What Sex and The City 2 Tells Us About Deflation

Couldn’t help but write something about this.  As everyone well knows, Sex And The City 2 is in theaters.  So for the fans of the show, you’ve got a way to get your fix of Carrie, Samantha, Charlotte and Miranda.  Don’t worry, I’m not going to say anything about the movie.  This isn’t that kind of post.  My two readers would have a fit if I didn’t talk about something related to the macroeconomic landscape or credit markets or what have you.

But the fact is, there are fewer fans that are going.  Box-office results from Memorial Day were weak.  While SATC2 did well on a relative basis, the fact is Memorial Day is traditionally a big movie release weekend.  To have a movie gross $37MM in third place while the leader, Shrek Forever After, made $57MM.  Weak by historic standards to say the least.  I recently went to the theater to see a movie with my son about a month or so ago and you can tell people aren’t going to movie theaters the way they used to.  I’d offer that we’re seeing a shift in the demand curve because the aggregate demand to consume/watch movies has changed.  And I don’t think it’s just a change in the amount, I think there will be changes in the content/genres of movies we want to see.

Anyway, I also came across this post over the past day or so.  While it may be a tad early to call SATC2 a bomb, I’m pretty sure its box-office take has been a little disappointing to Warner Brothers.  There were a couple of things I just couldn’t help but agree with when I read it.

The last 18 months have seen this country wracked by economic misfortune brought on my mindless greed, unbridled ambition and an unmooring of our moral compasses. Buying a dress that costs more than a mortgage purely for vanity has little resonance in today’s society.

That’s true.  If you go out and look, there just isn’t the appetite to splurge like there once was.  I was never much of a splurger to begin with, but I know a lot of folks who did over the past decade or so.  Their money, their choice.  But as a study in behavioral economics, I find it fascinating to see when this group turns positive or negative.

Here’s another piece from that post I agreed with in that constant nodding sort of way:

When a movie flaunts outlandish fashion and we are asking where our 401K went, it is incongruous. Yes, films have shown high society before. They have shown how the rich live, but this is different. SEX & THE CITY bombed because it became disconnected from its core audience.

We are now frugal. We are watching out pennies. We are putting money into saving accounts. The fantasy of having the rich life means nothing right now. Shopping ’til you drop has no place when we are hitting yard sales for clothes. SEX AND THE CITY bombed because too many of us know too many struggling families. Wearing a pair of expensive shoes maybe nice for some, but making sure sons and daughters can go to college seems far more important.

Plus, it’s ten years later.  Time has marched on and collectively we’ve gotten older, like it or not.  As people get older, they do tend to spend less.  Think pensioners in Japan is a growth segment?  If you do then I have some primo swamp land I’d like to sell you.

And with the current economic backdrop being what it is, that’s not going to help a movie where backdrops are just as much a focal point as the characters are.  I will say I find it juicily ironic that so much of  the movie was set in the Emirates, with that massive restructuring Dubai World just completed and all (we’ll get to that another time).  It’s all disconnected on a number of levels.  A movie that is behind the times predominantly set in an area where people thought paying thousands of dollars a night for a hotel in an irrigated desert was a good idea.  Juicily ironic, indeed.

But the social mood aspect is something I’m always drawn to.  And for that, I went digging up some posts from my favorite editor of animated financial news, Kevin Depew (never mind the fact he may be the *only* editor of animated financial news, well, anywhere).  First, there’s this aspect of social mood, quitting Facebook:

ABC News asks “What happens when you deactivate Facebook”? If a Facebook user really wants to make the separation permanent, how does the process work?

This is a hallmark of the ongoing falling transition in social mood, the rupture of social networks into smaller, fractured niche units. While bull market optimism carries with it an enthusiasm for openness, connectivity, and sharing, a shift to negative social mood brings with it the opposite.

via Five Things You Need to Know: Market Crash Inquiry Focuses on One Trader | Markets | Minyanville.com.

