So what’s up with all those balloon rides?

By all accounts, the economy’s still struggling, and families are cutting back—even bypassing traditional “essentials” like back-to-school supplies—especially in states like Michigan.

According to the most recent figures from the Bureau of Labor Statistics, Michigan continues to lead the nation in unemployment, at 15.2%.  And yet, that grim economic situation does not mean folks are resisting the urge to spend money in the Wolverine State—even on luxuries like balloon rides.

“Go figure,” said Scott Lorenz, who owns the Westwind Balloon Company in Plymouth, where business is quite literally way up—40% better than last year at this time, and Lorenz says July alone was a record-setter for him, bringing in almost three times the revenue he did in July of 2008. “The amazing thing to me is that despite living in Michigan, business is surprisingly good.”

Who’s forking over $695 for a two-person, one-hour tour of the skies over Michigan?  Lorenz says it’s young guys, splurging on rides to celebrate graduations with friends, anniversaries, and to pop the question to their girlfriends.  “I go up a few thousand feet, they get down on one knee and propose,” said Lorenz, who insists he has yet to have a woman turn down a balloon proposal.

“Let’s face it, nobody needs a balloon ride,” Lorenz conceded.  “It is, however, a true expression of how people think they are doing economically.”

Lorenz’ experience echoes findings from research just completed by market researchers at Synovate, who found 32 percent of American shoppers—especially young, single men—are still shopping, buying the same brands as before the downturn, and buying them at the same rate. 

“Many are claiming that we are witnessing a fundamental change in the consumer mindset and that we will never go back to the way we were,” said Ed Murphy, a Senior Vice President in the Retail & Restaurant practice at Synovate.  “They also said that during the recession in the early 1990s, but clearly we came out of that recession with a strong consumption mindset.”

And retailers report spending is not just on balloon rides and engagement rings for special occasions. 

Down to earth, on-the-ground businesses like selling work boots report solid sales.  The online site WorkingPerson.com offers a wide-ranging collection of  “tough-wearing men’s work boots and shoes” to guys who “work hard and play hard.”

And guys are snatching them up.  “Our site is doing gangbusters business with young men,” said Working Person’s COO and Director, Stephen Antisdel. 

Instead of hanging on to their boots until the economy picks back up, guys are deciding to buy new—and not cheap—some of the big sellers are high end boots priced at US$99 and up and “are tough enough for years of abuse.”

So if the boots last for years, why are guys forking over a hundred dollars on new boots now?

Antisdel suspects it’s a combination of factors that have young guys who work construction feeling more optimistic than other workers.  “It’s hard to get into people’s heads, but I’m hearing construction is starting to pick up in spots, and more informally, the guys I know in the trades are still working,” said Antisdel.  “Plus, when you’re on your feet all day, a good pair of work boots makes a huge difference in how you feel.”

The uptick in spending by consumers - boosted in part by men buying boots, as well as families upgrading cars, thanks to the government’s “Cash for Clunkers” program - still comes at a time of higher prices for many retail goods, and persistent concern about the future.

Jack Kyser, Senior Vice President and Chief Economist at the Kyser Center for Economic Research in California predicts his home state won’t see real recovery until 2011.  “Most people haven’t experienced anything like this in their lifetimes,” said Kyser.

And the shock has been life changing for some.  Murphy says his most recent research shows not everybody’s feeling better:  a significant number of shoppers—35  percent, according to Synovate’s study—believe the economy will never return to the way it was before, and their shopping patterns will remain curtailed for life.  These shoppers tend to be married women with children, living in hard-hit regions like the industrial areas of the Northeast. 

Sam Pocker, the author of “Retail Anarchy:  A Radical Shopper’s Adventures in Consumption” says another factor at play is simple:  women tend to pay far more attention to saving money and shopping wisely, while men—especially young single men—may ignore even the worst economic news if they feel an urge to get back to spending money.

“I still see lines of men camped out for the latest sneaker releases and I still see them putting down deposits on the latest video games,” Pocker said.  “As these are the current forms of entertainment, the trend is not out of line with any other form of financial downturn in modern American history.”

Electronics, clothes, and eating out remain the leading budget items consumers say they’ve decided not to cut, according to recent consumer spending data commissioned by the credit card alternative payment provider eBillme. 

“Personal care” items such as massages led the list of budget cuts consumers are making to keep costs down, followed by furniture purchases and going out to bars or clubs. 

But nearly a quarter of shoppers said they were still opening their wallets for downloads, movies and games:  buying new music and DVDs (22%) and still spending money on video games (24%). 

