December 22, 2014

Signs of a Slowing Local Economy

Signs of a Slowing Local Economy

Mark 13:28

“Now learn a lesson from the fig tree. When its branches bud and its leaves begin to sprout, you know that summer is near.”

I believe that, on a macro level, the economy can be so manipulated that it can be difficult to tell how it is actually doing; from quantitative easing, bailouts, subsidizing, fiddling with unemployment numbers and on and on. If we learn a lesson from the fig tree, I believe that we can see (on a micro level) when economic troubles are beginning to blossom. I’m going to break things into groups for this article. Some could fit into multiple categories, but you’ll get the idea.
 

Gas Prices

Gas prices can fluctuate based on several factors, from an international incident overseas to a weather event close to home. The price at the pump is reflected in the price of just about everything else. Petroleum is used in the manufacturing and delivery of almost everything we consume and interact with on a daily basis. The more it costs to get to us, the more we’re going to pay for it.
 

Unemployment

This is hugely manipulated by the government, mainly by not adding in people who are out of work but no longer qualify for unemployment and by not counting people who are underemployed. This can be hard to track on a local level but is not impossible. Now and then, we will hear of a local company letting workers go, or of a larger corporation closing a local branch.
 

Food

As I mentioned above, the price of oil can cause the price of groceries to increase. So can inflation, crops impacted by weather events and other factors. Companies have gotten tricky. They don’t want you to see the rising price of a product. At times they make the packaging smaller and keep the price the same or keep the box the same and change the amount of the product in the package.

I have said several times over the years that many of the riots and rebellions seen worldwide are due to increased grocery prices. The people of many countries spend 30% of their income on food. We here in the USA spend roughly 12-15%. They rioted because they had no more money to spend and the price of staples was increased, leaving them unable to feed their families.

Swelling soup kitchens and bare food shelves are also signs of local economic troubles. I have seen several reports in the last few years where food shelves have said that they had seen a sharp increase in people requesting aid.
 

Real Estate

Commercial and housing markets are a good gauge as well. Seeing foreclosure rates and the amount of rental properties increase is a sure sign that the local economy is in trouble. Banks are not giving mortgages to just anyone anymore, so people who would have qualified for a home loan ten years ago might be forced to rent unless they can come up with a 20-30% down payment.

Small local businesses closing can be another sign of trouble in a local economy. Some might go out of business because of a bad concept or poor business practices. However, when you see several vacancies in strip malls or in other locales, it can be a sign that there is not much disposable income in the local area.
 

Consumerism

To me this is the most telling sign of local economic trouble. We live in a society that likes to spend, so when traffic at local shopping centers is light for any length of time, it could be due to a lack of funds in the shoppers’ accounts and could lead to the closing of local businesses.

Another sign of economic trouble is sales with deep discounts, or starting Christmas sales much earlier than normal. Companies don’t do this because they love you, they do it because they love your money and some money is better than none. Another sort of silly sign is when a company will have one of their hourly employees dress up or hold a sign advertising a “special”. They would much rather business be busy enough to have that person in serving customers than providing cheap advertising.

I drive by several establishments that people gather at after work for happy hour. When times are tight, these places have fewer customers. The same can be said for restaurants. Both fast food and dine-in restaurants see fewer customers when the local economy is struggling. Many offer free meals for children on a certain day, or free dessert on another, or even buy-one-get-one deals. Again, they don’t offer these because they just like to see your face.
 

What do These Signs Mean?

I think they can show us that we could see more unemployment as companies try to stay afloat. As these companies try to get your business, it could mean steep discounts for those who have cash. There are those who say paper money is worthless, that gold and silver are the only way to go. I agree that paper money has no inherent value. However, they are wrong that it is worthless. Until we see hyperinflation, paper money still has value and the person who has little debt and has cash can get some very good deals.