Think about splurging and the reasons people splurge.  Why do they do it?  They want everyone to know about it.  The mere act of buying or doing something extravagant is not enough.  If you ask me, announcing things publicly on Facebook is the digital analogue of splurging.  It’s not enough to show up at a family reunion in a flashy new set of wheels wearing designer clothes sporting a designer hairdo.  You want to announce it to make sure people in Timbuktu can hear you.  Putting pictures of it all up on Facebook one or two days beforehand is perfect for that.  So if people are withdrawing from that kind of behavior, that should tell you something in and of itself.

Then there was this gem:

Consider curling. Last week the New York Times explored the sport of curling, wondering how this “oddball” sport, a “slow-poke game” originating in the 16th century, could come to occupy the sudden interest of Wall Street?

And so, after a day of braying for money in the markets, traders are winding down with curling. It is, fans say, a bit of after-market therapy. Curling is so slow and drawn out that it becomes mesmerizing.

The hypothesis most settle on is that Wall Streeters are attracted to the game’s slow-moving strategy. “It’s like chess on ice,” goes the common refrain. Socionomists disagree. The attraction to curling is simply one more manifestation of the negative transition in social mood. Or, perhaps chess is like curling on ice for people who hate sweeping.

via Five Things You Need to Know: Praying for a Lost Decade | Business & Markets | Minyanville.com.

If you stop and think about it, people view going to the movies as a hassle these days.  Getting ready to go (You’re not wearing *that* in *public* are you??!!).  Getting to the theater.  Getting tickets.  Getting popcorn, treats and drinks.  Finding a seat.  It’s enough to wear someone out before the movie starts.  Frankly, I like the idea of firing up Netflix on my Wii to watch movies I want to watch.  I don’t have to deal with any of the stuff I just mentioned about the theater.  Plus it had a side benefit: we told our cable company we wanted to drop a bunch of channels because of it and they cut our monthly bill by fifteen bucks.

Totally deflationary… yet so appropriate…

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8 Comments

Filed under About me, finance, Way Forward

8 responses to “What Sex and The City 2 Tells Us About Deflation

  1. Joe

    Prof Pinch,
    Interesting point about social mood. But it also could be that Sex in the City 2 & Shrek 4 are really just a bad movies. Your bigger point that movies that resonate with public’s mood become successful is right on target.

    During the depression, there was an incredible variation of movies. The common assumption that movies provided a form of escapism, that you could escape your troubles for a few hours. But in reality the movies were quite varied and movies from Warner Brothers, in particular, tackled very gritty topics & controversial themes.

    Early on gangster movies, film noir topics where the bad guys get their deserved comeuppance were the norm and quite popular. “I am a Fugitive from a Chain Gang” was a hugely popular movie from this period.

    After 1933-34 (and the New Deal) the movies became much more sanitized with the introduction of “film review” boards and censorship and the movies went more to Horatio Alger / Frank Capra type stories and the triumph of individualism over corruption etc.

    The US Great Depression had two distinct phases and the popular movies of the time reflected the shift in mood & circumstances.

    • No question, I think the overall quality of movies today – indeed, the past 10-15 years in fact – has been abysmal in general. To me, Hollywood will need to step up the story and the writing in general if they’re going to earn people’s dollars.

      But thanks for your comment. Fascinating stuff and glad you offered the feedback.

  2. John

    How do you explain Avatar, Iron Man, etc.

    I think you are partly right about age though.

  3. fauchon

    Everything you say about going to the movies being a hassle is correct but also add: high ticket prices (aiming for $20 per lately); 15 minutes of garish trailers & ads with blaring sound turned up to the max; grotty theaters; rude audiences blabbing away, chomping popcorn, diddling/tweeting with their super-bright-screen “devices” or, god knows, watching porn for all I know. All in all, what used to be a pleasure is now a pain.

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  5. bankrchick

    Pinch, your writing is awesome.

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