And a special word on apparel sales, as a sign of our times.
By Wolf Richter for WOLF STREET.
Services are growing at a decent pace, though more slowly than a year ago. The labor market is the strongest in years, so consumer spending is growing at a good pace, including retail sales, driven by red-hot ecommerce sales. Where the economy is in trouble is in industrial goods and in the huge oil-and-gas sector which also drags down the manufacturing segments that supply it with heavy equipment, tech equipment, vehicles, chemicals, and the like. And I have a couple of special thoughts on the consumer side, concerning apparel sales.
We’ll look at this situation via the detailed wholesale trade report by the Census Bureau, released today. Total wholesales in October fell 1.4% from October last year, to $494.3 billion, below where they’d first been in May 2018. It was the sixth month in a row of year-over year declines and the largest such decline since 2016, and it follows the boom last year when year-over-year sales growth peaked in May at nearly 11%:
The bigger year-over-year declines in 2015 and 2016 were driven largely by the collapse in oil prices and the bust in the US oil-and-gas sector, when many dozens of oil-and-gas drillers filed for bankruptcy. Plunging demand by that sector for manufactured goods – heavy equipment, tech products, specialty vehicles, chemicals, etc. – and the collapse of prices of petroleum and petroleum products helped pull down overall wholesales by over 5% during the time. The current oil bust, which is really phase 2 of the same Oil Bust, is a milder iteration.
The wholesale trade report tracks the movement of goods through the sales channel. Sales of services are not included. Wholesales are divided into two categories: durable goods such as industrial equipment or appliances; and nondurable goods such as groceries, apparel, and petroleum products (gasoline, diesel, etc.). The damage was spread over both categories.
Durable goods wholesales.
October 2018 had been an all-time record boom month, with $263 billion in durable goods wholesales, up 8.7% from prior year. October 2019 fell 1.9% from that lofty record, to $258 billion.
Among the categories there are four biggies, two of which rose year-over-year: Automotive, +2.6% to $42 billion (includes used vehicles and auto parts, but not new vehicles sold directly by manufacturers to dealers or fleets, thus bypassing wholesale channels); and Professional & commercial equipment, +2.3% to $47 billion. The remaining two biggies and several smaller categories booked wholesales that fell year-over-year:
Household appliances, electrical and electronic goods, -5.5% to $55 billion. Ninth month out of the 10 months this year of year-over-year declines. But this deterioration came off the steamy peak-spike in October 2018, which had been up 7% from Oct 2017, which in turn had been up 13% from October 2016 – the boom-years for these goods. October or November are the seasonal peaks in this category.
Machinery, equipment, and supplies, -1.7% to $42 billion. The third month in a row of year-over-year declines, after a huge boom in 2017 and 2018 peaking with 18% year-over-year gains in June, July, and August last year.
Among the smaller categories of durable goods were some other notable decliners:
Metals and minerals except petroleum, -12% to $15 billion, the sixth month in a row of year over year declines. This puts wholesales in the middle of the 10-year range, and back where they’d first been in 2006. Wholesales are measured in dollars, and so this category is heavily dependent on commodity prices of metals and minerals. There has been no growth since 2006 — just variations within a band, ranging from $10 billion to 16 billion a month.
Computers, peripherals, and software, -0.4% to $25 billion. Sales had been growing with large seasonal fluctuations (the high point is always in December, for tax reasons) and had been outright booming in 2017 and 2018 with year over year growth rates exceeding 10% in many months, topping out at 18% in October 2018. But this boom has now fizzled.
Miscellaneous durable goods, -7.8% to $20.5 billion. The all-time peak was in August 2011 at $26 billion, and the prior peak was in July 2008 at $24 billion. In October, sales in this category were back where they’d first been in May 2007.
Nondurable goods.
Wholesales in nondurable goods ticked down 0.7% year-over-year to $273 billion. In this category, there are three biggies. Two booked rising sales:Drugs, the legal variety, +4.1% to $65 billion; and Groceries, +4.8% to $59 billion. One, petroleum and petroleum products, booked sharply falling sales.
Petroleum and petroleum products, -9.2% to $59 billion. A year-over-year decline of $6 billion, largely based on the plunge in oil prices that started all over again September 2018. Note that the year-over-year decline in total wholesales, durables and nondurables combined, was also $6 billion. The decline in wholesales of petroleum and petroleum products, based on plunging prices, was the largest driver in the overall decline in wholesales. Had this category been flat, overall wholesales would have been flat as well.
