Guest Post: What's Your Favorite "On the Ground" Recession Indicator?

Tyler Durden's picture

Submitted by Charles High Smith from Of Two Minds

What's Your Favorite "On the Ground" Recession Indicator?

Beautifully maintained trophy cars are being dumped for cash. What does that say about the "real" economy?

Everybody has their own "on the ground" recession indicators: the mall parking lot, the tony restaurant that used to be packed every weekend, and so on.

I have two favorites: freight trains rumbling south down the main line of the West Coast and "sell your own car" used car lots.

The freight trains are self-explanatory: at the top of the housing bubble, they were loaded with flatcars of lumber. Now? A lot of empty flatcars and container flats. A lot. Yes, the official statistics indicate rising rail traffic, but they must mean one more car has a load in a 100-car train and there's only 20 empties. The freight trains I see are still running with beaucoup empty cars.

There may be some explanation of why this is so, but I can report that these trains pulled no empties in 2007.

"Sell your own car" lots reflect the "private market" for used cars. If you want to know what people are trading in for new cars, then go look at new car dealers' used lots. At the local Honda dealer, I saw a number of Lexus SUVs on their used lot; people trading down to save on gasoline?

I've sold a few cars myself at the local "sell your own car" lot, so I know it's reputable and a model that works for buyers and sellers. For a flat fee, you park your car on their lot and price it however you want. Potential buyers get to test-drive it, take it to their mechanic, etc. It's a big lot, so the selection of cars and prices is suggestive of larger trends--at least to me.

Back in 2009 at the initial depths of the recession, the used Toyotas and Hondas vanished and the lot filled with Volvos and other big-car-payment brands. I took this to reflect people were ditching their car payments and snapping up older reliable cars they could buy for cash and get another 100,000 miles out of.

I hadn't been by the lot in a while and what I saw astonished me. The lot was packed with "fun" cars and luxury brands: four recent-vintage Cooper-Minis were lined up (none sold in the week I monitored the lot). A cute yellow VW Beetle--another "fun" car-- was over by the Mercedes. Yes, Mercedes, and Porsches, all beautfully maintained.

For the first time in the two decades I've scanned this lot, it was chockful of luxury cars: a pristine black 2002 Porsche Boxter with low mileage that raised my blood pressure and sorely tempted me because it was "priced to sell"--and for a Scots-Irish-French tightwad, that's saying something; an equally beautiful Mercedes 500-series two seater, low mileage, brand-new in appearance; a fairly decent Jaguar; another pristine 300-series Mercedes, a classic, unbelievably well-maintained Porsche 911 (1991)-- the list goes on.

In the good old days, these "still look new" luxury cars would have been snapped up at these prices. But now they sit here, unsold, day after day.

Another class of "fun" car was also represented--the muscle car: a very clean recent vintage red Trans Am attracted onlookers in one corner of the lot.

Sellers can add comments to the sales tag, and on at least two of the luxury vehicles it was noted that the car had been their father's, one owner. Others indicated the original owner was selling.

If you know some car buffs, or you are one, then you know what these low-mileage super-clean luxury cars represent: they represent the lifetime achievement car for a guy, or the trophy car the rising exec takes out on the weekend. There is no other explanation for a 10-year old car to have 17,000 miles, or 33,000 miles--they were all garaged and enjoyed as a third or fourth car.

It seems Dad is getting too old to drive, or it's no longer feasible to ease into the low-slung Porsche, and so he's given it to one of his kids. And the kid drove it to the lot to turn into cold hard cash.

As for the "fun" cars: maybe they're still selling big numbers of new vehicles, but the glow of owning a mediocre-mileage car with no room for the dog or kids seems to be fading for existing owners. My sister-in-law spent a fortune having her Mini Cooper fixed last year, and our friend with a cutsy VW Beetle had a repair bill after a few years of ownership that could have bought a decent used car instead.

For whatever reason, "fun" cars that I never saw on the lot before are now there in abundance.

This is all anecdotal, of course, and wide open to interpretation. If you go to the techie-hipster favored neighborhoods in San Francisco, the tony cafes and restaurants are crowded: there's plenty of Web 2.0 money floating around. If you only look at these concentrations of talent and free-flowing investment capital, the economy looks like it's booming. Ditto if you try to book a table near the Opera on performance night: there's plenty of old money around that can spend $100 per dinner, too.

