Tummy tucks, country clubs tick up on Yellen’s waggish rates dashboard
(Reuters) – Janet Yellen made her reputation as an early spotter of the looming slump seven years ago when she highlighted some unorthodox indicators of decline in consumer spending: tummy tucks, gourmet dining and country club memberships.
Now she is Federal Reserve Chair, Yellen will find a much brighter picture from her novel monitoring system as she and the Fed board mull the first U.S. interest rate hike for nine years, which could come as early as September.
As chief of the San Francisco Fed back in 2008, Yellen joked to colleagues at a somber policy-setting meeting that people were putting off plastic surgery, eating at high-end restaurants without reservations, and the waiting list to join a high-priced Silicon Valley country club had shrunk to "a mere thirteen."
Behind the colorful data – which provoked laughter according to the transcript – she had a serious point. The plunge in discretionary consumer spending was a harbinger of the deep recession to come.
Yellen has not made any high-profile public references to those remarks since. But her unique dashboard shows solid signs of recovery.
Michael Kulick, a cosmetic surgeon in San Francisco, now spends about 16 hours a week doing tummy tucks and other surgical procedures, double what he did in 2008.
Back then, he explained, it wasn’t just the thousands of dollars such surgeries cost. People didn’t want to jeopardize their jobs by taking time off for recovery.
Granted, real estate prices and wages in the San Francisco Bay Area are rising faster than in other parts of the country, which might skew local data. But overall, Americans spent more on cosmetic surgery in 2014 than any year since 2007, figures from the American Society for Aesthetic Plastic Surgery show.
Forty miles south of San Francisco, the Palo Alto Hills Golf and Country Club – which may or may not be the club Yellen referenced – raised its initiation fee to $200,000 this year, double the fee in the depths of the recession, although still below its pre-crisis peak.
"We’ve had no trouble getting members to join at these higher prices," said Janice Graves, membership director for the club, whose newer members are mostly younger families working in Silicon Valley’s booming technology industry.
On the other side of the San Francisco Bay, the public golf course at Wente Vineyards in Livermore has seen a 20 percent increase in annual golf rounds played from 2008, and each round played is bringing in more money, proprietor Carolyn Wente said.
In Berkeley, where Yellen taught economics for 30 years, local favorite Chez Panisse – a pioneer in the farm-to-table restaurant movement, where dinner for two typically costs $350 – is also showing improvement.
Although there was never a time you could walk up and get a table at the restaurant, where Yellen has been known to eat, things are busier than they were, said general manager Jennifer Sherman.
Back in 2008, she said, "on a Tuesday night in January you could probably get a table a week ahead." These days mid-week reservations are tougher to find, unless you like to dine at 5 p.m.
Joking aside, it is unlikely that Yellen would lean heavily on figures showing America’s richest are back to spending at or close to pre-crisis levels. But neither would she completely dismiss them, as she looks for further improvement in the broad labor market before raising rates.
Spending habits of the rich, like the rest of us, "shift with the economy, for sure," said Graves at Palo Alto Hills Golf and Country Club. (SAN FRANCISCO/Aug 2/2015)