During the bottom of the Oil Bust in February 2016, wholesales of petroleum and petroleum products had collapsed by 63%, to $28 billion, from about $75 billion a month in mid-2014, due to the collapsed price.
The rest of the nondurables categories that booked declines are much smaller, but together they also weigh on the scale:
- Paper products, -7.5% to $8.2 billion
- Apparel, -5.0% to $14.9 billion.
- Chemicals, -1.7% to $12 billion
- nondurables, -3.1% to $21 billion.
A special word on apparel sales, a sign of our times.
Apparel wholesales peak in October, in preparation for holiday shopping season. October 2017 had been the all-time peak for apparel. Wholesales have fallen 12% since then. But apparel retail sales in the US are doing well overall – they’re just shifting to the internet.
According to a report by Digital Ecommerce, in 2017, 30.6% of all apparel sales in the US were conducted online; in 2018, ecommerce’s share of apparel sales had grown to 34.4%. Given the 18.5% growth rate of online apparel sales in 2018, it is likely that in 2019, around 40% of all apparel sales will be conducted online.
Outsourcing of apparel manufacturing to cheap countries, with sales shifting increasingly to the internet and cutting out some middlemen, has for years put downward pressure on apparel retail prices.
In addition, direct sales that are bypassing wholesale channels are increasing. These are sales by manufacturers overseas to consumers in the US, via platforms such as Amazon and eBay, or via branded sites such as Nike’s, that are selling imported merchandise directly to consumers, cutting out classic wholesale channels and all US middlemen. These direct-sales are captured in ecommerce sales, but they don’t show up here in the wholesale data.
So, with many consumer goods categories, such as apparel – and even household appliances and electronics, the category above that showed declining wholesales – the sales channels are changing, with increasingly large amounts of merchandise bypassing wholesale channels and even classic US retailers, and being sold directly by the manufacturer or the brand to consumers.
Department stores get crushed one by one by ecommerce. Read… Brick & Mortar Melts Down as Ecommerce Jumps by Most Ever
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Good analysis. The changes brought on by the internet still have not been understood by us much less by government staffers that provide data.
The tariffs and other events have caused a wave of disruption.
Who knows what the heck is going on……but….
lots of folks are working and they sure are buying a bunch of stuff including housing, trips and services.
Too bad we can’t get statistics on rec drugs retail sales, opioids vs cocioids vs meth. This would say a lot about the public mood.
Marijuana sales in Colorado continue to set sales records and show no signs of tapering off.
Beer sales are also up.
Seems like party on until the party’s over, then scramble for the door.
Go to the door in the meantime is under water, human history and an incredible talent to always repeat and never learn
Some plutocrats think the door will take them to another planet. I say send them ahead to suss it out.
Yeah, right, “the door”. I’m very curious where it/they are and where they go.
VERY CURIOUS.
On global retail sales for the largest market recreational medicinals:
Cocaine: $1.4 trillion (2019) down from a peak of $1.8 trillion (2000s)
Opioids: $1.6 trillion (2019) new record high
Cannabis products: $350 billion and gradually declining due to statutory
changes.
Prohibition increased the price of alcohol in the US. 14,000,000 gallons of beer was seized in 1926 (peak prohibition).
There are 2 amendments to the US Constitution specific to ethyl alcohol.
These 2 amendments trivialize the rest of the document. I agree with the globalists, the constitution (aside from the bill of rights) is antiquated junk.
All the substances listed above are human rights (see amendment 10). Statutes to the contrary are illegalities.
I would not touch amphetamines w/ a 10 ft pole.
I guess Opioid and Cocioid sales totals are mainly in US. If Opioids are rising and Cocioids declining it looks bad for US mood, doesn’t it.
But I have to question your figures. Total US GDP for 2019 is 21.5. Your figures would imply that these drugs account for over 10% of our economy. I think if it were anything like that it would be legalized.
I noticed in our local Walmart store they have set aside a vendor space to provide a space for the goods people can order online then drop by and pick up their order.
However in walking by, I have yet to ever see anything in this order pickup space!