Once again, there were no older Toyotas or Hondas on the lot, only a few 2-year old models asking near-new prices. I interpret this thusly: older reliable cars that will last another five years without major expense are snapped up immediately, and superfluous "fun" cars and luxury trophy vehicles are being turned into cash.

When people are driving their pride and joy cars out of their pampered garages and selling them for cash, not trading them in for a new car or keeping them for pleasure, I think that's saying something about the "real" economy you won't find if you hang around Twitter HQ or the bejeweled Opera crowd.

You may intepret it differently, of course. That's the beauty of "on the ground" recession indicators.

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Cindy_Dies_In_The_End's picture

CNN article about "Local Currencies" being used to pay for health services caught my attention the other day. Its getting more difficult to juggle those Obama wins by a ;andslide faux polls with the need to make money in reality.

 

Recession Indicator? Toll Booth operators on Turnpike telling me they are ready for a revolution.

(But then again we are relentlessly hostile in Secaucus...)

Cindy_Dies_In_The_End's picture

Also, I was wondering if ZH was going to start a Vote for the Worst contest. Oh nevermind, we already have that...

knukles's picture

If Washington DC ever gained statehood it would be called "the Blow Me State"

CrazyCooter's picture

Mine is the cheapest 12 pack of aluminum can beer at the beer store:

  • Grains
  • Heat to brew
  • Aluminum for the cans
  • Paper packaging
  • Energy to transport

That is a hell of a cross sample of core commodities in a single product.

People drink beer. Poor people drink beer. It is highly price sensative when poor people want their beer, thus, a true market indicator of inflation.

Regards,

Cooter

El Viejo's picture

When I did a project at a major brewery they told me the demand for beer always goes up during recessions.

Smiddywesson's picture

Absolutely.  My brother works for Seagrams.  He told me that people won't buy a new car in a recession, but the industry knows they will buy a $100 bottle of tequilla.  They had a word for it, something like "comfort luxeries" or something.  The theory goes that people will spend ridiculous amounts on booze during bad times because it makes them feel better.  Their most expensive lines of booze are doing the best, so I guess that validates the theory. 

Also, alcohol related misconduct is up six fold within my company.  It has to be the economy.

Gully Foyle's picture

Smiddywesson

That and everyone has their personal brand. Only drunks drink anything thrown at them.


mkhs's picture

And I always thought I was being polite not refusing a gift. 

FEDbuster's picture

Go to Walmart (the largest grocery seller in America) tonight at midnight (or most of the day tomorrow) after the EBT cards of 46 million Americans get refilled.  The hidden "soup lines" of the first Great Depression during the second Greater Depression.

Thomas's picture

I count fake or clearly unprofitable stores in the mall (think: lawn tractors with no attendant or some room filled with things for kids to jump on) 

Coke and Hookers's picture

Spot on. This is a well known phenomenon with all kinds of comfort foods. For instance, chocolate sales have very strong negative correlation with real economic indicators (not the fake ones everybody uses these days though). People skip bigger purchases and instead have a cozy night at home on their couch and comfort themselves with chocolate or primo booze. The correlation is particularly strong for high grade stuff like you mentioned with the $100 tequila. Swiss and Belgian chocolates sell like hotcakes during recessions.

e-recep's picture

that explains my new addiction of lindt lindor truffles and remy martin vsop. taken together!

Gully Foyle's picture

El Viejo

Yep, alcohol consumption is up now.

People can't afford to drink out so they buy and stay home.


SheepDog-One's picture

Sure a $50 bottle is way cheaper than just a few drinks at the bar. Buy and stay at home.

ClassicalLib17's picture

A 1.75 of Makers Mark goes for 47.99 around here.  That lasts about a week.  I went from 70k in 2009 to 22k a year today, but I can still afford my Makers.  Debt free, bitchez

CrazyCooter's picture

I only keep two bottles in my house; Makers and Belvedere. Usually, I just drink beer, but occasionally I like to sip something. :-)

Regards,

Cooter

Common_Cents22's picture

Costco Kirkland vodka is as good or better than grey goose at half the price.  

Jason T's picture

PBR uses high fructose corn syrup instead of sugar.. i still buy it though cause its cheap and doesn't taste that bad.

IAmNotMark's picture

I think the number one indicator of how bad it really is in America are the number of people that say PBR doesn't taste that bad.

toady's picture

I hadn't seen any PBR, or heard the acronym. 'PBR', in twenty years, until recently. Now I see and hear it everywhere, even here...

There's an economic indicator for you!

