ACCORDING TO MY WATCH, it's time for a recession in Ireland. The big hand is on 25,000 (the number of people who have emigrated from Ireland this year) and the little hand is on 8, the number of special offers that I've examined for deep discounts on things I could use during these tighter times. So in a fit of positive action, we pointed the Batmobile towards Limerick, the city my mother wants to revisit before she's boxed up. Mom remembers Limerick for the mighty Shannon, the Limerick City Gallery of Art, the big castle, the Milk Market and the Pound Shop. In fairness, mom remembers Limerick in the reverse order that I cited those landmarks. I'm working hard to scope out the perfect route for 80-something mom to walk in the city of Limerick and it means keeping her away from hoodies, a common urban species found in the town. Today, we marked another street as a no-go zone because of pack-running hoodies (two sets of young Gardas were always within 80m of the packs) and we also discovered a nest of shops and a well-regarded cafe we know mom will enjoy as she spends her American dollars in Limerick shops. We returned with recession-proof socks, encouraged by our success under the proud red flags of Munster.
Walking Limerick, Dublin, Cork or Clonmel is an exercise in recession education. According to mother-wear shop assistants, sales of maternity dresses are up, so to are till receipts in the Euro Shop (or Pound Shop to the well-initiated). Our friendly travel agent tells us that Ryanair will make a profit in 2009 because that airline knows how to pre-configure every click on the web for another service fee. Our favourite Limerick hotels (Absolute, Clarion, George) all offer ways to stay overnight for less than €50 if you choose your packages correctly. And in Extravision, DVD sales of Mamma Mia! are flying.
Henry in Cashel tells me that his competition will continue selling Fairtrade coffee at their current prices. With a nod and a wink, he takes a few euro off the kilo of Cofesa beans for me--fair trade for me.
According to Tim Harford, "consumers should cut back their spending if they believe that their earning power will fall for an extended period of time, but if they believe the hard times are temporary, they should 'smooth' by borrowing in hard times and paying back with things pick up." That's not going to work in Ireland because this 2008 recession happened on the heels of a banking crisis, meaning it won't be easy to borrow your way out of the tight times.
The Undercover Economist [1] points to data from the 1990s in the report "Shocks, Stocks and Socks." [2] These data document that when people are unemployed they save money in a logical way, by not buying small durables such as socks or clothing. In the short term, people get by and save about 15% of their household budget that way. When they find a new job, they replace the tired socks. Running opposite that flow, we returned with fresh socks for the winter, eager to test them at the Berlin Weihnachtsmarkt next week.
Tim Harford -- "What will we buy to help us through hard times?" in the FT Weekend, 29 November 2008.
Martin Browning and Thomas Crossley -- "Shocks, stocks and socks: consumption smoothing and the replacement of durables during an unemployment spell" [224 kb PDF]
Hat tip to Sean O'Grady, our virtual tour assistant.
