Entertaining Losses
Notes on a shrinking horizon
Earlier this month, I took my son on a shopping spree for his birthday at our nearby outdoor mall. I was struck by how crowded it was with shoppers—shoppers who, I guessed from a series of cultural cues, were largely working-class at a facility that was predominantly upscale (Apple, Banana Republic, Whole Foods; we concentrated our efforts on Old Navy). Last weekend, he and I went to see The Devil Wears Prada 2 at at multiplex there, which was the most crowded I’d seen it since COVID. Judging from the most obvious anecdotal signifiers I could see, business is booming.
I myself haven’t really changed my own economic behavior. But I’m feeling a steady, inexorable pinch. In recent weeks, I’ve been largely improvising my way through rising gas prices by siphoning off cash I might spend on other things, or covering a tank from a minor windfall like a trip it turns out I didn’t have to take. (Tolls: another topic of price creep.) But over the last week or so, these ad hoc solutions have become insufficient. A staple item from the drug store has gone up in price six percent. My favorite value meal at McDonald’s is up seventeen percent. Another movie theater that serves food posted a sign on the door announcing an eighteen percent service fee.
These are largely discretionary purchases, unlike my water or electric bills, which have also climbed steadily. So they’re the most obvious targets for economizing. I’m either going to have to cut back on some of my creature comforts or reconfigure the family budget, perhaps by drawing down savings. (My retirement fund, for the moment, has been surging.) These are not appetizing options, and I reckon I’m not alone in feeling this way—suspecting that what I’ve been witnessing in my retail travels is a form of collective denial. It’s a well-established sociological principle that people are far more desirous of avoiding loss than they are taking risks for gain. Which includes avoiding loss even amid a lack of possible gain.
It’s very hard to understand what’s going on in the economy right now. Employment is up, as are wages (though they’re not keeping up with inflation). Oil prices are rising, but so—counterintuitively—is the stock market, perhaps because the traders are figuring they’ll get bailed out like the way they were last time if there’s any serious trouble. Salaries are for suckers; the real money is in interest and investing.
Our last bout of inflation earlier this decade—the first serious one in a half-century—was the result of the pandemic and the justifiable surge in government spending to meet the crisis. This one seems to have resulted from the decision of a single man who claimed to have already “decimated” the threat he now asserts required a war of choice. It may be that this war will not turn out to be the complete defeat it appears to be. But the economic consequences will be ones we will be living with for some time to come. Maybe a long time to come. Maybe we’ll take comfort by having fries with that. A small order.