Have to wonder how the order online and then pickup model is working or not working for Walmart?
WES,
I never understood why anyone would drive to a store to pick up something they ordered online, when they can get it delivered at the same cost, usually a day earlier (Best Buy), to the door. That said, it’s nice to have convenient pick-up/drop-off places down the block, such as a convenience store, where you can just walk in and get your stuff without having to drive 10 miles and without having to negotiate huge parking lots and big stores.
There is a UPS and a FedEx pick-up/drop-off place like that within one block from our place, and that’s very convenient. But going to a Walmart to pick up a package, unless you live across the street from that Walmart, seems nuts to me.
I’ve done this before, Wolf, because Walmart (and other businesses) have typically charged for delivery but not for store pickup. If the store is within a 15-minute drive, I’ll typically pick it up to save on shipping fees. (I have more time than money these days.)
Also, I hear more reports of package theft in my neighborhood, so I’m becoming a little reluctant to receive deliveries.
There are the environmental issues as well (e.g. packaging, Fedex drivers), although I know it’s not clear whether one way is worse than the other.
It seems like there is a bit of a backlash against the constant onslaught of packages.
I have done this at Home Depot. Usually for a home repair or outside project I am working on. I need the part or tool right now in order to finish in the weekend I started.
Walmart and Home Depot and Target often charge for delivery for small orders, e.g., <$25 , or for large items/orders, which will be free shipping if you pick up at the store. So, cheapskate that I am, I will order ship for free to store.
Their hope of course is that you will buy something else while at their store.
Once, I ordered a 16ft A-frame ladder from Home Depot which was free shipping to the store vs $54 shipping to the house. So we picked up at the store with our truck
I’ve seen two types of people who do this. First there are those who are looking for something in store, it isn’t there, and they are pointed to the in store on line ordering. Some can do it themselves, some need help from the clerks. Which leads me to my second type of buyer, that are those who are not computer savvy or don’t trust buying on line. Older buyers or disabled buyers come in here. I buy on line for a friend of mine who is legally blind…he can look and search, but filling in all the account stuff doesn’t work. He loves ordering in store and picking up, likes talking to people, is patient waiting for his stuff, avoids expensive impulse (on-line) spending and it gives him something to do. Not everyone wants everything, now, now, now with as little physical activity or contact with people as possible.
I wonder why people are so passionate about getting things done as cheap, fast, and distanced as possible…it’s so opposite from many countries where a store seller is insulted when you don’t bargain and chat…including negotiate the price.
The customer with the American attitude is missing out on so much in life….and too ignorant to know it.
Wolf,
“Nice to have convenient pick-up/drop-off places down the block, such as a convenience store, where you can just walk in and get your stuff without having to drive 10 mile”
As others have pointed out, ship to store usually avoids what can be a hefty minimum order/shipping fee rqmt.
On the other hand, I think it is really the last mile (or 2) delivery that imposes huge costs on retailers trying to deliver – meaning there is an opening for close in businesses that do nothing but accept packages so that buyers can save on shipping to home fees.
As you pt out, convenience stores have lockers for this purpose – but I think you still get stuck with the shipping fees. The open niche is for PKG acceptors who have negotiated zero mailing fees from the delivering retailer.
I don’t think that UPS or 711 do that yet.
I have NEVER been charged for shipping and delivery to the door when store-pickup would have been free. Best Buy is big on this. Order a laptop, get it delivered free in two days, or pick up in three days. Same cost to the penny. Pickup takes a day longer because the store needs to get the same package from the central location and then process it, and they want to make sure they have it ready for you at the pickup counter.
Gandalf here mentioned a ladder he ordered online and picked up with his truck. Well, I don’t buy many ladders. Last one I bought was 20 years ago before you could order this stuff on the internet, and I carried it home a few miles because it wouldn’t fit in the car. Yup, that’s me, the nutcake walking down the street carrying an aluminum ladder. Thank God for the internet and free delivery to the door.
I’ve done this specifically with Walmart because they have a full grocery store inside where I buy some stuff. Also, it saves on packaging and shipping costs plus I avoid all the porch thieves looking to score my merchandise for free.
