Selfishly speaking about the economy...

I suppose we all think about the economy mostly about how it effect our own situation. Unemployment on the rise or just too high? Obviously if you lose your job, it effects you negatively. If a family member loses their job and needs help, maybe moves in with you, it effects you negatively. If you are a business owner, and more folks are out of work and can't afford your services, it effect you negatively, unless of course your business is geared towards the unemployed and/or struggling, then it could be a boom.

What if you are employed at a stable position but not in danger of losing your job, or maybe retired? You could argue that there are benefits to a bad economy. Retailers can't raise prices, if people already can't afford their products. Fewer people that can afford to buy should increase competition which should drive down prices.

In my own situation, I work for myself making a living from the casino industry, so I am not in danger of losing my job. I guess my biggest concern it that if things get bad enough some casinos close down causing more crowded conditions and less opportunity for me, but really in the last decade the casino industry has and continues to explode with more and more locations and opportunities, so that really isn't a concern. Maybe with shrinking bottom lines, they tighten up games, with more unfavorable rules leading to larger house advantage, but again, with more competition, this really shouldn't happen.

So selfishly a bad economy with more folks out of work doesn't effect me all that much. Since I sold my condo earlier this spring and am in the market and preparing to purchase a home, a bad economy and housing market is a benefit for me. Of course the day after I buy, when prices won't be going anywhere to offer any kind of return on investment, that benefit becomes a liability. I guess overall, my biggest concern about a bad economy with lots of folks out of work and struggling is that some of them will get really desperate, which translates to an increase in crime. Even decent people when desperate enough will resort to extraordinary (bad) things. Add that to the not so decent people out there and things can get really bad.

I guess more people out of work means less taxes coming in and on the local level that can mean reduction in services, closed firehouses ect. Have I missed anything? Anyone have any thoughts? Anyone else feel kind of guilty, that they are not all that effected?

Quote: kewlj

Anyone else feel kind of guilty, that they are not all that effected?

Is this your first recession? They all suck for everybody
eventually and boom times are generally good for
everybody eventually. The key word here is 'eventually'.
The sooner its over, the sooner 'eventually' will be here.

I know this much, the grocery store gets smaller every
time I go. Prices are going up and package size is shrinking.
Take cat food as a glaring example. It was 18 lb bags, then
16, then 15 and I saw a 13lb bag today. And the prices
are $3 more than the 18 was. Look at coffee, breakfast cereal,
salty snacks, shredded cheese, cookies, snack crackers.
Inflation is next, Jimmy Carter's 2nd term has to end in Nov.

Quote: kewl

Retailers can't raise prices, if people already can't afford their products. Fewer people that can afford to buy should increase competition which should drive down prices.

I can see your point in that a bad economy impacts different people in different ways and some feel much less of an effect than others. I will quibble with your thoughts about retailers, though because the price of many goods IS going up. Food prices, gas, etc. have increased a lot during this recession and recovery. The bag of feed for my backyard poultry flock (eggs for family and friends) started at $9.95 four years ago and is now $13.45. We've continued to buy the false promise of ethanol from corn and the price goes up even higher in a bad growing year than it would without that additional pressure.

Other retailers may not be increasing prices but food and gas are vital; a new pair of shoes is optional for many.

I agree with Bob, though, the bad economy impacts all of us in a negative way. The ones who are making it through the thing with minimal issues still feel it. Jobs that felt totally secure now don't feel the same way. Houses don't appreciate and may not for years. There are lots of low interest rates for mortgages but few seems to be getting them. Income from investments, retirement pensions, etc. is buying less than it should.

The local governments feel the pinch--and that is probably where someone who feels no other impact will feel some of it. There will be tough decisions about schools, roads, police protection, etc. to be made when local tax receipts don't add up to enough money to keep services at current levels.

All in all, I believe everyone feels a bad economy and would be better off in a good one...but I can see how the current situation isn't impacting everyone equally. The people on the highest and lowest ends of the economy are likely least impacted--the richest will still be very rich and the poorest just can't get much poorer...everyone in between will feel the difference between a good and bad economy.

(I thought I quoted Bob's response, but it didn't take, but...)

As per your last line: I would prefer not to turn this into a presidential election thread, as we have enough of those going, although such is really out of my control.

