Sunday, October 5, 2008

What’s Hot and What’s Not as the Credit Bubble Bursts

The collapse of the credit bubble will reshape the United States’ economic landscape. Here’s a quick rundown of some of the things that are on the way up — and on the way down.


Tourism. It costs less than ever for foreigners to spend a week or two visiting the United States.

World travel. If you only have U.S. dollars to spend, it will be hard to visit most countries.

Fitness. People are taking more responsibility for keeping themselves healthy, knowing that if they fail, there may be nowhere to turn.

Health care. Prices for drugs, surgery, and even diagnostic tests are rising so quickly that soon they will be mostly beyond the reach of most potential medical consumers — and beyond the scope of most health coverage.

D.I.Y. When all else fails, if you want something done, you still have the option of doing it yourself.

Financial arrangements. Loans, insurance, and retirement savings aren’t as reliable as they used to be.

India, South America, Australia, New Zealand. Areas that largely avoided the global problems of the last five years will have a chance to take on more leadership roles.

United States, Europe, China. Closer to the center of the financial troubles, people will spend a significant part of their attention adjusting to new ways of doing things.

Food, transportation. People will make the essentials of life and work a higher priority, even as prices go up.

Climate control, clothing, furniture, equipment, haircuts, television, formal education. There is already a massive slowdown in non-essentials as businesses and consumers try to make their budgets work in a low-credit world.

Retail. When it costs more to drive, consumers make fewer visits to stores — and that means fewer impulse purchases.

Online music, movies, and games. People who don’t have extra money to spend suddenly won’t mind the hit-or-miss quality of free online entertainment.