The Discretionary Spending Sector (Travel, Restaurants, Entertainment, etc.)
As the economy continues to fall, Americans are not going to run out to the mall every night after work (if they have work) and squander their limited cash and very limited credit on more high-priced designer handbags or the latest CDs. Discretionary spending is, well, discretionary. And many items and activities we currently enjoy will simply be off our shopping lists after the bubbles pop. This will certainly slow many businesses to a crawl and force others completely out of the game, further driving up unemployment.
But discretionary spending will still hold up better than the Capital Goods Sector of the economy because some people will still have money, and they will keep spending their money, except at a lower level than before. So, instead of discretionary spending disappearing altogether, the people who can still spend will simply buy lower-priced discretionary items. Instead of shopping for designer handbags at Saks Fifth Avenue, for example, they may downgrade to Target or Walmart.
The restaurant business will face this trend as well. Once the bubbles pop, far fewer people and businesses will have money for eating out. That will certainly affect all restaurants. But some people and businesses will have money and will be quite happy to go to restaurants, as long as they don’t have to spend as much as they used to. So the restaurant industry will continue to be a huge industry in the United States, ...