Update from Sicily

Over the weekend my wife Dawn and I headed to Sicily for a vacation.  You might think that I have been preoccupied with food, wine and surf here in Taormina, and you’d be right!  However, I also have been tuning into the state of the Italian economy.

Taormina is overrun with tourists from all over the world.  Folks from the U.S., U.K., Germany, Italy, France, and many other parts are here visiting.  Many of these folks are coming via cruise ship and seem to be opening their wallets.  This sort of anecdotal evidence is important to verify abstract economic data and to get a first hand reading of what is really happening on the ground.

Recall that the European economy is barely growing, 0.3%, yet, there clearly is consumer spark here.  Shops in Taormina are open and selling things with no, or very little discount.  There are very few shop fronts empty or awaiting a new lessee.  Yes, Taormina is a resort town.  However, there was a time within the last year when even the wealthy, or upper middle-class traveler was not making a trip or if they were, they were not spending much money.

For store fronts to be open in Taormina and not empty means that shops are thriving.  For there to be no discounts offered in Taormina means that people are buying at full price.  What’s more the mix of shops is predominately higher end kinds of stuff.  That is a strong indication of an economic recovery being underway.  Remember too, that this is the tourist off-season in Europe.  We are two months past the August vacationing month.  At the end of most recessions, it is the wealthy who return first to being consumers.  And that is certainly happening here in Taormina.

I don’t want to read too much into my experience here.  But my intuitive sense is that not only is the recession behind the industrialized world, but the economy is also poised for a less tepid recovery.  Not exactly a ringing endorsement, but it is an endorsement.

Jason