Likstane's picture

Times are tough when you see the pile of olympia empties in your neighbors backyard.

CompassionateFascist's picture

I'm from Milwaukee

and I oughta know

its draft-brewed Blatz beer

wherever you go

BooMushroom's picture

I went to the local bowling alley for a cheap night out with the Missus. Pitcher of soda =$7.25, pitcher of PBR =$6.00. Guess what we drank?

Perverse incentives work, too!

BrotherBroGo1's picture

I have recently ventured that way as well....not bad at all especially in bottles.  Cramer mentioned it on CNBC a couple days ago as a favorite of his recently....made me seriously question my company!

 

daveedollar's picture

Real beer doesn't have sugar as an igredient.  I'm probably drinking high fructose corn syrup too; my paw in law always suggested getting the brew that "popped your cork".  He lived a frugal and pretty happy life. 

ClassicalLib17's picture

Fuck Pabst Blue Ribbon.  My friend bought his 92 year old mother a 40 of King Cobra and she liked it. She typically drinks whiskey and water,  but in these hard times you gotta do what you gotta do to cut costs. 

PrintPressPimpin's picture

In south lake tahoe which is having the worst snow I have ever seen in over 20 years right now PBR is like an Icon.  I think every joint around sells PBR cans for a buck.. All the kids drinking it on the lifts..Shit is garbage..  I did like it when they were serving the Olympias as an alternative though

Dick Gazinia's picture

Strip Joints

Parking lot with 6 cars on a saturday night.

Short BJ's

Postal's picture

No BJ's. Hell, I'm unemployed, so I can't even pay the cover.

trav7777's picture

it'd be the African State

my recession indicator is clubgoer population

johnnyBoy's picture

backwards..."I'll blow you" state

 

TruthInSunshine's picture

More filthy prostitutes who clearly can't afford to keep up their appearance in Manhattan.

Apparently, these employees of financial firms and banks are trading down on attire and such.

sessinpo's picture

How many times I get hit on by anyone. I am one real ugly dude but I do have a full time job with health care for the time being.

UP Forester's picture

Maybe you can just wear a hat that says "I'M EMPLOYED, INSURED AND SINGLE" instead of a paper bag now....

Iwanttoknow's picture

Gone to hell.Fixed it for you.

Gully Foyle's picture

Mine is the amount of people posting on websites.

If they were busy working they wouldn't have time to post bitchy little snippets and get into hissy fights.

Internet Tough Guy's picture

You must be laid off from the dot-com crash, eh?

Gully Foyle's picture

Internet Tough Guy

Retired, worked hard, got sick, stopped working.

Moneyswirth's picture

You "retired" then "stopped working"?

Government employee I take it...

Gully Foyle's picture

Moneyswirth

Sorry, for confusing you. I should have had a period after retired.

If I were a government employee I would still be there not working and collecting cheap bennies.


WonderDawg's picture

I doubt it. Government employees stop working long before retirement.

Flakmeister's picture

But not quite as soon as the inheritors of vast fortunes living off dividends taxed at 15%....

NotApplicable's picture

Stop? That would imply they've started at some point, which is an absurdity, as there's no work to be done.

fourchan's picture

mine is the bass base factor

 

i live in the hood and the amount of bass going down the street durring good times was rediculious.

now everyone in detroit has lost their jobs and abandoned half the houses, its nice and quiet, crickets

wind rustling leaves in the trees. thanks great recession of 08 09 10 11 12 ect...............................

jekyll island's picture

Emergency Room visits.  They are up 20% in Memphis.  It is a very sensitive marker for the economy.  People lose their jobs, lose their insurance, now they go to the ER when they get sick. 

CrashisOptimistic's picture

One better one . . . SSDI disability recipients explode.  They lose job, then their unemployment expires and they have to eat, so they become "disabled".  Avg payment $14K/yr.  

I know of two people who became disabled this year.  They got laid off last year.

Gully Foyle's picture

CrashisOptimistic

Pretty fucking hard to get SSD. Initial filing is denied in most of the cases, unless it is mental illness. Then there is, at minimum, a year wait for a court date. Menwhile you need to not only have your doctors say you are eligible but also the testing doctors.

I'm really question that get on right away claim you made.

And to be successful you need an attorney who will claim a quarter of your back pay. Plus they get paid first before you see a cent, paid directly from the court (close enough).

But I am starting to wonder if the states are throwing people from Social Services to SSI.