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Party like it’s 2009

By Steven Bowman
Created 05/05/2009 - 23:56

Party like it’s 2009
by Steven Bowman

To the recently unemployed, the current economic crisis may seem like a flashback to the soup lines of The Great Depression. However, to many still working in high-paying sectors such as finance, law and technology, the credit crunch is merely a recurring news headline that could lower the cost of their next holiday. I believe that the media has it wrong. Not everyone is cutting back. In fact, some people are spending more than ever – and God bless them for it, because this is what will reinvigorate the economy, not populist subsidy politics.

Adam West is a 25 year-old investment banker in the Sydney CBD who typifies the spending trend. “Due to where the Aussie dollar trades relative to the US dollar, I have increased my discretionary spending,” he said. “No reason to lose 30% switching the currencies when I can spend it here on nice dinners.” Lucas Steel, a 28 year-old banker says that his “eating-out and nightlife expenditures seem as buoyant as ever.” Jacob Smith, 32, works in recruitment. He also just spent $450 AUD per night for a room at the Netanya Resort in Noosa, Queensland, during a recent holiday. However, due to the economic downturn, he received a discount such that his last two nights were free, reducing his actual cost to around $270 AUD per night.

Even most our friends across the Tasman Sea are spending freely. A survey by UMR Research in late January found that 60% of New Zealanders, both professionals and non-professionals, do not plan to cut back their spending at all [1]. In fact, several key business leaders from around the globe are arriving at the same conclusion. For instance, Ericsson chairman Michael Treschow [2] was recently quoted as saying "at the moment, even if the world is in this financial crisis, we see no tendencies that our customers are holding back".

I believe that the road to economic recovery is paved with spending by professionals. Governments around the world are continuing to pass economic stimulus packages in an attempt to get consumers to spend money. Here in Australia, the Rudd Administration passed a $41.5 billion AUD fiscal stimulus package that included $12 billion AUD of cash bonuses for low-to-middle income earners [3]. Another way to achieve the same result is for consumers to just spend without the government telling them to do so – and that is exactly what professionals like Adam, Lucas and Jacob are doing.

It may not be a universal trend, but it is also not an isolated one: professionals are spending irrespective of the global economic crisis. Furthermore, they should be encouraged to keep doing this. Only by stimulating the economy through discretionary purchases will Australia – and the rest of the world – emerge from this financial crisis. Rather than vilifying those that still dine at Tetsuya, holiday in Bora Bora or buy an Aston Martin, we should all applaud their consumerism. The gainful employment of your neighbor – or even yourself – may depend on it.

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