Crystal Balls

I was enjoying a typical morning in south-west London today, sipping a cappuccino in Cafe Nero amid the mums with babies and ‘working from home’ laptop crowd.

With slowing growth and higher prices on the horizon, it doesn’t take a genius (or an economics teacher) to predict there are tough months (or years?) ahead. The data tells us that the ‘Big Three’ indicators of output, jobs and prices all have the potential to move in the wrong direction in the near future. Which made me think, what would a serious slowdown look like?

The ‘work from home’ crowd will probably choose to spend more time in the office. Presenteeism may rear its ugly head after years of the promise of wireless living. David Smith wrote a few years ago about real-life indicators of a boom, including the idea that female worker’s skirts become shorter when growth is strong (it’s not what you think!). The argument goes that when the opposite happens, and the economy is slowing, workers strive to appear more committed and thus wear more serious clothes in the office. So it’s good news for retailers of office wear and bad news for Starbucks.

What about mums on maternity leave? One might argue that with a tighter economy they may try to return to work earlier, or even have to if their partners are made redundant. But the opposite could happen, with mums taking voluntary redundancy and extending their leave for longer. It’s possible, however, that with lower spending in general there may be fewer opportunities for ‘mumtrepeneur’ businesses to be profitable. And the winners in this scenario? Starbucks and, maybe, Baby Gap (retail therapy in the face of adversary – and justified as it’s not spending on ourselves). The losers? Retailers of office wear, perhaps…

In general, suppliers of non-essential goods with high income elasticities of demand will fare the worst. So travel agents, sports car dealerships and up market restaurants beware. But beyond the obvious economic impacts, how else will our lives be changed?

Here are some predictions which, in time-honoured crystal ball fashion, will prove to be wrong:-

Frugalism. There are already movements in the UK (generally crossing over from the States) to reduce waste and live a simpler (and cheaper) life. So it’s three cheers for recycling, barter (what better mechanism than the internet to reduce the costs associated with finding a double coincidence of wants?) and living out the waste bins of your local Tesco and Pret-A-Manger.

Saturday night TV. I predict a smash hit show (probably on the mainstream channels or freeview) which brings everyone together at the water cooler at work – or in Starbucks – and it will have a large cast of likeable characters and a worthy tone (see Frugalism above). Or maybe it will provide more glitz and glamour to take our mind off things. Either way, staying in really will be the new going out – and maybe even ITV will enjoy a revival.

Borrowing not buying. For those of us addicted to books, maybe it will be time to visit the local library rather than Waterstone’s. The joy of free books, music and even film will make a comeback, I predict.

Even for those of us who are not directly affected, in the words of the mother in The Railway Children, perhaps ‘We have to play at being poor for a while.’