‘Latte Index’ serves as tepid consumer economic indicator

Our Washington Independent colleague Mary Kane may be on to something …

An unofficial measure of what’s going on with the economy is the Latte Index, or trends in discretionary spending when it comes to Starbucks. When people cut back on pricey, frothy coffee drinks they probably didn’t need in the first place, the theory goes, it shows they’re taking steps to curb their spending. And less consumer spending means slower economic growth.

With Starbucks already closing 600 stores due to lower sales, it’s fair to say the Latte Index carries some weight. But now The Big Picture spots another Latte Index-style trend: Discounts at Starbucks:

As you may have heard, Starbucks has canned their DVDs and CDs. At a recent visit, I picked up Juno (which I have been meaning to see), and for Mrs. Big Picture I grabbed The Kite Runner — for $7.95 each. They also had the new James Hunter CD (Official site, Amazon, NPR interview) and the latest John Mellencamp disc (Official site, Amazon) were also $8. But the big thing that caught my eye was their $2 special. Bring your receipt in from any purchase in the am, and after 2pm any Grande Cold drink is just $2. Value maximizers may want to go for the Iced Frappucino Double Chocolaty Chip Frappuccino Crème at $4.80 but it weighs in at 510 calories. Or, the Java Chip Frappuccino is 460 calories. I went for the Iced Caramel Macchiato, which cost less, but is practically dietetic at 230 calories.

I cannot recall Starbucks being this promotional since . . . well, ever.

The Big Picture wonders if anyone else is seeing new promotional discounts. The $2 special — a new economic indicator?

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Wendy Norris

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