American economy will slow down as the U.S. population ages. But this won’t be bad for all businesses. Funeral homes, anyone?
Tyler Cowen is the Holbert L. Harris Chair of Economics at George Mason University and serves as chairman and faculty director of the Mercatus Center at George Mason University. He is author, most recently, of Big Business.