An extended time of these signs in a local economy could be a huge warning to move. Look at Detroit, the city was vibrant and thriving, known for music and automotive might. But now the city is literally falling apart with some buildings being so derelict that the city has torn them down.

I have no proof, but I believe that with a drop in local economy, we’ll see an increase in crime. There is a certain percentage of the population who have no problem turning to crime in the best of times. I believe there is a larger percentage who will only do it if they feel they must to take care of their families.

I would really like to hear your thoughts on signs of trouble at the micro level, local economy. Please share them in the comment section.

 
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Comments

  1. My family owns a small business. We are currently operating at one-fourth the volume we were in 2007. In speaking with a few other small business owners, one is going out of business, one has failed and declared bankruptcy, and one is contemplating bankruptcy, renting out their home, and living in the store room above their business. Many others have shut their doors. Our local paper recently had a big splashy headline about the new businesses opening their doors locally – a Dollar Store and a bail-bonds outfit. I think that speaks volumes about local economy.

    • Chris Ray says:

      Sorry to hear things have slowed so much, and I agree that the two businesses are telling of the time we live in.

  2. Another place to look is at service type businesses. I know this falls under consumerism but it’s usually the first place people start cutting back when things get tight. Fewer hair cuts, fewer yard services and so on. I’ve also noticed a big increase in the number of “yard work” businesses. More people out of work means more people looking to start a business and oft times in the service business section.
    My wife is a hair stylist and though her customer base has increased it’s only due to the fact that she hasn’t raised her prices in the past 5 years. Other’s in the area raise their prices to make up for lost revenue but it has the opposite effect they hoped for.

  3. The unemployment numbers also do not include those who have not yet been employed, but are looking for their first job. My son, and several others in our area that I know are in this boat and I am sure that there are many others.
    Many places only take applications online and you never hear back anything, others interview, say they will let you know either way in a couple of days, and then never do, even with multiple call backs after giving them a couple of days.

  4. Goatlover says:

    Less inventory on store shelves was something I started noticing a few years ago. Stores were tightening their belts because sales were slowing, so fewer items were being ordered at a time….Grocery stores had 2 boxes of a certain cereal with LOTS of bare shelf behind them.

    The only full parking lots are the local thrift stores. People are buying second-hand to stretch their dollars.

    Local banks are more like funeral homes these days. NO walk-in customers to speak of. Minimal staffing. Little-to-no loan demand.

    Also, I went into Walmart on a Tuesday afternoon, during normal business hours. The place was surprisingly crowded, so I asked a cashier what was up. She said, “It isn’t the 15th of the month yet. That’s when people run out of money on their SNAP cards. It’ll get really quiet after the 15th.” I looked around and saw a LOT of working age adult customers, male and female. They were the unemployed, out spending government-provided money……I immediately went to the bean aisle and bought another 10 pounds!

  5. Dare Tuitt says:

    Another sure sign: local food banks begin to experience pressure to serve more and more people, including those who are employed/underemployed yet still run out of food by month’s end. Food donations go down while demand goes up. Every time food prices go up, more people are driven to food banks to make up the different they can no longer afford.

    Still one more sign: private security companies flourish. As crime increases, businesses hire security guards, or have sophisticated electronic surveillance systems installed. The trend for Home Security has been a booming business in the suburbs, as crime spreads out from cities, but now rural areas need security services to keep food, heavy equipment and farm animal theft at bay.

  6. Badger359 says:

    Good article, hard times are coming fast around the corner. California’s drought will impact food shortages in fruit and vegetables in a massive way considering they provide greater then 84% for the US. Not to mention meat. So prices will go up like Gas prices. Prov. 27:12 (a prudent person foresees the danger ahead and takes precautions, The simpleton goes blindly on and suffers the consequences.) Another one goes, (A days wage for a loaf of bread, but don’t spoil the olive), The black market will increase, so will crime and persecution

    • Chris Ray says:

      Glad you liked it. Proverbs 27:12 is one of my favorite verses, and gave me the idea for the tag line for the blog.

