Hey Jay (Hey! That rhymes!),
I'm going to ask Joel to rename this thread to "The Jay Chen Doom & Gloom Thread", and ask that all bulls that risk posting on this thread be banished to Singapore, where they promptly receive 50 lashes with a sharpened cane... <g>
Getting serious for a moment, I really like Fleck and his style. One of the very, very few outright honest financial writers today.
I'd like to note something in the local economy that I observed today, and then extrapolate that further to a possible logical conclusion...
In a neighboring town, there is an ethnic minority people that predominates. These people are easily identifiable by manner of dress and even physical attributes. This town is particularly not wealthy, and to the best of my knowledge, this has always been the case. While this ethnic minority is not exclusive to this neighboring town, when these folks are observed in large numbers, it is a reasonable assumption that many, if not all, hail from this neighboring town.
In my town, we have a deeply discounted movie theatre. Prices run from about $1 to $1.50 for adults, to even less than that for children, and infants often, if not always, are free. On selected days of the week, prices are reduced, coupons accepted, and popcorn/soda offered for free (in the small sizes).
In years past, people from this neighboring town of relatively poor people dominated the attendance at this discount movie theatre, particularly during the discount days/hours. That's not unusual, as these people were merely maximizing the buying power of the limited discretionary income that they had. You would also see a smattering of retirees (mostly from the trailer parks, not the wealthy retirement communities) here and there, depending upon the movie offerings on any particular day.
Today I had lunch at an inexpensive mom-and-pop restaurant located in close proximity to the discount movie theatre. I had a marvelous view of everyone attending today's afternoon showings, which coincidentally looked like a discount day in addition to being a holiday.
I was mildly surprised at who was attending. Gone (for the most part) were the poor people from the neighboring community. Instead, retirees from the wealthier areas predominated. These are folks that can afford the more expensive theatres if they so desired. I saw many of them by their cars secretly stashing snacks in their fanny packs or purses (a no-no at most movie theatres, as that's where the theatre makes its money).
My conclusion: This is just one method that average people are using to cope with decreased wealth and decreased discretionary spending dollars in these trying times. Not coincidentally, the eating establishment where I was sitting was largely empty, just me and 2 other tables, plus only 3 employees working the holiday lunch rush. (And on a related note, I was in Target yesterday afternoon with my wife and the store was largely empty, save for employees and a relative handful of customers, maybe 50 or so... In fairness, when I commented on the dearth of shoppers, the cashier replied that at about noon, the place was hopping, but shopping just died off quickly after 1:00pm. Go figure. A holiday weekend, and the shoppers just slowly die out...)
Anyway, the extrapolation in my way of thinking is that not as many baby boomers are going to delay retirement as the "experts" think. Instead, they will retire anyway, maybe a year or two later than originally anticipated, but not the 10 and 20 years later that most "experts" are currently predicting.
In order to achieve this early retirement, I believe that the boomers are going to stop free-wheeling spending here very shortly. Spending will be limited to necessities only, and spending emphasis will be on quality goods which they expect will last for the duration of their lives. Boomers will cope with decreased incomes in the same ways as the movie-goers did, by cutting corners, using discounts where possible, and simply not spending on anything frivolous where less expensive opportunities exist.
Some examples:
Boomers will make extensive use of coupons, senior discounts, discount shopping outlets, etc... They will use their collective ingenuity to find less expensive ways of reaching goals or making purchases. Instead of attending a first-run movie at an expensive theatre, they will go to the discount movie theatres or use video stores, perhaps teaming up with other like-minded retirees to swap rentals with one another while still within one rental period.
Instead of two vacations a year, say a cruise plus a land-based vacation, they'll cut that back to one inexpensive land-based vacation a year, and take a cruise maybe every 5th year, selecting the least expensive options on the cruise to contain costs. Casino gambling will be largely curtailed, except for the possibility of combining a night or two with a land-based vacation. Attending expensive concerts or plays, etc. will be limited at best.
Restaurant use will be largely curtailed, and largely confined to special events such as anniversaries or birthdays or select holidays. Restaurants that are now considered moderate in price (Applebee's quality) will become the "high end" restaurant of choice for the boomers. Expensive restaurants (for example Spago's) will be too dear in price to even be considered as an option. Low end restaurants (like McDonald's) will be ignored because the same quality and food can be prepared at home less expensively, and in greater quantities, to be refrigerated for use later in the same week.
To sum it up, boomer retirees will find a way to cope with lesser income rather than to delay early retirement for what they would view as an unacceptable time period.
And ultimately, this will translate into reduced consumer spending in the very foreseeable future. Which in turn will undermine any private sector effort or public sector effort to artificially stimulate the economy.
At least that's my thought for today...
KJC
EDIT - Ooops... Posted this on the wrong thread. Intended as a reply to this post: Message 17489828 |
