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Inscrutable Consumers Push New Frugality Overboard

Devin Leonard, with the help of 15 of his colleagues, has put together a cover story headlined "The New Abnormal" that carries the subhed, "Americans are broke and depressed -- and also swilling $3 lattes and waiting in line for iPhones."

The bottom line? "No one knows anything" about the state of the American Consumer. We are, in fact, a nation of schizophrenics who "splurge on high-end discretionary items and cut back on brand-name toothpaste and shampoo." Apple and Mercedes-Benz are thriving while consumer product companies such as Kellogg, as Karlene Lukovitz reports this morning, are being hit by discounting driven by retailers looking to build traffic and consumers snatching up generics.

On the positive side for people who market things is Duke University professor Dan Ariely's observation that folks freaked out by market gyrations tend to shop rather than invest in a financial instrument that might go south. "If they lose money by spending it on something," says the author of Predictably Irrational: The Hidden Forces that Shape Our Decisions, "at least they have something to show for it."



Read the whole story at Bloomberg BusinessWeek »

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