I stopped going to Walmart when they stopped stocking the shelves. Now I have my own personal shelf? The chains are saving money not using a third party delivery service. It takes me a few weeks to fill my cart. I time the purchase with the statement date on my CC. Overnight means nothing to me. The offer of free shipping will either disappear, or be hedonically incorporated into most consumer products in a few years. Like CCs, you will be paying whether you use it or not.
Wolf, for those who work full time it is often impractical to have deliveries to an empty home.
Wolf, you clearly have never lived in Minnesota.
The primary use for pickup at Walmart appears to be grocery lugs where people can drive up and leave.
Another thing that I observed at a Walmart grocery store was the bulk shipment of lugs to what appeared to be a home for elder residents. Seemed like a proper form of delivery for perishables and sundries under the circumstances.
Whats a lug?
Hef, a lug is sometimes called a crate, but designed specifically for fruits and vegetables. My experience is that the fruit is usually used for canning, but others may have a different spin.
I meant to add that many people can drive 10 miles that cannot walk 2 blocks whether due to infirmity or environment.
My local Target tried this, having a system where people would phone in (or use the internet somehow I guess) to make up an order, and then come by a cute little tent they had set up in front to pick up their stuff. Eventually they took it down and let the area go back to its normal and natural use: Bike racks and a place for the crackheads to hang out.
Apparels are possibly some of the worst sign of excesses in our economy if you ask me. One reason that I would actually agree with the far left nutjobs about communism is how wasteful that entire apparels industry is. I think I read somewhere that there are 5+ shirts manufactured every year for every human being on the planet.
Talk about wasteful. And our sales channels are amplifying that waste, it allows you to buy thousands of dollars of clothing and then return all of it within certain number of days. I would guess most of those clothing are not simply put back into circulation. It is the worst definition of waste. I personally think that was one horrible development that accelerated the trends of cheaper and cheaper clothing. It is absolutely disgusting.
But hopefully apparels will undergo a hedonic improvement overtime, especially as technologies are embedded into them. The $20 shirt now is going to start costing $200 become we’ll embed sensors and chips into it to do who knows what. Then it’ll either cause people to spend more cautiously, or balloon debt even more.
Exciting isn’t it.
Apparel is the poor bloody infantry of retail.
Go to any mall in the world: Isfahan, Manila, Ft Lauderdale, Barcelona… Apparel is 75% of the stores in any of them and the rate seems to be increasing. Mountain of shirts, trousers, shoes… you really have to wonder how much of it goes unsold at the end of the season and it’s promptly scrapped or sent to rot to some undeveloped part of the world under the guise of “humanitarian aid”.
Most of these apparel stores appear to be franchises of some sort, the kind that makes you scratch your head about the financial viability of the whole deal because between amortization of the initial investment, rent, utilities, royalties etc they have to sell a whole lot of overpriced underwear just to break even.
The apparel itself is more of a prop than the end product sold there, which is the franchise itself. As such it’s as siposable as those cheap paper decorations used at children’s parties.
PS: it’s funny that far left nutjobs say so because the worldwide apparel industry would probably be far smaller (and sustainable) without the catastrophic irrigation projects in Central Asia decided by Soviet central planners to create huge cotton fields in what are now Uzbekistan Turkmenistan and Kazakhstan. ;-)
Its my understanding that TJ Max (and probably others) have made a successful business by buying things other stores want to get rid of.
When I worked in garment industry we used to sell to retailer by the dozen and used to kid that they sold one for what we got for a dozen. I am sure it wasn’t quite that bad. If you are a small manufacturer you are set up to produce and you really need to find a home for your products. I remember the biggest fiasco was making something for Sears for then model Christi Teague. I think for some reason it all came back.
Other thing I saw was size tags changed so you can fulfil the order on time.
Yes, that’s good business and mostly the preserve of weekly markets here: just be sure to give the stalls a wide berth early in the morning because the people shopping there for new arrivals give Black Friday crowds of yore a run for their money.
I also would like to know how much the big Spanish apparel chains like Mango and Zara pay for their merchandise: my grandmother was a seamstress so I know how to tell apparel apart and this is the cheapest stuff money can buy sold with an obscene markup. You are probably too generous in your assessment.
It probably costs them far more bringing the containers over here from Asia than filling them with shorts and dresses. This is stuff that won’t last the season… no problem filling your wardrobe and you will also get some clean rags to use!
