Middle Class Consumerism: Strong and Steady
If you take a stroll through a mall or visit a new apartment construction sales office, Israel feels more like America in the 1970s or Spain in 2000. For that matter probably Moscow or Beijing or even Rio De Janeiro of the last decade: strong economic growth and growing consumer spending driven by new credit policies. In Israel, large mortgages were unheard of fifteen years ago. Today, a couple with steady income record can get 50% montage without too much trouble. The banks have flooded the market with so much cash, housing prices have been on the rise regardless of supply and lately regardless of geographic location inside Israel. Even apartments if remote towns are rising in prices while supply is plentiful. Builders simply "up-sell" by loading up large apartments with high end finishes. The same goes for consumer products. There are more luxury malls and luxury shops everywhere. Just recently the luxury Italian car companies Maserati and Ferrari hung up their brand symbols on a central Tel Aviv building (just across from the central train station). If you want Rolex, go down to the new luxury building on Ibn Gvirol, a street considered tired and rundown just five years ago. The push by the market is not limited to luxury items. In the middle areas, there are even more signs of strong growth and credit use.
In most consumer spending sectors, Israelis are spending more and are driven by easier credit terms. While developers were building up Israel's shopping malls in the 1990s, many retailers and consumers were wondering who will be using these. Malls were build not only in the cities, but also in main road intersections in rural areas. The idea was to attract local shoppers so they will not have to make a long trip to a big city. Many of these shopping malls were empty at first. But some have managed to attract shoppers and sellers. Today, most middle class Israelis can use credit cards with good credit terms rivaling many European countries. Israel is not yet a consumer driven economy like the US, but there are many who would like it to develop in that direction. The recent economic downturn (2008 in the US, 2010 in Europe) was a warning flag to the Israeli economic regulators, but not enough to scare the banks and retail community. From a street level perspective, credit availability and consumerism are still growing at a strong clip. While some believe that we learn from history and from the failures of others, some see that this is not the case. Stay tuned, this story is slowly developing and the twists and turns will be interesting to follow.
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