Starbucks, SUV’s and Stagflation

Every day brings more news of economic hard times. Today the Wall Street Journal reported that Starbucks will be closing about 600 stores in the next year or so. Starbucks has been a part of my life for the last 15 years. I remember when the first one opened in my hometown. I didn’t know what to order, so I ordered what my friend Sheri ordered (a double non-fat iced latte with 2 equals). Sheri traveled to Southern California frequently, and was a seasoned Starbucks visitor, so I deferred to her wisdom and adopted her drink. That year was 1993. I was starting my senior year in high school in Cupertino, the heart of the Silicon Valley and home of Apple Computers. Al Gore came to our high school that year; in fact, my best friend and senior class president Stacey took Mr. Gore on a tour of our high school campus. The purpose of his visit? To discuss with a small group of top students this new “Information SuperHighway” that was about to change all of our lives.

To say that a lot has changed in the past 15 years is an understatement. Managing our day-to-day tasks has been transformed by the internet, home offices, cell phones, and blackberrys. I find that I am more efficient than ever, but at the same time busier than ever. Back in the mid-1990’s, I think we all wondered what the 00’s would be like. What issues would make the news? What kind of cars would we drive? What things would we worry about?

Here we are, mid-2008, and I feel that we are in the midst of another major change in how we live our lives. So many people are evaluating life’s little choices, from giving up the daily Starbucks drink, to trading in the van or SUV for a more fuel-efficient car. Restaurants are hurting as more people dine at home once again. Little luxuries like the daily mocha or latte are being cut from the budget. The economy is the topic everyone, including the presidential candidates, are talking about. Are we in a recession? Should we worry about inflation? What about stagflation, that 70’s phenomenon?

Back to Starbucks…those that know me know I love my coffee. And, I love Starbucks. I know the drinks are pricy. I know many argue Peet’s is better, or Java City, or that an artsy, independent coffee house brews the best coffee. I have become so attached to my Starbucks mocha that I find myself dissatisfied with anything else. It’s just not the same. With Starbucks cutting back like so many other businesses in this rocky economy, does this mean that the proverbial sky is falling?

Even during the Great Depression, homes still sold. There are always buyers out there who are moving up, moving down, needing more space, needing less space. The Sacramento region is now 2 1/2 years into this economic downturn. I read just yesterday that a new wave of mortgage-rate adjustments is about to hit, meaning more foreclosures are on the horizon. I do believe the WSJ is correct in characterizing our current economy as entering stagflation. According to wikipedia, the definition of stagflation is “an economic illness wherein inflation combined with stagnation locks a society into slow-to-negative economic growth and rising unemployment, invariably including recession.”

Whatever one’s economic situation, right now is the time to:

1. Take stock in one’s financial situation
2. Make goals (saving more, spending less, paying off debt, etc.)
3. Buckle down (make a gameplan!)
4. Get to work!

To quote the great Vince Lombardi, “Dictionary is the only place that success comes before work. Hard work is the price we must pay for success. I think you can accomplish anything if you’re willing to pay the price.”