Retro back to 2008
Good Morning Middle America, your King of Simple News is on the air.
Every so often I go back a couple of years in my archives to see how I’m doing on my predictions. The following was published June 12, 2008.
U.S. NEWS: The markets are rebounding this morning after taking a pounding this week. The good news is that retail spending is up. The bad news is that unemployment is up. So if more people are unemployed…where is the money coming from? Oh, that’s right, our government pulled the old “checks in the mail,” scheme.
My wife and I haven’t gotten ours yet, due to the last two digits of our social security numbers being high, but like I said, the checks in the mail. I wonder who will send the 8.5 million unemployed (25,000 more last week) a check NEXT month?
So here are some economic predictions for the coming months. As the stimulus checks wind down, consumer spending will wind down with it. Way down. The travel industry will report ongoing losses as the normal winter slowdown approaches.
Holiday spending and holiday travel, which many businesses depend on for pure survival, will be much lower than in 2007, as more and more of our incomes will necessarily be diverted to rising home heating costs, elevated grocery prices, and the cost of auto fuel; in other words, necessities.
Hundreds of thousands of Americans are employed in non-essential businesses. Entire specialty shops that sell everything from high end kitchen gadgets to designer sunglasses will fold the tent.
Wages will once more (just like the housing bubble) fail to pace real inflation. Any wage increases will be dwarfed by the falling purchasing power of the dollar.
And finally, Europe will find themselves in at least as much trouble as the U.S. and will fall into recession. Europe is far too dependent on U.S. trade to survive intact.
Let’s talk for just a moment about the non-essential jobs that I mentioned above. As prices rise faster than wages, it’s not so much about what you purchase with your shrinking income, than what you DON’T purchase.
Many businesses are supported with “discretionary income.” Income that is left over to do with as you please after all the essential elements of life are accounted for.
One category of business that is firmly tied to discretionary income is the antique/vintage gang. These types of goods represent “things we want, but don’t need.”
I know a lot about the antique business, having spent several years as an auctioneer. The excitement of a dusty find in grandma’s attic dwindles at the same rate as discretionary income. Look for most antique shops to close and for vintage autos to take a nose dive.
The high end grocery business of natural and organic foods find themselves firmly attached to the same phenomena. The once rising Whole Foods Grocery chain has seen their stock fall from $53.65 to $26.96 in the past eight months. (Whole Foods fell to $18.00 but has now recovered to $40.00 temporarily).
Consider whether your business or employment is in the non-essential area that will be both the hardest hit and soonest to feel the pain of a slowing economy and react now rather than after you have no options.
I can’t say how much that I wish I were wrong about my predictions, but math is in fact the exact science and that is what I base all of my conclusions on.
The best advice that I can give is the same that I always give; Spend your life doing something that is truly beneficial to society while you live simple, live free, and live well.