The market has been going sideways for much of the past two months – sideways with extreme lurches up and down reflecting the persistent uncertainty among investors about where the global economy is headed. Are Greece and Spain going to render the Eurozone a failed experiment in unifying distinct national economies? Is China going to slam on the brakes and bring global growth to a screeching halt? Are US consumers going to finally hang up their hats, retire their credit cards and call it a day?
I hear these questions in the predawn hours of every morning as the financial news accompanies my exercise routine. A few weeks ago I was pondering it all as I was driving into work. Now, my route to the Bethesda office happens to take me past the local Apple Store. As I turned onto Bethesda Avenue I could see that this day was not like other days. A huge crowd thronged outside the store and the line extended clear down to the end of the street. Mind you, this was at 8am, two hours before the store was due to open. Truth be told I was not surprised. A fair number of Apple products can be counted among members of my household, and I knew what the big event was today – the launch of the iPhone 4. The expectant masses on Bethesda Avenue that morning were there to part with upwards of $300 each for the latest “this will change the world” offering of Steve Jobs & Co.
The iPhone 4 had received decidedly mixed reviews by the techno-pundits in the run-up to the product’s launch. Technical glitches, security issues – and I am assuming that a good number of the early adopters clamoring at the store entrance had read the reviews. No matter – they all wanted another piece of the magic. No doubt many of them had also shelled out for the iPad when that snazzy tablet appeared earlier in the year.
I usually am not one to conflate one data point into some larger explanation for What It All Means. And Bethesda, one of the richest zip codes in the country, is hardly a proxy for the US at large. But what happened that morning in suburban Maryland was happening all over the country as it turns out – iPhone 4s have been selling like hotcakes. Not surprisingly, Apple’s formidable earnings announcements last week were a meaningful reference point for the strongest week in stock market performance for some time now. Here’s how I see it: American consumers seem perfectly willing – giddily so – to part with hundreds of dollars for technology that – let’s face it – is as much about hype and glitz as it is about real functionality. This does not say “economy in freefall” to me.
Our consumer economy has been vibrant for decades, surviving the nastiest of downturns along the way, because our wants keep evolving into needs over and over again. Does anyone really need an iPhone 4 or an iPad? Not in the strict sense of the word – but if the perception of need exists then the need is real. We see this play out every time we switch on the AMC drama Mad Men, now in its 4th season. One of the really enjoyable things about that show is seeing the postwar consumer culture take root and permeate throughout all economic and cultural strata of the society, with “Relaxicisers” and Kodak Carousels filling the emergent needs of that time the way that iPhones and Viking grills do today.
There is a great deal of doomsday commentary out there. While I certainly do not intend to underestimate the scope or depth of our current economic woes, and particularly for the many who are out of work or underemployed, I also am fairly confident that our consumer culture is not grinding to a halt. For better or worse it is a deeply ingrained aspect of our economy and our society, and I expect to see those same breathless crowds amassing outside the Bethesda Avenue store next time Steve Jobs proclaims that the future has arrived in the form of some stylish construction of bits and bytes.