By Yoon Ja-young
Staff Reporter
Even the rich seem to have started tightening their belt amid the economic recession, expected to last over a year. Economists show concern that thrift is not a virtue during a recession as it further weakens the economy in a vicious cycle.
According to the National Statistical Office (NSO), sales at department stores in December decreased by 11.7 percent from the previous year, the first double-digit plunge since March 2004. Luxury goods sales grew over 30 percent in October and November despite the troubled economy but grew by only 18.7 percent in December. Ladies' outfit sales plunged by 13.3 percent.
Sales at outlets dropped by 6.9 percent and small retailers saw a 10.1 percent fall.
The December statistics came as a sign that even the high-income earners, or the middle class, the main customers at department stores, have cut back on consumption.
``Department stores are in trouble, as sales of luxury goods and female costumes that sustained them through the economic trouble started to fall,'' a spokesperson at the statistical office explained.
Poor sales of luxury goods seem to be a global phenomenon amid the severest economic recession. Compagnie Financiere Richemont, the global jewelry group, which also owns Montblanc, recently reported that its sales dropped by 7 percent in the third-quarter. Tiffany also reported a 35 percent quarterly sales decrease in the United States.
Though it is natural behavior to cut spending when the economy is in trouble, economists point out that thrift could accelerate recessions ― or the paradox of thrift. Keynesian economists explain that if a population saves more money, then total revenues for companies will decline, which means lower salaries and even downsizing; meaning the economy would have no way to rebound.
It is even more troublesome here, as the country, which has resorted heavily on the export sector, has had no luck in exports this year.