Is Everybody Broke?
shailynn
They never tell you what you need to know.
Price of food, vehicles, housing, flights, gas, vacations, healthcare, salaries for jobs?
I don’t think anyone knows these answers. Pricing on used cars has dropped like a rock in a lake over the past 6-8 months. I see new car lots with lots of inventory. I see food pricing go down, then up, then down. Same with just about everything else we all purchase.
I know my suppliers still can’t get their act together when it comes to production. COVID was four years ago!!! Why can’t anyone figure out what their new normal is? I understand this is the case over many industries. I’m talking a little tongue in cheek. I understand why industries, corporations and businesses can’t figure out what “normal” is these days but on the other hand I’m astonished they can’t.
Does it even matter? I ask that because it now seems everyone is broke. The high cost of living the past 4 years has finally caught up with many people. Just go dig into the news and see how many people are defaulting on loans, how many people are behind on student loan payments since they have started back up. It also doesn’t help that this is an election year and in that case many businesses are afraid to make any major moves until they figure out who the president will be for the next 4 years.
I talked to a buddy the other day who is the manager of a large grocery store. He said their sales are off 15% so far in 2024. The first time EVER the store has been down in its 15 year history. He said foot traffic is about the same, people are just buying less.
I know of several small local businesses in my area who won’t be here by the end of 2024 if things don’t change fast.
Two things that contradict everything I just said.
1. Stock market still kicking ass long term.
2. Vegas had its biggest gambling month EVER in December 2023 (see link below):
https://www.newsnationnow.com/business/y…
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This is normal, not the new normal, just the regular normal.
Covid, lockdowns, supply chain shortages which led to the start of the downward spiral laid the groundwork for gougeflation.
After increasing their profits the people that were able to overcharge us for everything using covid etc as an excuse aren't going to give it back. There are exceptions but overall high prices are here to stay.
Sure lots of people are hurting but at the same time many are prospering.
Situation Normal All Fucked Up
But I'm not sure I'm normal, I got lucky since I wasn't impacted much with the last recession I had money to invest when things were down. Most of the moves I made back then that everyone in my life said were crazy are now the things insulating me from the current chaos.
I think studies have show that lower-income people tend to gamble more.
It's funny to me, that we've got so many people who whine about being broke, but minimum wage is a joke. It's like I'm so victimized because the gas that I put in my giant truck that gets 3 miles to the gallon is expensive, but fuck the people who can't put a roof over their heads.
In speaking with colleagues in other departments the average balance in both checking and savings accounts has been dropping for the past 18 months and started dropping more sharply around September of last year. Our bank has also seen in uptick in early withdrawals from CDs in Q4 as well. The one upside is that average balances in our 401k, IRA and other investment accounts are up due to decent returns in the market.
From listening to earnings calls from a few competitors last week these trend is repeated among most banks. That adds up to a lot of people who are struggling to get by. A lot of banks, including the one I work for, are going to be tightening who they lend to this year and that is going to make it even tougher on those that have been barely getting by because now they are going to have a much tougher time getting credit if an unexpected expense comes up and they don't have enough cash in the bank to cover it.
Too many people don’t understand this and thereby are harmed by one big happy hooray then a thousand paper cuts. Fiduciary/inflation ignorance is widespread. For example, anyone suggesting more free checks or forced increases in minimum wage.
Dolfan - I get what you’re saying I feel the same way. I used to never check the prices on anything when shopping and then during COVID when it was thrown in your face everyday on the news I took notice. I was largely unaffected by COVID. No stimulus checks, work continued the same as usual, so I feel I am largely unaffected. Some of my friends that own business are sweating right now and I worry for them and their staffs.
Whodey - what you said here is very alarming. I have heard similar things but I think a lot of people ignore it or worse, do not want to talk about it because they are in the delinquent group. I have a relative that’s in banking as well (same state as you) and they’ve been saying the same thing.
I wonder what percentage that was pre COVID / during COVID / 4 years post COVID?
Would be interesting to see how much the 44% has changed in either direction.
Remember, the equity market is not a proxy for economic health. We are still in a "bad news is good news" cycle because poor economic data brings an end to tighter monetary policy, sooner. Even a single stock does not correlate well with the fundamentals of the underlying company. They can diverge greatly for many reasons over even a long period of time (years).
Also, it is true that elevated multiples in equities adds to the wealth effect, but it's disproportionally skewed to wealthy people who actually own stocks. So, it means that some people have more money, but it doesn't say much about the underlying economy.
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Well, if you believe some of young girls on YouTube - the answer is no. (Not that I do). I seem to get a constant feed of YouTube videos of guys walking up to strangers and asking how much money they have in the bank. The answers range from $5 to huge amounts.