As per your first line question: Yes, as an adult, responsible for my own situation it is.

I think much of those packaging issues that you mentioned are more about corporate greed than inflation. Companies are trying to 'trick' consumers with smaller packaging resembling long time standards. When was the last time you bought a half gallon of ice cream? lol

Quote: kewlj

I think much of those packing issues that you mentioned are more about corporate greed than inflation. Companies are trying to 'trick' consumers with smaller packaging resembling long time standards. When was the last time you bought a half gallon of ice cream? lol

"Blue Bell still offers a full half gallon to its consumers.

Blue Bell Creameries is committed to providing the best ice cream in the country and that includes continuing to offer ice cream in a full half gallon container, despite the industry trend to downsize."

We still get a full half-gallon but it can be downright expensive (but darned good, too!!)

Anyway...I am not sure the current downsizing of package sizes is just "corporate greed"--while I don't pretend to believe that never happened, I also believe it can be a combination of things at different times. Perhaps the moves to cut product sizes was done some points to increase profits and at others to cover increased costs.

As I mentioned, the bag of layer pellets has gone up nearly four dollars over the past few years. You can track a lot of that to the price of a bushel of corn has increased from $5.01 in September of 2008 to $7.54 in August of 2012 (and it was as low as $3.25 in 2009). The price of a ton of wheat has gone from $277 in February to $349 now. If the prices of the commodities used to make a product go up that much, there is no way for a manufacturer to hold the line on pricing without sacrificing profit.

I don't know of many for-profit companies than want to operate without profit.

The company then has the choice--do I raise the price 50% or decrease the size a bit and charge the same price because that lower size allows me to remain profitable?

Quote: kewlj

. Companies are trying to
'trick' consumers with smaller packagingl

Because they can no longer make the regular
product and make money. So rather than raise
the price, they make a smaller size.

And you're buying a house? Unless you're paying
cash, the bank is buying it, not you. You won't
own it for 15 or 20 or 30 years. And the way its
going, you're lucky if it will be worth what you
paid, plus interest, even then. It will take that long
for a full recovery.

You can tell people you 'own' it, I 'own' a house! But
every month you will know, when you send that
payment, and a small amount goes towards the
house and most goes for interest, thats when you'll
know you don't own squat.

EvenBob presents a very sound point.

It is true that food prices dropped pretty significantly leading up ot and in the early years of the recession, but one must keep in mind that all they did was drop from all-time highs, and the closest they got to pre-recession levels was just slightly above. Food prices began increasing again in 2009 and are right around their pre-recession peak as of late 2010. This graph:

http://www.americanprogress.org/wp-content/uploads/issues/2011/03/img/caldwell_chart1.jpg

Illustrates how food costs rise and fall pretty proportionately with oil, which makes sense, as transportation is one of the greatest expenses in getting the food from the fields to your table. Transportation also plays a factor in package sizing and price of animal foods, which EvenBob alluded to, because more units can be shipped with smaller package sizes for a lesser price, especially when the cost per package is kept the same or greater.

It was an excellent market for buying a new car for quite sometime, and this is hardly surprising because such a person is usually one that involves discretionary (I prefer disposable, but most people say discretionary) income. Discretionary products has to trim the fat in terms of workers (jobs lost) while simultaneously reducing prices to try to maintain their margins in pure volume, rather than price. In the case of food, with exception to specialty products, you're really not going to see a tremendous shift in demand (though some people will switch to discount stores exclusively...bad decision...better to sale shop at all of the stores because discount stores offer prices on generic brands that are just slightly HIGHER than most stores sales prices on an item...stock up when you can) because everyone will continue to eat, and demand for grocery products actually grows slightly as people stop going out to eat.

The only major variable that the food industry deals with is the cost of transportation, given that this is the case and a price increase will not greatly affect demand, they'll maintain their profit margins by increasing prices. It is thus that consumers eat those increased fuel costs at more than just pumping gas directly into their vehicles.

Transportation is also a factor for the margins of discretionary products, but they have to eat it. Prices are going to be reduced to induce volume selling to maintain as much profitability as possible. You're also going to throw out as many perks, rebates and brand-loyalty incentives as you can to encourage people to buy your product, as opposed to the one(s) they would usually buy, because you are trying to do it with volume, but some people are going to be out of the market no matter what you do with your prices.

