Sunday, August 20, 2023

If There's No Recession...

...then why are retailers acting so desperate?

In my email today, and almost every day, a missive from Camper World imploring me to buy a new camper. They offer 50% off - that's right 50% off - on any camper price with $200 as the last three digits in the price.

Holland America is flooding me with mailings advertising cruises. My "personal cruise advisor" that they assigned to me (after one Cruise) calls several times asking me when I want to book another cruise.  Not yet, but they keep asking.  They weren't calling and e-mailing me last year, though.

Meanwhile, it seems that every retailer I've ever done business with on the internet has been sending me emails asking me to buy more stuff. What's interesting about all of this is that it didn't happen 6 months ago or a year ago. They acted, back then, like they were doing me a favor by selling me something. Now it seems like they're almost begging.

But there's no recession, no siree!

Of course, these things on sale are not things necessary to survival - food, clothing, and shelter.  In any recession, it is said, the RV business goes in the tank first.  People cut back on spending, and things like RVs or motorcycles or boats are first on the chopping block.  Not the fancy cars of the very rich, or yachts or million-dollar rock-star buses, but the lower value crap that us middle-class people think we can afford by purchasing "on time" with borrowed money.

In a way, this is a continuation of a recession that was getting started before the pandemic.  During the pandemic, the government literally threw money at people in the form of "stimulus" checks and PPP loans (I closed my practice a year early!  Damn!) and flooded the market with cash.   It didn't help that interest rates were kept near zero during that period.  And, as might be expected, people spent the money and eventually this drove up inflation, housing prices, and labor costs.  It might be starting to calm down - or about to get a lot worse.

Recession... interrupted!

The problem is, people are pretty tapped-out in terms of debt.  A younger generation who might be looking at saving for a down payment on a house, is looking at student loan debt, intractable credit card debt, and high rent costs. With the astronomical rise in housing prices, you can't blame them for thinking that maybe they will never own a home of their own.  I thought that too, at one time.  Things may change for them, in a hurry, unless of course, they decide to just "give up" and wallow in material things.

A recent article in Forbes or Business Week or one of those other useless "business" mags behind a paywall, opines that "Gen-Z" is perpetuating inflation by spending too much money.   This is, of course, just generation-bashing, which these magazines seem to find amusing.  But there is a nugget of truth to it, of course.  You can't complain about food prices being too high when you just spent an extra $20 on Door-Dash, having $15 worth of food delivered.

I am not kidding about this, either.  I read online, complaints from customers of that service that it took an hour to get their food, cost $20 extra, and that the whole thing was unreasonable as the restaurant was only 10 minutes from their house!  We are talking able-bodied people who own a car, but are too lazy to drive or even walk to the restaurant to feed themselves, much less even go to a store and buy groceries.

When you spend as much on delivery fees as you do on the food, you are telegraphing to the business that their prices are too low.  But quite frankly, I suspect that food delivery will be another one of those luxuries that will go on the chopping block in short order.

Of course, it is not just luxury items that are falling from favor.  Like I said, every single retailer I have ever done business with, has been SPAMing me asking if I need more product. After radio silence for several years, I now get a once-a-week e-mail from Schick, asking me if I need more razors.  Nag Champa hounds me to buy more incense.  Unique RV asks me weekly (and Mr. See as well) whether we need more holding tank chemicals, after buying a case earlier this year.  A guy who sells lawnmower parts won't leave me alone. Another fellow who just sells snap kits wants to know if I need more - and checks in weekly, just to be sure.

MailChimp has been busy!  Name the business, they have started SPAMing me regularly just in the last few weeks or months.  Last year, I never heard from any of these businesses - and they acted like they were doing me a favor by letting my buy their products and services - at inflated prices, too!

Even Walmart seems to be doing the Desperation Samba - prices are stabilizing and, in some cases, dropping slightly.

And in terms of employment, we are starting to hear about layoffs.  People in "hot" job sectors, where you could name your own salary just last year, are finding it hard to get a job, as "no one is hiring" or if they are interviewing, it is only to see if they can get someone cheaper to replace someone they already have.

Of course, this is all anecdotal evidence.  True enough, the "supply chain" issues of the pandemic are largely over.  Truckers are once again complaining that they are not making any money and demand has slackened.  Or was that just a transitory thing?  Just last April, it was reported that retail sales were downToday, they report that retail sales are booming!   The financial press - also lost to click-bait news.

One thing is for sure - with rows of F150s once again lined up at the local Ford Dealer, they can't claim "supply chain shortage" and ask over-sticker for new cars and trucks.  Well, they can, but only idiots would pay that.  And sadly, the idiot shortage has yet to appear.

Financial news organizations are only good at predicting the past.  And to be fair, no one is very good at predicting the future.  A reader writes, lamenting selling off their investment properties before the pandemic.  He made a profit, but not as much as he could have, had he hung on for another year or two or three.  I did the same thing, selling out in 2005 when the market peaked in 2008.  You can mourn for losses on trades you never made, or be content knowing you still made out like a bandit.  And in terms of making mistakes, selling "too early" is not even 1/1,000ths as bad as selling too late.  Making money is always better than losing it!

Of course, the thing that worries me is that if the economy crashes in 2024 (even a mild recession) it could propel people to vote for Trump, as he would claim to have the solution to all their problems (just as he has a bulletproof report on election fraud!) and he would blame the economy on Biden - even though conditions we see today are the cumulative effect of the years leading up.

It is like with Clinton claiming credit for the booming economy of the 1990s.  With the fall of the Berlin wall and the collapse of the Soviet Union, we could afford to spend a lot less on defense (too bad we didn't spend much on trying to stabilize Russia back then!).  As a result, there was talk back then not only of deficit spending being a thing of the past, but the scary proposition that the national debt might end up getting paid off!  Economists were worried that the government, flush with cash, would end up as the biggest investor on Wall Street - and control the market!

Seems so naive in retrospect.  Successive administrations piled on more debt, and the relative peace of the 1990's was shattered on September 11th - and suddenly, it wasn't "The End of History" - at least as we knew it.

Like I said, predicting the future is hard to do.  But what gives with all these people hounding me to buy shit?  We never saw that last year!