Even if the prices of consumer staples such as gas continue to escalate in America and in Europe, this is less likely to deter European consumers, given that such cost-of-living budgetary issues such high fuel costs have long become acceptable to European consumers, and because public transportation is better funded within the EU. The fears of competitors regarding European investment may actually be a potential boon, given that they will temporarily lessen the threat of competition in the present environment, and the fact that European spending seems to be continuing, unabated -- hence the fears of inflation.
Conclusion
In contrast, the average American's spending on consumer goods may flag, given likely increases in the interest rates by the Fed. This is especially true for mid-market products like Levi jeans. Consumers who are lower middle-class are likely to cut back on their clothing budgets, or buy from discount retail stores. Upper end consumers are likely to continue to buy more pricey jeans, with more social cache than Levis. However, in Europe, unlike America,...
Investment dollars are still relatively cheaper in Europe, and the recent decline in the American dollar whetted many European tastes for imported American clothing.
The American apparel industry has been hit hard in recent years, and must mitigate the risks inherent in standing still in an environment, where domestic demand is likely to decline. The European bank's more lax attitude towards inflation is likely to benefit both the costs of increased investment, as well as facilitate a healthier buying attitude in the minds of the European consumer.
Works Cited
Dougherty, Carter. (8Jun 2006) "European Bank Raises Rate but Doesn't Signal Future Moves." The New York Times. Retrieved 9 Jun 2006 at http://www.nytimes.com/2006/06/09/business/worldbusiness/09euro.html?_r=1&oref=slogin&pagewanted=printwrite
Levi Strauss & Co. (2006) Official Website. Retrieved 9 Jun 2006 at http://www.levistrauss.com