I think many of these small apparel stores have a business model of going out of business at the right moment, before their suppliers and the tax office come knocking on the door ;)
Apparal industry would also be smaller, more sustainable and with more durable products without US Monsanto ;( I severely doubt they use glyphosate in Russia, not sure about these ex Soviet republics.
BTW, Zara is quite cheap over here (Netherlands) compared to many alternatives. And they certainly are not the only one with cheap quality, I just have to look at my T-shirts from 20 years ago that have survived (some no-name brand, probably not the cheapest) and compare to the rubble that many big brands sell now and that you can throw away after one year :(
And 10 aisles of women’s goods and 5 aisles of kid’s for 1 aisle of men’s …
This year vacation I took my ASIAN wife to USA for a few weeks, after the first week of taking her to all the outlet stores and malls, then I took her to the ‘Goodwill”, where everything that she had seen for $200+ was $5 USD, and most of it was brand new. There is one theory is that shoplifters can now steal new stuff and sell at Goodwill who resells.
She proceeded to by Nike, Columbia, all the top brands for every member of her family, over 20 garments didn’t spend $100 USD.
snoopy,
As far as I know, Goodwill doesn’t pay for goods. It accepts donations, and you can write your own receipt and possibly deduct the donated value from your taxes. Goodwill posts a schedule online to indicate how much you can deduct for, say a skirt or a sweater or men’s trousers. We donate stuff to Goodwill periodically to clear out our closets and get rid of electronics we don’t use anymore. I have never even seen any indication that Goodwill pays for stuff.
I think people use platforms like eBay, Amazon, or others to sell pilfered merchandise. Or they sell them on the sidewalk.
Wolf,
Pilfered merchandise is a big problem in SF. I know people who work in loss mitigation at Gap, and they say the situation in SF is totally out of control. It has gotten to the point where a group of two or three people would walk in the store with shopping bags, and very quickly load up stuff, and walk right back out the front door. The staff are explicitly told not to try to stop them because of the potential danger of violence, and the fact that even if caught, those people are not going to be prosecuted.
From what I’ve heard, this is in part because smaller crimes like petty theft are no longer going to be punishable by prison. Laws that were set up or changed for good reasons now have loop holes you could drive a truck through. I believe the original focus on not targeting petty theft is because of you don’t want to throw someone who is just stealing some food into jail. So there are anti-incarceration laws set up so that property crimes below a certain threshold is not considered felonies.
https://www.city-journal.org/san-francisco-crime
The downside is of course, the criminal elements have figured this out. The same loss mitigation guys have said that these low level thefts are pretty sophisticated in terms of planning, there are scouts that comes in, looks around, and ID their targets, and then the snatch teams comes in and try to go under the threshold. They hit a few stores in a burst, then they stop and disappear for a while, then repeat.
This also goes back to the fact that porch thefts have become normalized, since even if caught, those people aren’t punished, and the police can’t afford to spend the resources to deal with this stuff, and the laws are no longer amendable to dealing with this.
I don’t know how wide spread the problem is in CA, but in the bay area, I’ve started noticing about a year ago that there are now security standing in front of Costco. It’s just a bit nuts.
MCH,
“It has gotten to the point where a group of two or three people would walk in the store with shopping bags, and very quickly load up stuff, and walk right back out the front door.”
I have witnessed one of those: 3 people with huge suitcases walked into my local Walgreens, spread out in one of the aisles, and threw everything (shampoos, etc.) on the shelves into the suitcases, while people were taking videos of them. When their suitcases were full, they closed them and ran out with them.
My Safeway has now put the entire personal care aisle behind locked glass doors. This is a huge hassle for shoppers.
Friend of mine who’d witnessed a similar thing — he’s younger and more hot-headed than I am, retired Coast Guard captain and now a startup guy — said police should start shooting these people on sight. I don’t think that’s helpful, but something should be done about it.
Wolf,
I have been told by friends who live there a few years ago that there are certain parts of Paris that you want to avoid because the police tend not to want to go there unless they go in numbers. I don’t know how exaggerated that is, but there is a certain degree of truth to it.
