Female side of economy outdistances cheap males

April 01, 2007|By Jay Hancock | Jay Hancock,Sun Columnist

Merchants have always known that men are tighter with a buck than women. Women happily invest in making life beauteous and meaningful while men skulk around in their grandfathers' sweaters, turning off unneeded lights.

But the gender spender-gap may be growing. In recent months, companies selling to men have had a much harder time raising prices than those selling to women, says Merrill Lynch economist David A. Rosenberg.

Aside from the anthropological implications, the findings suggest that you're better off owning stock in say, Tiffany and Talbots than Sony or Black & Decker.

They also demonstrate hidden disparities in the indicators that the government watches to try to keep the economy on track.

If the price pattern of "men" stuff spreads to the larger economy, we'll be in for lower inflation and lower interest rates.

On the other hand, if jewelry and Prada are the bellwethers, look for the Federal Reserve to raise rates to try to cool things off. The females appear to be winning.

Rosenberg's research was based on the January Consumer Price Index, but the pattern was even more striking in the recently released February report for the same indicator, he says via e-mail.

For one thing, the cost of women's apparel is rising at its fastest pace in more than a decade.

Prices popped at a scary, 13 percent annual rate in January and February compared with December, according to the Bureau of Labor Statistics. Such month-to-month measurements tend to jump around, but from February 2006 to February 2007 - a better indicator - women's apparel prices increased 5.2 percent.

That's still twice the overall inflation rate (2.4 percent) and the biggest year-over-year increase since 1991.

Jewelry is up nearly 10 percent in a year, the highest increase since 1992. Other categories in which women dominate the spending decisions and that are appreciating more than inflation are home appliances, candy and housekeeping services, Rosenberg says.

Meanwhile, what Rosenberg describes as men-oriented merchandise sits on the shelves and often depreciates even before anybody takes it home.

The last time television prices rose from one month to the next was 2005. Year-over-year, TV prices plunged 24 percent in February. Prices for cars and men's clothing are falling. Tool and hardware prices are increasing, but barely.

Rosenberg has even calculated separate men's and women's consumer price indexes. The former is barely above zero; the latter is way ahead of general inflation.

Falling shoe prices

OK, the thesis isn't airtight. Women's shoe prices are falling. So are dishes and flatware prices.

Also, "women are big players in areas that people considered to be male-dominated areas," says Thomas Hine, author of I Want That! How We All Became Shoppers. "That was the story of Lowe's. It was about being a woman-friendly hardware store. ... There is much less gendering of what people buy than we usually assume."

Women buy a ton of men's clothing, for example. Conversely, men buy lots of jewelry for significant others.

But the larger point is that women increasingly control spending decisions that were once made by men - for all products.

Partly it's because they're doing better in some economic categories than men. Recent unemployment, job growth and consumer confidence gauges are all more favorable for women. Sixteen percent of Fortune 500 CEOs are women, Rosenberg says. Many more women than men attend college these days.

"As more women have worked, they've been making more of the family's buying decisions, not fewer," Hine says.

Many are single

And thanks to divorce, longer lifespans and delayed marriage, millions of increasingly affluent ladies are single. If they're living alone, they make all the buying decisions, and they spend a higher percentage of income on themselves than men do.

(Single women make 30 percent less than single men but spend 30 percent more in absolute terms on clothing, Rosenberg says.)

Rising prices are an economic negative if they force authorities to raise short-term interest rates and slow the economy. But for companies able to pull them off, they mean higher profits and buoyant stock.

Rosenberg's "female" component of the S&P 500 stock index has risen three times as fast as the "male" index since 1999.

Not every consumer dollar will go to the Hermes handbag or the Macy's dress. But that looks like the way to bet.

jay.hancock@baltsun.com

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