Sit back, let the lights dim and forget the recession. Feel the soundtrack
bathe away your sub-prime worries, fuel fears and negative equity
nightmares. Escape instead to the poptastic tune of: I have a dream, a song
to sing, To help me cope with anything.
Yep, the super-troupers of Abba are once again riding to our rescue in times
of trouble. People are flocking to see the film Mamma Mia!, based on the
band’s music. Among those seeking the feelgood factor at the Vue cinema in
Finchley, north London, last week were Richard and Maria Collins.
“We hardly ever go to the cinema,” said Richard. “But when you are feeling the
pinch, it’s an uplifting thing to do, and it’s an enjoyable film. Compared
to going on holiday, it’s good value for money.” Maddy Cullen, a shop
worker, felt the same way. “We’re suffering the effects of the credit crunch
at work . . . I’ll be going to the cinema lots this summer, it’s fun and
cheap.”
The Abba Economic Index, a little-known financial measure with an uncanny
correlation to tough times, is on the up again. It first entered a bull
phase in the mid1970s, when the band rocketed to stardom amid the three-day
week and raging inflation. Britain was an economic basketcase, yet we
couldn’t get enough of Waterloo, Fernando and Dancing Queen.
When recession struck in the early 1990s, where did we seek solace? In Abba
Gold: Greatest Hits, which was released in 1992. It topped the UK charts.
Now Mamma Mia, here we go again. While banks are disappearing up their own
collatoralised debt obligations, the latest Abba-fest will help Hollywood
defy the recessionary gloom. The film factory’s box office take for June was
up 17.3% over the same month last year.
“The cinema business tends to do very well during challenging economic times,”
said John Fithian of the National Association of Theatre Owners. “We always
need good movies to do well. But history shows that the industry is
recession-resistant.”
In most recent downturns, Hollywood revenues and cinema attendances have
risen. Reinforcing the point, Mamma Mia! The Movie Soundtrack was last week
ranked second in Amazon’s top 10 albums and Abba Gold was number eight.
Other sectors such as camping, home cooking and affordable luxuries such as
cosmetics are also faring well as boom turns to bust. Inside every downturn,
it seems, is an upside waiting to get out.
Nobody denies that falling employment and house prices hit hard, nor that the
turmoil in the financial system could get a lot worse. However, contrary to
many headlines, there are slivers of light amid the gloom. Economists, a
gloomy breed at the moment, admit that a downturn can have benefits, at
least for some people. “It’s certainly not the case that every company in
the whole economy is going to do badly,” said Paul Dales of Capital
Economics, the consultancy firm. “We have seen anecdotal evidence that
supermarkets such as Asda, Aldi and Lidl are doing well.
“I was in Pizza Express recently and it was jam-packed: if people start
feeling the pinch, they don’t stop going out entirely, they go to what might
be deemed more reasonable areas.
“There are other good things. The fall in house prices is generally seen as a
bad thing – but it’s only bad for people who own a home.” In many ways, it’s
only bad for those who want to sell a home. “It’s certainly not bad for
those who want to buy.”
Tough times in the property market can also open up unexpected opportunities,
as the late 1980s demonstrated. It was in empty office space in the East End
of London that young artists held the Freeze exhibition that set Damien
Hirst with his pickled animals on the road to stardom.
Indeed, recessions often bring a flowering of the arts. Jazz prospered in
America in the Great Depression of the 1930s as people stayed in and
listened to their radios. That period also saw the rise of the movie
musical. The chorus girls may have sung “We’re in the money” in Gold Diggers
of 1933, but they certainly weren’t.
Our health and that of the environment can also benefit from the squeeze.
According to recent studies by Lightspeed Research, 6% of people are driving
less because of higher fuel prices and 14% are flying less. As well as being
good for the environment, less traffic on the roads means quicker commutes.
We are also cycling more and holidaying closer to home, thus keeping our
spending in Britain. Among people who have changed their holiday plans this
year, 20% have cancelled altogether, 34% have switched to a cheaper option
and 34% are staying in the UK, according to Lightspeed.