About 15 years ago, I was in Baltimore, was at a convention and had lived in a hotel near the edge of the inner harbor, so still considered the inner harbor area, but when I went to a convenience store just two blocks up, they had things locked up in cages, there was stuff on the shelf, but I think anything above a certain dollar value (not sure how much) was stuffed behind cages or was not easy to get to. I had heard about the bad neighborhoods just beyond the inner harbor, but that was the first effect I saw. The people at the hotel always told you to stay in the inner harbor area when you asked them in terms of where to go. It wasn’t my first time through Baltimore, but then I drove to Hopkins the next day, and you can tell how the area is demarcated. It felt like there was an invisible wall around a containment area. It wasn’t surprising at all to me that when the riots in Baltimore occurred a few years ago, it happened in the areas around those areas.
SF is already a bit like that, but the problem is that, but with Prop 47, they are making it less livable for people in these not so great neighborhoods, and slowly those neighborhoods expand out. Until more and more of it goes bad, and let’s face it, SF is not the friendliest city to live in to start with. I’m afraid they’ll slowly make SF like how I heard NY was in the 70s and 80s. (heck, if I believe any of this stuff I see on NY, that’s trending that way too with all these protests against cops, and a lot of it has to do with the current mayor and his views on policing)
We take everything for granted now. Around 100 years ago my grandmother was making underwear out of left over flour sacks. I worked in a garment factory in high school years in the summer. It was amazing how fast people sewed on commercial machines for $1.80 per hour (46 years ago). Its all gone now, but machines are probably better and people in Viet Nam may get paid about what pay was in US 46 years ago.
Old School,
I still remember the lumpy socks after my mom darned them. Now? When clothes wear out, (and I wear them to death), they go for shop rags. Nothing wasted.
About store pickups from a rural perspective. It all depends. If I need something particular from a distant supplier, okay then Canada Post works great and I wait a few days. However, if I need something right away, or am doing a town run anyway, I order online the day before for a store pickup. This ensures they have what I need and it is already mine before I even show up. I seldom store shop unless it is for hardware or building supplies. Clothes? Who cares? If they don’t have what I would buy I feel a sense of relief and do without. :-)
I still see select manufactured product lines protecting their commercial distributors. I would dearly love to buy specialty products from the maker. They have websites, they have product reviews and descriptions, but the next page is a distributor nearest you.
I live rural as well. Had to pickup relative at Raleigh Durham airport during rush hour. Made the mistake of going my old route through Morrisville. It was unbelievable the amount of development and traffic.
I am not sure a booming town is worth the headaches of traffic and no space. Seems like most of the money goes to real estate developers anyway with overall quality of life not as good.
Old school, They have been advertising Raleigh, Cary, Apex the best places to live in USA for about 10 years now. 20 thousand per year migrating to this region.
Cary = “Containment Area for Relocating Yankees” a/k/a the New Jersey of the mid-south. No thanks.
For 70% of employed Americans (production and nonsupervisory), real wages are lower today than they were 46 years ago.
And if you believe that the CPI underestimates inflation, they are far lower.
Did we imagine the wheel of justice would make an exception in out case?…40 years of gleefully supporting the slave systems in Asia is coming home to our roost.
Agree, quite exciting. Just ordered me five “I love global warming” logo t-shirts from MarkDice.com, one in every color. Can’t wait.
I think I go through at least five shirts per year. Same for pants. So I should buy clothes that all look the same, like uniforms, and get more mileage?
I keep two good pair of Jeans and a work pair in rotation. Five t-shirts and five button up shirts. I travel so much I just live out of my bag most of the time. Guys have it easy.
More efficient oil prospecting and development is good for the consumer. Better oil companies survived. Natural gas is used for cheap electricity. Exxon produced it. Global oil consumption has been growing.
We are fortunate to have a somewhat free market energy production market and a lot of resources. In Germany the electricity cost is about 33 cents per kw-hr about 3 times what I pay in N. Carolina. NC has insignificant fossil fuel resources so probably 99.9% is being imported from another state. We do have several nuclear plants.
With fiat currency it’s really tough to know what the true state of the economy is. Here are two things I think about:
1. If federal deficit is 5% and economy is growing at 5% nominal, do you have sustainable growth?
2. If present value of investment is future discounted cash flows and if savings income is less than inflation by 2% is the value of savings about zero?
To me even though we are temporarily at full employment, we had to eat a lot of seed corn to get here. I think that means we have structural issues that needs to be addressed, but our politics doesn’t allow it until there is a catastrophy.
