More Positive Economic Signs: Full Flights & A Packed Mall

We took a long planned trip to Chicago for the weekend. Michigan Ave downtown and "the miracle mile" were packed with people, lots of them carrying bags of stuff from all the high-end retailers. The hotels and restaurants were all busy too. I kept thinking "what recession?".

South Florida mall parking lots and restaurants are full too. Traffic is heavy and homes which sat for months with the for sale signs in front are becoming harder to find, at least in my neighborhood.

Just to rain (pun intended, given your picture) on your parade. College apps tend to be up in recession/depression. It's a good way to avoid a depressed job market and obtain greater marketability for yourself for the future (hopefully recovered) job market. For retailers, sales up is a good thing, but how are profits doing? When a $1400 TV from a year ago is now $800, someone lost quite a bit of expected revenue from that sale. Given that this is a typical scenario for several categories of products, the increased sales only indicate greater revenue, not greater profit. (This does indicate a price point where people will buy, at least.) The profit situation depends on the distribution of "loss" that the retailer, the manufacturer or the supplier have taken on price reductions. The airlines are an industry that has already greatly reduced its capacity. The recent recession will likely hit hardest on business travel, the profit center of air travel. The full flights on a holiday weekend do not indicate the level of business travel. I think the economy has at least approached bottom if not reached it, but I don't feel one holiday weekend is a strong indicator of recovery.

I have seen the same thing in regards to the malls. Granted I am not a big time shopper but the few times I have visited the malls in Atlanta they have been very full. For an economy close to a depression it sure does not "look" that way when you see the economic activity with your eyes.

I took my daughters shopping last weekend as well and noticed that the mall was packed. However, I also noticed that EVERYTHING was on sale...40%-70% off. Shoppers were combing sale racks. I have also noticed that airfare is very low. It is my hypothesis that the lowered prices are responsible for the activity, and this will not necessarily lead to an increase in profit since the retailer/airline must sell 2-3 times as much product at the discounted prices. So far as academia is concerned--I have two college-age daughters and both have reported the same finding. Several friends who had hoped to go to out-of-state or more prestigious colleges are now applying to in-state colleges, since their parents have had to scale back aspirations for financial reasons. Also, many college seniors have decided not to bother with this year's dismal job market, but instead have opted to continue in school another year or to go straight on to graduate work.