Consumer Frugality Adds to Woes in France

Lauren Fleishman for The International Herald Tribune

The Porte de Clignancourt flea market in Paris, where antiques were on display.
By LIZ ALDERMAN
Published: July 11, 2013
PARIS On a recent Sunday at the sprawling March aux Puces de St. Ouen, Frances largest
and most famous flea market, crystal chandeliers glinted in a rare patch of Parisian sun.

Lauren Fleishman for the International Herald Tribune
It used to be elbow to elbow here, said Hamidou Debo, the owner of this shoe stall in the
market.
An ornate Napoleon III-era clock perched on a marble mantelpiece, and sales signs peeked from
vintage clothing, vinyl LPs and other curios that have long drawn throngs of shoppers here,
jostling for a bargain.
But something seemed amiss on this afternoon, as it has almost every weekend for more than a
year. As with so much else now bedeviling France, the economy is to blame. French consumers
simply are not spending the way they used to, and that is an impediment not only for the
merchants of the March aux Puces, but also for the countrys ability to emerge from recession.
It used to be elbow to elbow here, said Hamidou Debo, a shoe vendor who sat quietly in his
outdoor stall as a handful of people browsed through silver-hued sandals and black leather high-
tops before shuffling away without buying. Now the crowds are around half what they used to
be.
For Mr. Debo and 2,500 other merchants in the 17-acre market on the northern edge of Paris, an
economic slowdown has gripped business, and there is no telling when things might turn around.
Last year, he said, he regularly made 300 to 400 euros, or $390 to $520, in sales by lunchtime.
Now he barely makes 100 euros.
Its the crisis, Mr. Debo said. People are no longer spending. They are worried about what the
future will bring.
Europes long-running economic troubles have been, for the most part, confined to the feeble
countries of Europe: Greece, Spain, Portugal and Italy. But more and more they are coming
home to roost in France, raising questions about whether one of the Continents biggest
economies may become the next sick man of Europe.
By many measures, France is already moored in malaise. Unemployment is at its highest point
since the current record-keeping system began in 1996 10.8 percent and job creation has
been on a downward trajectory for more than a year.
These problems, coupled with tax increases and government spending cuts intended to keep the
deficit and rising debt under control, mean that France is now struggling to exit a shallow
recession, its second in four years. Even if the recession does end this quarter, the economy is
expected to remain stagnant at best, contracting by 0.1 percent this year, according to the French
statistics agency Insee.
No wonder households have tightened their purse strings. But that has become part of the
problem, given that consumer spending represents 56 percent of French economic activity.
The consumer has always been the motor of the French economy, said Jean-Paul Fitoussi, a
professor of economics at the Institut dtudes Politiques de Paris. If that economic engine does
not work, then where is the growth going to come from?
President Franois Hollande, who recently acknowledged that the economic situation was
serious, is offering a grab bag of measures meant to stimulate growth, including a program to
create thousands of subsidized jobs for the rising ranks of unemployed youths. This week he
announced a plan to invest 12 billion euros in the energy, digital, aerospace and health industries.
Mr. Hollande is also urging the French to be optimistic by citing forecasts that France and the
euro zone will begin to emerge from their slump by next year, if all goes well.
But persuading the French may be no easy task.
On Wednesday, the French employers union Medef warned that Mr. Hollandes policies were
destroying 8,000 jobs a day. The chief executives of Peugeot and other French corporations
called for urgent measures to stem unemployment.
In June, consumer confidence hit its lowest level in France since records started being kept in
1972. With unemployment still rising, households were more pessimistic than ever about the
prospects for future living standards, according to Insee. Consumer spending, which contracted
last year by 0.4 percent, is expected to remain stagnant for the foreseeable future, despite a slight
pickup last month, the agency said.
Whats more, the French are continuing to hold onto a chunk of their savings for rainy days they
see coming. The personal savings rate is 15.5 percent, lower than the nearly 17 percent rate in
2011, but still well above the 2.5 percent rate in the United States. That is a lot of euros not being
pushed through the economy.
No place may be more emblematic of the consumer state of mind than the March aux Puces,
whose name translates as flea market. It was so named in its early days in the 1870s because of
the presumably flea-infested furniture among the goods carted in from the citys trash heaps by
vendors known as rag and bone men. In subsequent decades Pablo Picasso was said to stroll
the market for inspiration. The 2011 Woody Allen film Midnight in Paris featured the market
in a pivotal scene.
Today the market is something of a microcosm of the French economy, with merchants in a vast
outdoor area peddling inexpensive clothing, shoes and accessories for low-income shoppers, next
to thousands of pricey antique and curio stalls that cater to an affluent crowd.
On the recent Sunday, not far from where Mr. Debo sat, waiting for customers, Lauriane
Barclais, a French public finance agent, said she and her boyfriend were cutting back sharply on
expenses, and had virtually stopped eating in restaurants. In a rare splurge, Ms. Barclais had just
paid 125 euros for a leather winter coat, but only because it was discounted by 50 percent.
The couple said several of their friends had lost jobs, were looking for work or could find only
temporary employment. Nearly everyone they knew had become more parsimonious.
Everything has become more expensive food, rent but salaries stay the same, Ms.
Barclais said. The economy is not going well, and I dont see it improving.
Achraf Dzyzai, a seller of childrens clothing in the outdoor market who recently discounted
everything in his stand to 10 euros or less, had a similar lament. Weve lowered our prices, he
said, but Ive been sitting here for more than an hour with no buyers.
Mr. Dzyzai says his typical customer earns minimum wage, which in France is around 1,430
euros per month, about $1,880, before taxes. The crisis is dominating their thinking, he said.
The economy was bad, but now it has become terrible, said Michel Corbez, the bespectacled
owner of an Asian antique furnishings stall, as a well-heeled French couple strolled by. The
policies of the current government are like the nail in the coffin.
As if flagging sales were not bad enough, Mr. Corbez said taxes on the boutique and on a larger
store he owned in a Paris suburb had surged this year to 6,000 euros annually, about $7,800,
from 350 euros five years ago. Its clear the government is desperate for money, he said. But
we are being taxed so much, we feel like we are left with very little. It makes you think they
dont know what theyre doing.
Down the hall from Mr. Corbez, Noureldin Elcheikh sat in the boutique he has run for 14 years,
offering 19th-century French tapestries, gilt-framed mirrors, chairs covered with red damask silk
and opulent cloisonn vases. He drew on a cigarette to pass time. Weve never seen things as
bad as they are now, Mr. Elcheikh said.
France is already sick, he added. Things were slow, but purchasing power seems like it fell
off a cliff since last October.
He sighed: Its like the world has stopped.