If you drink the kool aid about robust growth and the stock market, and close your eyes to lack of affordability ….say a young couple buying that first house, or worrying about college costs, you are a casualty waiting to happen.
These people don’t even know what seed corn is. They probably think it is a new kind of nacho with liquid fountain cheese, in a box, waiting to microwave.
It’s funny how modern finance has changed the world. My grandfather got married at 17 in 1916. How did he get his house I asked. His in-laws gave him some land and he and his dad built it without borrowing any money. Pretty sure it would have been way under $1000.
Every time he had a couple of kids he added a room. As far as I know he never borrowed a dollar his whole life. Debt was just not easily available.
He also never had all the laws and regulations that you have today. Truly scary of the laws that hinder your life.
You learn a few things in life. If I was young and broke I would ride around farm country and find an unused mobile home and rent it.
Small farmers usually need the income and they are decent shelters. It costs about $3000 to demolish and haul off debris of a mobile home so most just sit empty when relatives die or move on til they are forced to deal with it.
Recently was traveling the countrysides of AZ and NM. Saw many old vacant trailer homes scattered here and there. Had eerie feelings of the recent past, or the portending future.
That’s the right way to think about it. An investment return is future cash flows, not a historical stock price chart.
Fixed income is now producing an investment loss, after inflation. Stocks present the illusion of beating inflation and a positive return, but the earnings growth assumptions are overly optimistic. In reality, stocks are producing a loss as well, and this should be evident later.
I went back and looked and sp500 was about 1425 on Jan 1, 2000. By several measures you could say that is about what the market should be valued at today or you might as well say Jan 1, 2020 to make it an even 20 years. It’s pretty easy to see that the Fed has went all out to keep asset values stocks, bonds and houses pumped up. I guess if you have an elastic dollar you can do that.
Then it risk we have is an overshoot on the downside. What if SP500 goes back to 666 or bond yields go to 6%? What if both happen at same time and all pensions go boom?
Bad Fed policy creates worst Fed policy.
The Fed has made the debt problem extraordinarily worse by kicking the can for so long. It’s to the point where ordinary remedies will not work any more. They are setting us up for a huge wealth tax, which is about the only thing they can do to create lasting demand and correct the economy.
As part of that shocking correction, I assume we’ll regulate the Federal Reserve and lock away the names of recent Fed chairs in the armpit of history.
” … nondurable goods such as … apparel …”
Got a kick out of that.
A favorite sport coat of mine is a Harris Tweed, bought from a haberdashery store in 1979, before such stores disappeared.
one of my wife’s most beautiful dresses is ca 1929, from an antique store.
I have similar story. A friend of a friend who I didn’t know husband died and he was going to take his clothes to donate to the thrift store. He stopped by and said the clothes were nice if I wanted to look through them. He had expensive taste and they were just my size. I gave him a $100 and picked everything out I liked. I didn’t need anything for 5 years. I hate shopping.
I had an older friend that lived in a retirement community. He said that he repeatedly got calls from widows whose husband had passed away and did he want to stop by and see if there was any clothes he wanted. He thought it was a little creepy.
About 20 years ago, my wife used to shop regularly at Macy’s and Nordstrom. She only bought clothes that were well-made classic styles.
She hasn’t been to either of those stores for at least 15 years and now just goes shopping in her closet. According to her, most of the clothes available in those stores now are weird, poorly made, junk from China.
One of our daughters shops almost exclusively at the local Goodwill store.
The reselling of apparel and accessories has gone main stream. There are online platforms where you can buy and sell used clothing, handbags, shoes, and all kinds of wearables. Many items being resold are brand new, never used items. There’s even a category of reselling called retail arbitrage, where items are purchased cheaply new or used, specifically for resale.
It’s a new world out there and the numbers don’t necessarily reflect the activities accurately. Reselling platforms have huge technology costs but don’t necessary pay for the merchandise they sell. They may have no cost of goods sold, only operating expenses. They may pay commissions or take fees from sales.
I doubt the government data reflects any of the changes going on right now.
It’s kind of funny how we are shaped by our times. My work career was totally in manufacturing. I was part of the wave of textiles and furniture that had moved to get cheaper labor in the south.
Automotive oil filters were invited in Oklahoma I think, not sure how that ended up in NC.
