Swedish for recession

Ikea's trademark bookcase is proving to be a global economic indicator

Swedish home furnishing giant Ikea recently made waves when it redesigned its iconic Billy bookcase to make the shelves deeper. The Economist magazine was quick to declare the move an omen for traditional books, suggesting that Ikea expects Billy “customers will increasingly use them for ornaments, tchotchkes and the odd coffee-table tome—anything, that is, except books that are actually read.”

Perhaps. But keeping the Billy relevant is not just good news for consumers, but economists too. Three years ago, Bloomberg News unveiled its Ikea Index, which seeks to measure the purchasing power of consumers around the world by comparing the prices of the ubiquitous, flat-packed particleboard bookshelves in different countries—specifically the plain white model that measures 80 cm by 202 cm.

And, as one might expect, the most recent data shows a world in economic turmoil. The price of the shelving units fell 17 per cent over the past year to US$49.99 in the United States, which is still struggling with a weak housing market and soft consumer spending. Meanwhile, the lowest-priced Billy bookcases were found in Europe (a Billy unit cost just US$42.82 in the Netherlands), where the euro zone debt crisis continues to deepen. And China posted the biggest overall drop in prices, a full 27 per cent, as the country’s once blistering growth has slowed considerably. By contrast, the highest prices were found in the Dominican Republic (US$111.54) and Israel (US$96.87).

While Bloomberg didn’t provide figures for Canada, the shelves are currently priced at $69.99 on Ikea’s Canadian website, which works out to about US$71.34 at last week’s exchange rates, which makes sense since our economy has continued to perform comparatively well over the past few years. As for whether people will continue to store books on their Billys, Ikea has stressed it has no plans to ditch its existing shelf size. It’s also worth noting that The Economist has a conflict of interest when it comes to reporting on the Billy bookshelf. The magazine was the creator of the competing Big Mac Index back in 1986.

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