Commentary: Things We Won't Get Rid Of
What Tough Times Reveal
John W. Ritenbaugh
Given 22-May-10; 17 minutes
The thing that has stimulated my mind in regard to what's happening in the world—for this week, anyway—is the economic downturn that is taking place in the United States. On the one hand, we've had the government giving indications through their media sources that things have made a turn and we are recovering. But on the other side, there are very, very many noted economists who are saying, "Hey, wait a minute. There are just as many signs and maybe more that this thing is an ending; it is actually worsening"—because there are things that are on the brink off taking place in the financial world that are going to take things down. Almost right on cue—if you noticed this week—the stock market fell about five hundred points or so, kind of shaking things up a little bit anyway.
But one thing is true, that what is taking place is worldwide in its seriousness. It seems like every major nation is especially concerned, though, with things that are happening in the United States. Now, Greece and other countries there surrounding the northern part of the Mediterranean are causing problems, especially in Europe, and they fear over there—and probably rightly—so that it's going to very likely damaged the strength of the euro if they do not get their act together and do something about it in helping Greece out.
But the United States is still the cause of most concern worldwide, and this is because our purchases of their goods—I mean, the good goods that they produce—is what is sustaining their economies. In addition to this, many countries have their finances invested in bonds—American bonds—that they buy because they feel that they are a safe investment and that they are going to pay them certain dividends. But they also realize that we are overspending at a horrific rate, and their bonds—our bonds—are in trouble, and they are in trouble because they know that they are supporting our indebted economy. Their concern is if we crash, so will they.
The world's economy is so tied together that if this huge ship of state (the United States) sinks, they are going to be pulled down, too, and they are going to be relatively helpless to do anything about it.
The dour news is that the outlook for our economy is indeed showing many signs that it is getting worse. This spurred an article that appeared in the U.S. News and World Report recently. The author read a book, and then he decided, "Hey, this would make a good article for the U.S. News and World Report." So he went to the editor and said, "Hey, can I write on this thing?" And the editor gave his permission, and that article indeed did appear in the U.S. News and World Report.
The idea that the writer of the article had was that since we have been in this downturn for two years now, what is it that Americans are showing—by what they are doing—that they have things that they will not get rid off out of their lives in order to cut their spending? I think that you might be interested, because who knows what we are going to have to face because what happens in the world is going to affect us.
What are you your fellow Americans saying by what they do is important to their life—so important, these are the things they will reserve to the end to keep. This information was not compiled only from those who were unemployed or unemployed for a long time, but also from as much of the segment of the public has this author could find who were fearing that they were going to be struck by this thing. So it's coming from a pretty broad base of people. This list does not include any absolute necessities like food. These are other things, besides these absolute necessities, that people are doggedly hanging unto as a last resort. These are not listed according to order of importance; I am giving them to you only as the U. S. News and World Report listed them.
Number one on the list: portable computers, including laptops, notebooks and iPods. The justification is, "I'm looking for jobs by means of these instruments." —so they are hanging on to them now.
Coordinated with that is number two on the list: high speed Internet access. People will cut back on cable programming, telephone service, and even gas and electricity, but they will not cut off Internet access. They feel their livelihood is too closely connected to it, and it is a last resort.
Number three on the list: smartphones. iPhones and BlackBerries can handle email and also use it to browse the Internet. Here is something from the industry that is substantiating this: The people are saying that the sale of these items in spite of the economic downturn has surged 25% in 2009 because people are anticipating their electronic versatility, and therefore their need.
Number four you might find surprising: movies. People are saying that entertainment is still necessary in spite of the bareness of their pockets or whatever. I heard yesterday that some theaters in California are venturing, charging, twenty dollars per person admission to the theater. They're going to charge this for the new Shrek movie.
To substantiate this, 2009 was a banner year. Remember, this downturn started in the middle of 2008—I mean, the sharp decline. But 2009 was a banner year for theater attendance, so it is showing that people will not give up entertainment.
Number five goes right along with movies: television. Overall, Americans are spending less on entertainment, but TV watching surveys reveal that we are watching more TV than ever before. Average TV watching time has reached 18 hours per week. That is a two hour jump in one year. People are killing time at home.
Number six goes right along with movies and TV, and that is music downloads. This sounds incredible. CD sales fell by twenty one percent in 2009, but music downloads on the Internet rose in the same amount. So the conclusion by the industry is that more people now consider the iPod a necessity that in 2006 (when it came out on the market) despite the recession. People are going to keep on buying them and using them.
Number seven—this one is really interesting—of things they will not get rid of: pets. Do you know to feed a big dog costs as much in a year as to feed a six or seven year old child? It's like adding another mouth in the house. Now this is what U.S. News and World Report said regarding this one:
Fido sits at the table these days, maybe [they said] even the head of the table. While Americans have cut spending on themselves spending on themselves, spending on pet food supplies and grooming is rising uninterruptedly at five percent per year.
The industry comment was this—they call it the humanization of pets. Very interesting.
Number eight: booze. People refused to give up booze, so U.S. News and World Report's comment was this: "Smoking less apparently does not make us more virtuous. Americans have backed off high end booze, but we are still drinking enough of the cheap stuff to make up for what they have given up on the other end of the scale."
Number nine. This will rock your socks: Coffee. We refuse to give it up. People are giving up the daily five dollar latte, but have compensated by drinking more of the cheaper stuff (just like the booze). Starbucks sales dip thirty one percent in 2009, and in 2010 they have already dipped another twenty one percent. So people aren't going to Starbucks; they're going to Trader Joe's and they are going to the Harris Teeter and they are getting the cheap stuff and they are making it at home themselves. They refused to give it up. Maybe because it's jacking them up.
Number ten: education. People are refusing to give up education. Now, this is an educational program that those out of work are on themselves. They went on them before, in order to make themselves more valuable on the job, and they will not get give it up. Also, the children of those who are in financial straits of some kind. They will cut expenses everywhere in order to continue that child's education, even if the child is still only in high school—you know, they are going to a private school. So rather than put them in the public school, they keep them in the expensive private school in order to afford that education. It's considered too valuable to drop it.