Riding the Hawaiian waves may be out this summer, but we are rediscovering the
simpler pleasures of camping. Last week Blacks Leisure revealed a slide in
sales of surfing and snowboarding gear, but healthy sales of camping
equipment.
“Camping is really strong at the moment because of the economic slowdown,”
said Neil Gillis, the chief executive. “A lot of people are switching from
Europe to the UK for their holidays.” Bookings at UK campsites are up about
10%.
Matthew Harris, a 34-year-old anaesthetist from Birmingham, is among the happy
campers. “Rather than the usual European getaway, we all went on a camping
trip with the family and some friends in the British Isles instead. It was
only a couple of pounds per night per person and it’s a great family
activity. The kids love the outdoors.”
Harris has adopted a similar attitude at home. “I do a lot more home cooking
from scratch rather than cooking from packs or getting takeaways, which are
probably more expensive than they should be. It is a good way to spend an
evening, is relaxing and you can make it into a social activity.”
The flipside of cutting back on nights out and creating one’s own
entertainment at home is a return to a healthier family life and more
engagement with your children. And, as some US bloggers have pointed out,
for couples looking for free entertainment there’s always sex. Watch out for
signs of a baby boom in the next nine months.
While we may give up big ticket extravagances, we often compensate with
smaller luxuries. The “lipstick test” is one reflection of hard times: if
sales of lipstick and similar items go up, say some financial experts, it’s
an indicator of recession. Sure enough, sales at the cosmetic firm L’Oréal
were £3.4 billion in the first quarter of 2008, well ahead of the same
period last year.
Another area where simple pleasures are being revived is children’s toys.
Hamleys reported yesterday that its sales of wooden toys, teddy bears and
spinning tops are up. “With all kinds of negative news, people are moving
towards buying things that last longer,” said Keane Herman, operations Ties
are also in demand, apparently because executives are smartening up in the
hope of hanging on to their jobs. At the same time they are rediscovering
frugality in their expense accounts. Despite the downturn, low-cost
operators such as Travelodge and Premier Inn are adding thousands of rooms.
In business, other winners include insolvency experts, vulture funds gobbling
up assets on the cheap and “short sellers” betting on share prices going
down. Divorce lawyers may also do well.
In the US the credit crunch is being blamed for a rising number of trophy
wives dumping husbands whose wealth is plummeting. Raoul Felder, a top
divorce lawyer, has seen his firm’s business jump by 20%.
As one leading UK lawyer put it: “The trophy wives who married for money are
starting to cash in their chips. When money looks like flying out the
window, love walks out the door.” And for the divorce lawyers, the fees walk
in. TO SOME observers the biggest potential upside of the downturn is
cultural. After years of cheap credit, we know the price of everything and
the value of nothing – and a correction would be no bad thing.
“People have been spending what they don’t have,” said Dr Joan Harvey, a
psychologist with an interest in economic behaviour. “They’ve lost sight of
the longer term.” We are not born with a natural grasp of the idea
that it can often be better to save first and get rewards later. Harvey
cites research that shows if you offer a child one sweet now or three later,
they will tend to take the first option.
Rethinking the instant gratification of the boom years is wise, she says.
“People of my age were brought up with the idea that you don’t spend what
you don’t have,” she said. “But the idea that you save up for something has
gone. It might be a good thing if a recession brings it back.”
In the US one unexpected upside of the downturn has been a sharp reduction in
junk mail, especially from credit card companies. In Britain there’s not
much sign of delayed gratification yet, judging by recent figures for
high-street sales that were surprisingly buoyant. We are being much more
discriminating about what we buy, however, forcing retailers to cut prices
and increase special offers. Last week Marks & Spencer was offering a
man’s suit for £24.
Ultimately such retrenchment in the economy will add to the existing woes of
City bankers and financiers. In its own way that may deliver – in many
consumers’ eyes – another upside of the downturn.
As one victim of the credit crunch said: “Look on the bright side. This year
the bonuses of City bankers are going to be a lot lower. Which is no bad
thing, since they’re the ones who got us into this mess in the first place.”