Pool equipment was a combo of California and Ohio seeking cheap labor as well.
The thing they all have in common is there are always time pressures and cost pressures and quality issues and people issues.
1. Women’s lingerie
2. Upholstered furniture
3. Textile polyester draw texturing machines
4. Swimming pool equipment
5. Automotive oil filters
6. Swimming pool equipment again
I’ve noticed recently, about half a dozen homes with ‘salt water’ pools. What’s makes these attractive, over normal ‘fresh water’ pools? It seems they would be a headache to maintain.
Just Ask A Chemist®
Saltwater pools use a filtering system generally called “salt chlorine generator” for sanitization instead of ready-made “chlorine tablets”. The generator is actually an electrolyzer that will break down common salt and water into hydrogen, sodium ions and hypochlorous acid. The process can be maintained indefinetely as the latter will eventually “break down” into chloride ions and will be pumped back into the generator to begin the cycle anew.
Salinity in one of these pools needs to be maintained at around 3,000ppm which may sound like a lot, but it’s actually barely distinguishable by human taste buds. Ordinary sea water is 35,000ppm in salinity or higher by comparison.
What make these pools attractive is that you don’t need to add chlorine tablets anymore. Just check salinity once in a while and you are free to go. You will also do away with the smell and your hair won’t turn green if you swim a lot because actual chlorine gas concentrations will be much much lower.
The problem is, of course, the price. A generator is about $1,000 to buy and every 4-5 years you will have to replace the electrolysis cell (say $750 plus labor).
Other than that you will still have to keep an eye on pH, hardness etc.
If you have a salt water pool built from scratch it will be “salt friendly”, meaning built to withstand the higher levels of salinity, for example by using marine-grade stainless steel in lieu of ordinary steel, but updating an existing pool will cost big $$$.
Thanks for listening. ;-)
I agree with MC01 below. I have seen some issues with staining on salt water pools but probably operator error.
A lot of hazards around a pool. Diving, stepping thru a skimmer lid in high heeled shoes, diving board breaking, pump sucking a child’s guts out while sitting on drain in kiddie pool, electrocution while grabbing the ladder to get out of the pool, draining because hair gets caught in main drain, filter lid blowing off under pressure while someone works on it, legionaires disease from poorly maintained filter, gas heater installed below sleeping quarters and non vented properly and people never wake up. There are a lot of redundant safety features on new pools and equipment, but sometimes there has to be a fatality before something gets put into the standard.
Nothing beats taking a dip in your own pool, beer in hand, on a hot day.
Keeping water free of bacteria has been a problem from day 1. Two stories, the first is true and not positive about second.
In 1800’s ships used to gather drinking water from swamp waters between NC and VA because the oh was so low that it inhibited bacteria growth.
Other story that I am not sure is true is they would put a copper penny and a silver dollar in a ship’s barrel of drinking water because of the ionization that would take place would retard bacteria growth.
I used to bring fifty pounds of dry ice to toss into my friend’s pool. We got a laugh after a day of overheated motorcycling and I ended up with a wife from that folderol.
Chemical chlorine treatment for non-saltwater pools adds calcium over time, so the pool needs to be periodically drained and refilled. Salt water pools avoid this problem since there is no continuous addition of dissolved solids. However, salt water “saps” cement, which is under the gunite and is mortar, so it loses it’s strength, so we will see how the longevity of salt water vs. non-saltwater pools holds up.
If the US economy is genuinely improving goods based commerce should decline. The wealthy never have a lot of junk in their homes. Only lower income deciles park their excess in storage facilities.
Read a good article on other site with some good debt graphs showing debt expansion for each of the last three booms. The last boom and bust was nearly all mortgage. This one is nearly all government with some corporate debt thrown in. Maybe that means this is the final bubble before the money system changes.
Doug Noland calls it the government finance bubble… In 2008 private credit creation started to outrun government credit expansion and control of new credit through interest rates. This boom is nearly all corporate, I would hold corporates before I would hold Treasuries. I wonder if at the reversal point we turn back to government paper or leave it behind altogether, and do away with most government spending in order to privatize as much as possible. Sort of an antecedent to what the fascists did in Europe in the 30s. You know if the trains don’t run on time, maybe they weren’t supposed to?
Restoration Hardware, Tesla auto—the wealthy continue to buy goods.