“Although the recession has brought a new frugal lifestyle, there are certain areas of spending consumers are still holding onto,” said Samer Forzley, Vice President of Marketing for eBillme.  “Shoppers are spending more selectively, but still buying the things they enjoy most.”

And that apparently means even in the toughest of times, modern Americans still won’t resort to cooking their own meals.

Eating out—or ordering in—remains a luxury almost half of consumers said they were not cutting back on, according to the eBillme research.

That’s a trend that’s reflected in a bump in business at Delivery.com, a full-service online restaurant delivery company that picks up food from restaurants and delivers it to homes in 65 cities.

Delivery.com reported a jump in business in June, with the average dollar amount spent per order doubling, from about nine dollars, to $21.95.

“Our reports show a dramatic increase,” said Melanie Gordon-Felsman, vice president, public affairs and marketing for Delivery.com.  “This shows that people still want a ‘nice meal’ experience.”

And, experts say, some consumers are simply hungry to spend after buckling down during the past few months.

In Atlanta, Eric Joy runs Georgia Home Theater, a high-end provider of custom home theater equipment that’s been in business for eighteen years, selling everything from iPod docks to fully outfitted home video and audio systems costing up to half a million dollars.  And they’re selling--especially at the low end.

“I think people are just tired of staying home and not getting out and buying stuff,” said Joy, who reports Blu-Ray disc players are selling particularly well.  “It’s a way to buy something and upgrade your system without breaking the bank.”

While sales of consumer electronics have boomed in recent years, the industry group Consumer Electronics Association expects sales to drop nearly eight percent in 2009, the first decline for the industry since 2001, and the biggest drop since 1975.

But Eric Joy says the declines aren’t deep in Dixie.  “Here in Atlanta, we’ve got young, single male executives, and they are bored not buying anything.” 

After growing his business by 20 percent for three years straight, 2008 was flat at Georgia Home Theater, and 2009 will be down, but nowhere near the drop predicted elsewhere, Joy said, thanks to gear-hungry guys willing to splurge on a new toy after months of holding back.  Joy said customers come into the store complaining, “how long am I going to go and not buy some cool new stuff?” [pullout quote]

Jamey Boiter is a Charlotte-based brand strategist who’s studied the shopping habits of young men, who may be buying now out of a need for new toys—and who may have added income from having moved in with roommates or parents during the recession.  “The areas we’re seeing young men spend money right now are jewelry (watches, cufflinks), accessories to complete fashion hook-ups, and then it’s on to their toys.”

Consumer psychologist Kit Yarrow at Golden Gate University says it’s no surprise some of the first signs of consumer confidence may come from young men.  “It’s completely predictable,” said Yarrow, who’s just written a book on young consumers, Gen BuY:  How Tweens, Teens and Twenty-Somethings are Revolutionizing Retail. “It’s really the fear of the future that’s put the brakes on consumer spending, and young men typically have less fear.”

Yarrow reports Gen Y (those born between 1978 and 2000) consumers—especially the guys—are fearless of financial insecurity that may have rattled their parents, and they’re far more likely to be willing to spend—especially to get a desired “look.”

“I interviewed one young man who had a hundred pairs of sneakers—he was obsessed with them,” said Gen BuY co-author and USA Today retail reporter Jayne O’Donnell.  “He had a matching t-shirt for every pair of sneakers.”

Retailers report solid sales among young men, who are snatching up fragrance and grooming products.  “Younger guys put a lot into how they look, and much more than previous generations of guys,” said Yarrow.

A need to have the right “look” may also explain some of the bump in shopping down South, explains Jamey Boiter.  “Most trends start in New York and Los Angeles and then migrate to other parts of the country.  With the recession having been so impactful so suddenly, some believe that natural trends toward fashion have been slower to reach the South this time,” said Boiter.

“So the surge that would have happened nine months ago under normal conditions is just now happening,” said Boiter.  “And since it’s been such a down market, it’s feeling like a real move.”

“This is a game changer for most brands,” said Synovate’s Murphy.  “If you are a major brand, you will have to carefully weigh the long term consequences of price reductions if you want to keep sales at historical levels, and at the same time, you have to market to your key strengths vis a vis the lower cost competition.”

As for those balloon rides?

Even the experts can’t quite explain that one.  “The gigantic puzzle of the consumer,” said Kit Yarrow.  “The way people justify things—and guys in particular—they’re masters at this.”

You can learn more about Synovate’s shopper research or – for North American shopper research - please contact Ed Murphy.