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Economy: At least we can afford the good stuff again

Winebottles 
Some days, reading The Times Business section is like riding a roller coaster. You're up, you're down, you're screaming, you're laughing -– all in 10 minutes or less.

For example, in Wednesday's section, there's staff writer P.J. Huffstutter's story, "U.S. wine sales rebound."   

After two years of sluggish wine sales, consumers are starting to reach for -- and spend more on -- their favorite vintages. And the California wine industry, having survived several vineyard fire sales and a glut of excess inventory, is seeing signs of a post-recession rebound.

So up we go, arms raised and having fun.

But you know what comes next -- that big drop:  "Auto sales hurt as consumers' mood darkens."

As staff writer Jerry Hirsch reports Wednesday:

Consumers were tripped up by a confounding set of circumstances, including rising auto prices, a spike in gas prices and auto inventory shortages, that combined to "plague" sales, said Jeff Schuster, an analyst at J.D. Power and Associates.

So we're into the twisting, upside-down part of the ride, reflected in another story tucked inside Wednesday's section, "Consumer confidence falls unexpectedly in May."

Seems "Americans grew slightly more pessimistic about future job prospects and business conditions," according to the nonprofit Conference Board, which puts out a monthly consumer confidence index.

So, Chardonnay we can afford; Cadillacs, not so much. 

Certainly, though, if we want that wine while flying, we're gonna have to pay for it. As The Times also reported Wednesday, "Airlines’ revenue from fees has almost doubled since 2008, study finds."

The world's largest airlines collected an estimated $21.46 billion in passenger fees and sales of frequent-flier points last year, about double the amount collected in 2008, according to a study released Tuesday.

For some airlines, so-called ancillary revenue now represents between 15% and 30% of all revenue, according to the report by IdeaWorks Co., a Wisconsin-based consultant on airline fees, and Amadeus Corp., a Madrid-based technology company for the travel industry. 

If you're an airline, this is the up part of the ride; if you're a consumer, not so much.

And we wrap up today's ride right back where we started, with Huffstutter's story on wine sales:

Dragging a black tote out of her Ralphs grocery cart, Carolynne Chan steadily filled it with half a dozen wine bottles on a recent Friday afternoon.

Before the recession, the oenophile said, she and her family belonged to several wine clubs. Two years ago, when her husband's engineering firm was cutting its staff, the family budget had little room for even an $8 Merlot.

No more. "We're buying a lot more $12 bottles," said Chan, 43, a mother of two. "We're not spending money to travel this summer, but we can afford to make our Friday dinners a bit nicer."

Yes, if the Merlot is good enough, who needs Paris? 

And you may need more Merlot after taking a peek at The Times' website Wednesday afternoon and this headline: "Dow falls more than 200 points on fears about economy."

Uh oh. Here we go again. 

-- Paul Whitefield

Photo: Ralphs customer Jennifer Murphy tries to pick a bottle of wine inside the grocer's downtown Los Angeles store. Credit: Genaro Molina / Los Angeles Times

 

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Andrew West

Good story that is a very good analogy with the roller coaster ride everyday reading the Times or watching CNBC up and down economic stories. Reinforces what I learned in ECON class in college, the Economists are making educated guesses.

David Blum

Actually the wealthy, who tend to consumer high end wines, are doing quite well and have been for years. The middle class and poor, whose incomes have stagnated since the 70s, are suffering miserably.

Adweek recently had an article that said now that so much money concentrated at the top, Madison Avenue should no longer worry about targeting the middle class; they can't afford to buy stuff.


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