From a small northwestern observatory…

Finance and economics generally focused on real estate

Retail?

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The massive, annual orgy of shopping is just around the corner, and I’ll admit I’m worried.  Let me share a bit of a story.  I live in a pretty tony suburb of Seattle.  I dare say I’m surrounded by conspicuous consumption.  The Range Rover density in my corner of the world is embarassing.  That said, the glass bowl on the Kilpatrick family’s upright mixer broke (first world problems, right?), so we ordered another one.  Turns out, the quickest  quickest way to get a replacement was to have it delivered directly to a nearby big-box (which shall remain nameless) so I wandered in to pick it up yesterday.

It wasn’t just the dearth of customers that disturbed me, but the dearth of sales staff. the shelves were reasonably well stocked (albeit, nothing holiday-esque yet) but the cashier stands were empty — all checkouts were directed to the customer service desk (I’m not kidding).   I’ve frequented this store regularly, and while I don’t have a grasp of the seasonality of their business, my guess is that the shopping count was about half of what I had seen in there before.

Let me repeat that.  About half.

Most economists have been looking for a pull-back (that’s a kind word for “recession”) sometime next year or the year after.  The current leadership in Washington fails to note that increasing stock prices do not bely the onset of a recession.  Indeed, Mike Patton had a great study of recessions and the stock market (measured by the DJIA) published in Forbes back in 2012 (click here for a copy).  He studied 14 economic pull-backs dating from 1928 thru the most recent one.  Intriguingly, in most cases, the market hit record highs immediately prior to the onset of each recession.  In fact, in a couple of the recessions (particularly the one in 1945), the market continued to rise even during the economic trough.  During the most recent kerfluffle, the market was behaving quite nicely, albeit with a bear trend, until the full onset of the recession.

I think there’s more to be learned about recessions down on Main Street than there is up on Wall Street.  Right now, Main Street in my admittedly prosperous corner of the world is not as healthy as it was a year ago.

Written by johnkilpatrick

October 13, 2017 at 3:52 pm

Posted in Economy, Finance

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