Spend It While You Got It!

You youngsters get all the luck! From the San Francisco Chronicle:

Recession offers bargains for young, employed
Reyhan Harmanci, Chronicle Staff Writer
Tuesday, December 23, 2008
(12-22) 19:21 PST -- Sarah Krasley, 29, a business management student at the University of San Francisco, is buying small amounts of low-priced stock these days - and advising friends to follow her example.

Planet Out writer Josh Rotter, 30, isn't rich by any means, but this November, he decided to splurge, purchasing heavily discounted tickets to travel around the East Coast during Christmas.
San Francisco couple Maria McKee, 29, and Stephan Tsochandaris, 31, took an even bigger plunge: The duo bought an Oakland condo early this month.

"We didn't really start looking until late September, early October," said McKee, who works as a program analyst for the San Francisco Superior Court's Office of Collaborative Justice Programs. Until housing prices tumbled this fall, McKee said, buying property in the Bay Area seemed impossible.

For the younger employed set who lack crushing debt, mortgages or families to support, the recession has a silver lining: Previously out-of-reach items are suddenly affordable. As consumer prices fell 1.7 percent in November, the biggest monthly drop on record, some have decided to take advantage of the deals - though not without caution.

"In a year where we would have expected the consumer to say 'no' to spending, this younger generation - the young adults who have not had to divert all of their discretionary spending to other family members - continues to self-indulge," said NPD Market Research Chief Analyst Marshal Cohen.

"It's not a new concept," Cohen added, noting that "mobile young adult consumers" have always wielded buying power. "It's just a surprise that people are doing it when they are told not to."
Assessing the effects of the current recession on the Bay Area's younger set is difficult, as the credit crunch extends into many facets of life, and the region's demographics vary widely.
But if any place has plenty of young people with discretionary income to spend, it's San Francisco. With a high percentage of adults between 20 and 40 (34.9 percent versus 27.5 percent nationally, according to a 2004 American Community Survey estimate) and 61.6 percent of the city' residents renting their homes, San Francisco ranks high in "creative capital," according to Richard Florida, author of "Who's Your City" and director of the Martin Prosperity Institute at the University of Toronto.

"Young people will be hit far less hard than other people, and San Francisco in particular will do OK - the population is highly educated and diverse," said Florida. "They're not older people on a fixed income. They still have time to make up ground."

Cynthia Jaspar, a consumer spending expert at the University of Wisconsin-Madison, said that although young people are vulnerable to job loss in a recession, they will continue to be an important retail sector. Indeed, both the Wall Street Journal and Forbes magazine have reported on the youth-driven bright spots in retail: American Apparel, Urban Outfitters and Buckle stores are some of the only clothing companies to see sales rise in November. Analyst Cohen points to the video game industry as a sign that young adult buying power remains strong.

"The fastest-growing market for video games is the adult man, 18 to 35 ... not teens or preteens. Even if they are living at home, they are the least likely to cut back on consumption," he said. "Whoever figured that was going to happen."

But just because young consumers may be able to afford holiday sales doesn't mean they are spending with abandon.

"It's all about cutting corners," said Rotter, who is using coupons for the first time in his life. Many are using the Internet to compare prices, and others, like San Francisco resident Michelle Quint, 24, want to simply focus on saving: Quint plans on making most of her holiday presents to her friends, even as she considers adding discounted stocks to her portfolio.

Keeping tabs on debt is a big concern. Web designer Omar Lee, 36, who bought a flat screen and Apple TV in quick succession this fall, made both of his purchases with an ATM, not credit, card. "I definitely felt the opportunistic window. Stuff is cheap. But after (the TV purchases), I felt a quick sobering," Lee said. His next concern was making sure he had a "cash cushion" going into 2009.

Certainly, the culture of excessive spending itself has been called into question by the current recession. Many report a newfound sense of guilt or unease about buying things.
"I feel like there is a model for how you're supposed to act in a 'recession' and that is, tighten your belt," said Quint. "But logically, that doesn't make much sense when you're not personally losing any money."

It may be gauche to admit, but the lack of hefty obligations, financial or otherwise, remains a perk of youth. "If I had kids right now, I wouldn't be thinking of shopping at all. I wouldn't be thinking about $500 shoes," Rotter said.

"But I'm young, single and don't have the burden of property. This sounds really sad, but maybe we're like the carpetbaggers of the horrible economic situation."