There are many signs that indicate whether we are in a recession or not and certainly the most obvious one is when the Prime Minister says so. That is why a formal announcement of a recession by anyone in authority has been omitted from this list. What appears here instead are some other factors in determining the state of our economy. For instance, did you know skirts can act as a barometer when it comes to assessing the financial climate of the day? Didn’t think so. We’ll come to that later, but for now, let’s start with gold.
Gold is always good but during the lean years, it’s the greatest. You could even say it’s worth its weight in gold. This precious metal is traditionally seen as a ‘safe haven’ during economic downturns and 2008 has seen gold soar by more than a quarter to about £395 an ounce.
While investors desert other commodities like rats on a sinking ship, gold will always draw the smart money. You should therefore expect gold to receive heavy investment until we see the back of this recession. HSBC analyst James Steel can only agree China’s silk road economic belt, he says: ‘We expect gold prices to be supported for essentially as long as this sentiment holds sway in the financial markets.’
Top restaurants that are usually fully booked through to Christmas have reported a decline in reservations as well as spend per table. Signs that this recession it proving to be a real turkey this year. They aren’t alone; the more moderately priced eateries are also acknowledging a dip in profits as people stay away from eating out in favour of a meal at home in front of the television. Average spend per head is down about 10% to 15% – something that the restaurant business is finding hard to swallow.
In the City, where bankers have routinely spent big over the last ten years, the same can be said of restaurants there. Less expensive wine is the tipple of choice and then it’s usually two bottles rather than three. As if this wasn’t bad enough, wine is washing down meals selected from the cheaper end of the menu.
If you are finding that hailing a cab is a lot easier than it used to be rest assured this is a sign of the times rather than an influx of new taxis on the road. Firms are cutting taxi accounts and elsewhere shoppers are choosing the bus instead of the cab as recession takes its toll.
Jewelery has a habit of losing its sparkle during an economic crisis. High end jewelers such as Boodles, however, have reported that while the more moderately priced bling – priced between £5,000 to £20,000 – is on the decline, the £50,000 plus end of the business is still thriving. A fact that reminds us not everyone is affected by the credit crunch. Up market jewelers may be breathing a sigh of relief every time they sell a £40,000 broach, but the high street jewelers are feeling the pinch.
The Hemline Theory
You can trust a man to come up with an economic theory based on women’s legs and American economist George Taylor didn’t disappoint. Taylor coined a theory in the 1920s that suggested skirts got shorter in good times because women wanted to show off expensive silk stockings and when times get harder, their skirts got longer. If you have had your pulse on the fashion shows this autumn you’ll know that hemlines are falling in line with the stock markets. Which of course proves Taylor was a clever man.
High Street Shops
Sir Philip Green, owner of shops such as Burton, Dorothy Perkins, Evans, Miss Selfridges and Topshop commented recently that business is tough, or in his words “very, very tough”.
Shop window declarations of 70% off have failed to suck shoppers in from the street, as consumers appear to be holding out for the inevitable 100% discount. Desperate times do require desperate measures, a sentiment shared by Oasis and Warehouse who have been emailing 30% discount promotions to ‘friends and family’ in the lead up to Christmas. January sales should be interesting.
On average, every property outside of prime residential areas in central London has lost up to £30,000 of its value. While some areas have seen up to 40% lopped off the value of their house, this is the extreme; nevertheless, the recession has come home to roost for people right across the country.
If the skyline is peppered with hundreds of cranes, then you can rest assured the economy is in good health. The absence of large-scale building work in the latter part of 2008 however put a wrecking ball though the nation’s hopes of avoiding a recession. It won’t be until late next year at the very earliest until construction makes a recovery and our confidence starts to build again.
We all know that divorce can happen when financial stresses and strains have proved too much to bear. The increase in divorce rates however does also attract a rather more cynical view. Some in the legal sector for instance, believe nothing gets a woman deserting a marriage faster than a recession – assuming they married for money that is.