If they are telling the truth - and that’s a big IF, every marginally cute girl is on Only Fans making huge bucks. There were two cute girls who claimed to be making $10,000 per month selling pictures of their feet. They said they had over $100k in their checking accounts
In my area, there was a stupid idea to build more casinos, thinking it would create more jobs and bring in more tax revenue. Now the casinos are oversaturated, and there are only so many gamblers out there. Now, the degenerates are just spread thinner across the growing number of casinos.
When people are barely getting by, things like concerts, movies, eating out, and sports games are the first thing to be cut out. I saw a lot of strip clubs close firsthand in the last year or two.
I have seen stories about food banks and soup kitchens not having enough food to feed people anymore. The amount of homeless and hungry people has doubled or tripled in some areas, while donations to support these charities have fallen.
Some stocks are blowing out earnings (Amazon, Meta), while other companies are in big trouble (New York Community Bank, Peloton). Gold is not far off its all time high in December 2023. There are lots of mixed signals.
I'm retired a few years now and truthfully my financial situation hasn't changed much, I bitch about the cost of everything just like most, yet I still spend on many of the same stupid things I always did, and crazy as this sounds my financial accounts are growing at a faster rate then ever.
The world is still turning, and where I live the luxury goods are selling like hotcakes, amazing every other new vehicle is a Mercedes, a BMW, or an Audi, very few American cars around here, the restaurants are packed with lines at the better places for dinner, the mall is crowded on the weekends, dozens of Amazon, UPS and Fed Ex delivery trucks making deliveries seven days a week, Uber Eats and Door Dash vehicles causing lines to get in to the gated communities every evening, I don't know how to explain what's going on with our economy, all I know is my own economy is just fine.
Real (inflation-adjusted) wages are higher than they were 50 years ago:
https://fred.stlouisfed.org/series/LES12…
Just earlier this week I was stopped at a red light watching all the vehicles pouring out of the Kroger parking lot at 5 pm. Car after car were new vehicles. Mostly Toyotas, Hondas and other imports. And the vast majority were SUV’s. A few large pick up trucks and mini vans.
It struck me - where did all of the American sedans go?
And doesn’t anyone drive a beater car anymore?
Now, even high school and college kids have nice cars. Every kid I went to high school with drove a beater. I’m not kidding you when I saw a VW I had in college that was literally held together with duct tape the headlight brackets were so rusty
The point is that wages have outpaced inflation. So, the median person buying the median stuff has more purchasing power.
What exactly is your point? It seems you may be implying that there's a huge wealth gap, to which I would reply "duh," but I'm not sure what that has to do with the discussion.
What's wrong with the economy?
The point is, higher productivity with relatively stagnant wages mean those whose income is primarily from investments are getting by far most of the additional goods and services. If they're plowing it all back into more investment, that would be one thing, but seems dubious that's what's happening.
We're a higher economic tier than average; you have to be to partake in this hobby. The average American making $50-75k is a lot harder up than we are.
Apparently not EVERYBODY?
The four airports immediately around Las Vegas have about 475 parking spaces for private jets - and they are all full this week.
(And poor Tay Tay can’t find an open spot)
The result? People buyer fewer items, or downgrade quality/brands.
I planned to purchase a new vehicle a year ago. Between the "give me a deposit, and me might be able to get you a vehicle in 6 months" nonsense, and "we charge $x above MSRP" scam, I chose to forego a new vehicle, and instead ensure I properly maintain my current vehicle in an effort to maximize its life.
I've also reduced dining out, as I find there is much price gouging occurring. It's simply not reasonable anymore. Do you want a smaller profit in exchange for more customers, or do you want to limit number of customers with your exhorbitant prices, and have difficulty absorbing your fixed costs?
There becomes a point where customers push back over excessive pricing.
Yes, there's inflation. But, I feel that companies are using the inflation news to push up prices even further.
And, the market system isn't a perfect one, just the least bad one so far. It can have inflationary or deflationary spirals, bubbles, and it can't adapt quickly enough to catastrophes like wars and pandemics. It's a wolf, not a domesticated dog. If people are dumb enough to vote for anyone who claims they can make a wolf shake hands and roll over on command, they are too dumb to keep a republic.
As I’ve said in the past I’m a sales rep and my company sells products. Prior to COVID we routinely offered discounts, to the point that if we didn’t offer discounts our customers didn’t want to product or they would buy much less if discounts weren’t offered. During COVID we stopped offering discounts, nobody complained and everyone made more money, because the end consumer was the one paying the price.
We realized this couldn’t go on forever, I’m not sure what most of our customers thought on that matter. Im sure it was a mixed bag. As sales finally started slowing we started offering discounts again hoping it would pick sales back up. Our customers flipped out and their end consumers did as well thinking there was something wrong with the products since we were offering discounts. As a result of all of this we stopped offering discounts on some items or trimmed the discounts (example) 10% off instead of the usual 20%.
The moral of the story is people are stupid, and the consumer has a very short term memory.