Banks are not going to take as many risks, though the recession did make for an excellent buyer's market in housing, (I bought my house in 2010) provided that you are buying a house that you plan to live in for sometime. The banks, however, while offering low interest rates also must endeavor to make the safest loans possible in an effort to offset gambles and loans that they have already lost, and will continue to lose, money on.

The opinion of whether one thinks that the economy has helped him, hurt him, or remained neutral, in my opinion, is going to be predicated largely upon how many of his dollars go to discretionary type purposes compared to how many of his dollars go to necessity type purposes. I would say that, if over half of your income is discretionary, quite frankly, you would probably be inclined to think a bad economy kicks ass. (Exceptions are business owners and people with a large sum of money in the stock market) If over half of your money is spent on necessities and the transportation price increase causes the price you pay for those necessities to go up, you probably think the economy is terrible even if you are seeing the same paychecks you were just before the recession. This is largely because of the consistent increase in prices of utilities such as electric. The recession slowed down the increase, predominantly when fuel was cheap, but there was never a decrease.

The competition for fewer customers that KewlJ alluded to is only relevant with discretionary products. It really doesn't matter with others because, even when some people go generic on an item as opposed to National Brand, the National Brand can take advantage of what brand loyalty they have (some people will pay anything for Tide :snicker:) by raising prices and getting the money out of the people they know they will retain. I would almost consider Tide a discretionary product, not detergent, in general, but Tide, specifically...just for one example!

In any event, I reiterate that if over half of your income goes towards discretionary products in industries that have had to price-compete (regardless of transportation costs) to survive, then you have found yourself either buying the same stuff (with more money at the end of the day) or buying more stuff. If more than half (and the further you get from half, the worse it gets) goes to necessities, then you have certainly felt the pinch as transportation costs have bounced back.

Quote: kewlj

I think much of those packaging issues that you mentioned are more about corporate greed than inflation. Companies are trying to 'trick' consumers with smaller packaging resembling long time standards. When was the last time you bought a half gallon of ice cream? lol

Why do you call making a profit "corporate greed?"

Lets try this a different way. The smaller packages are because of consumer greed. The consumer wants to pay the same price for things they paid in 1997. The only way to make it look the same is to subtly reduce package sizes.

Quote: EvenBob

You can tell people you 'own' it, I 'own' a house! But
every month you will know, when you send that
payment, and a small amount goes towards the
house and most goes for interest, thats when you'll
know you don't own squat.

The pipeline was a comin' EvenBob. When the place that I rented, immediately prior to buying the house, went from $525/month (when I rented it) to $1,000/month (last time I saw it advertised), I said, "It's good not to own squat!"

Quote: EvenBob

And you're buying a house? Unless you're paying
cash, the bank is buying it, not you. You won't
own it for 15 or 20 or 30 years. And the way its
going, you're lucky if it will be worth what you
paid, plus interest, even then. It will take that long
for a full recovery.

Since I am still in the looking process and haven't even been as motivated to look as much as I had anticipated, any plan of financing is premature, but probably not paying 100% cash. That would deplete my BR too much. With interest rates sooo low, it seems to me that NOT financing at least a portion may not be the best move. I can put those funds to better use generating more funds that will more than offset the mortgage interest. I will probably settle on the middle somewhere, putting a significant portion down and financing. That's what I did with my condo in 2009. Being a first time buyer and supporting myself by means that are considered, unstable by the financial world, I was REQUIRED to put a significant amount down. I suspect that won't have change.

Quote: kewlj

Since I am still in the looking process

Knowing what I know now about home ownership, if
it was me I'd wait till I could pay cash for the whole
thing. Actually, if it was me, in these times, I'd buy
a real nice double wide mobile home in Vegas, hunker
down till things got better, and sell it for what I paid.
Then I'd buy a house. Maybe.

Glad to hear I'm not the only one who's life has gotten better as a result of the bad economy. It's heart breaking to see/hear everyone's tragic stories.

Once the eco tanked, at my previous job, the company had to lay off employees permanently. I was the only one left with some very specific knowledge of running some CNC machines and computer programs. Didn't even have to ask for a raise. That's my short story.