Wednesday, March 19, 2008

How Do You Spell Recession?

How do you know when you're in the middle of a recession? Is it a sign when your investments would be doing better stuffed under your mattress than they are in the market? Is it a sign when your home is worth less every day? Is it a sign when anyone unlucky enough to be out of work will be out of work for some time to come? How about when Bear, Stearns goes under? None of these has led the Bush administration to admit that we're in a recession. Maybe a study of some different evidence is in order.

My beloved but ugly jacket literally fell apart a week ago, so I thought I'd go to a department store or two to see if they had anything left in clearance. No luck there, it's the wrong season for winter coats. However, I discovered at the mall that each and every retailer is having a fire sale on each and every thing you don't need. 40-inch LCD HDTV? You can get one for under $1,000. Furniture? At least 30% off. Small electronics? Look hard enough and you'll find a blender for $9.99. If you don't need it, it's on sale. I'm no economist, but to me this makes obvious the following: no one is spending money right now. If we were spending money, there'd be no need to give away the store. If we were spending money, there'd be no need to send $600 of our taxes back to us in May.

My torn jacket and I left the mall to run some more errands, and the reasons why no one is buying what they don't need became abundantly clear. We all know how much gas costs these days so I won't narrate my trip to the pumps. I stopped for a slice of pizza in order to avoid grocery shopping while hungry (I made that mistake once and came home with three bags full of meat and no vegetables, bread, or fruit, just meat, so that's a mistake I won't make twice). You might not know this, but the price of wheat has recently skyrocketed, in part due to demand from China. Pizza crust is made from wheat. Nationally, the cost of a slice of pizza has increased 25% in the past month.

Milk, eggs, and produce prices have also risen recently, due in part to the cost of shipping the stuff halfway around the world. Increased grain prices will mean that poultry and beef will cost you more by the summer, assuming you purchase grain-fed meats. All this makes you need a drink, doesn't it? In January, California wines increased an average of $2 a bottle, due to increased production and shipping costs. A blender costs less than a bottle of wine.

No one needs the Federal Reserve to tell them what a simple shopping trip makes evident. When the things you need cost more and more, you can't afford the things you don't need. Inflation of necessities leads to deflation of luxuries. Six hundred bucks a person won't fix it. On the bright side, if you have some cash left after paying your heating bill, it's a great time to buy furniture.


Just Asking said...

I was doing just fine until you hit the wine!! I can do without the meat, the potatoes, the produce, but take away my eggs and wine and I'm going postal. Maybe we need a counter to know how many days til that jughead gets out of the whitehouse!

tunsie said...

spring is just around the corner but u wouldn't know it with the temperature being where it is.cold damp and raw.i love u soooooooooooooo much and it kills me when u r hurt or upset.I'll tell u what.i happen 2 have 14 girlfriends and one of them has 2 have an extra coat that u can have at no cost 2 you,recession is not an issue here,if i told her give me your coat 4 my friend she would give it 2 me.she would let you have it because she wouldn't want u 2 be cold. tunsie.tunsie.tunsie

TW said...

Hey, maybe we should buy cheap furniture and burn it to heat our houses?