  7. Rev. Dr. Michael E Harris says:

    Dare–I just read an article about surveillance systems and decided I would check into more cameras. This to be done as soon as I finished my emails. One left–Wild Bill for America.

  8. mariowen says:

    What I have observed where I live is that there is a widening gap – and widening quickly – between the “rich” and the “poor”. The middle class seems to be dissolving right before my eyes! Those that have good jobs are not as many as before, and there are plenty out there that don’t have jobs and are living on unemployment or welfare or food stamps. For those in the latter class, some continue to live as though they were still working, using credit to maintain a life style that they previously could afford. One of these days it is all going to collapse. What we are going through right now is the stage of being over the cliff but we won’t admit it. We can still “fake it” but that won’t last for long. The slightest blip on the screen will begin the domino affect and then it is all over.

  9. Middle class? What middle class? We optimistically call it middle class, when in fact, it is simply the working poor!

    • Dare Tuitt says:

      Sadly, many of the middle class are now the working poor because they didn’t educate themselves on the hazards of being in debt up to their eyeballs. I know many will say the prevailing attitude was one of encouraging people to buy things on credit, to take on massive debt. As Christians, we should have known better. There’s ample scripture about debt and avoiding debt. It’s another example of the consequences that can happen when we don’t stay in the Word and make reading it a priority in our daily lives. People – we live in perilous times! You can’t count on even your Pastor to teach you these things from the Word! You have to make up your mind to follow Him in deed or not. Halfway doesn’t cut it. What else are you missing because you don’t read it every day? Just saying….

  10. Many of the metrics reported in the news are manipulated in ways that you won’t learn in statistics classes.

    One of the more reliable numbers is gasoline usage. The only downside is the time lag (the March release was for the December numbers).

    I believe that gasoline usage serves to tell us what’s going on with the economy.

    We’ve now hit a record low usage (the numbers go back to 1983) so that we now would have to TRIPLE gasoline usage to get back to normal levels.

    We used just 18.6 million gallons a day. True we had bad weather, but if you look at the 25 year period of 1984-2009, the worst January usage (usually the worst weather month) was over 50 million gallons a day.

    Information (including the data source link) can be found at http://www.thefinancialstateoftheunion.com/1/post/2014/03/resources-for-usa-prepares-march-10th.html

    If you’d like to hear more of my analysis of it, click on the Events tab and the post for March 10th includes a link to the mp3 replay.

    Gasoline usage is a great resource to use to counter “the economy is getting better” propaganda.

  11. In this vid, a Wall St Journal reporter actually recommends to hoard certain foods that are going to get expensive. Rare to hear something like this from mainline news.
    http://live.wsj.com/video/food-prices-surge-hurting-consumers-companies-alike-2014-03-18/EDABD832-6D35-4EF0-99D7-F757EEEEF740.html#!EDABD832-6D35-4EF0-99D7-F757EEEEF740

    Bottom line: Food costs are expected to increase 2.5 – 3.5% in the US this year. Was this reporter begin by telling people to hoard certain foods b/c she was recommending prepping? or just a way to save $$$? probably the latter.

  12. Larry,Back 40 renegade says:

    Do any of you folks think that this is a small downturn on account of the mid-term elections? Seems there is always a minimal slowdown around this time, but the real heartbreaker (recession) is when we have a brand new president and no one knows what he’s made of until he/she has to face some kind of crisis, in which case, he’ll lean toward the person/organization that offers him/her the biggest incentive to see things their way.

    • I agree with asessment of what a new President usually does. That means we have to work hard for to get a President elected who has constitutional principals, is not afraid to stand by them and tell the truth to the American people. Unfortunately we have to wait till 2016 for that and not the midterm elections.
      Yes there is usually a downturn before midterm and general elections but this downturn is based on a whole lot more than that. We’ve been on a downward spiral for years now and they keep hiding the numbers and changing accounting rules to mask it all.

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