I went into my local bicycle store this morning to get a long-overdue tuneup and saw clear evidence of how the horrible economic situation is affecting retailers. First, I was the only customer in the store: this on a Saturday morning, when that store is usually filled with cyclers passing by the bike route in front of the store. As the mechanic was writing up the order, I looked around and noticed that the store was more than half empty. Normally full of hundreds of bikes, there were now only a few dozen. I asked him, “low on inventory, huh?” He responded, “yeah, and it’ll probably stay like that for awhile,” adding sarcastically, “apparently people think the economy isn’t doing too well.”
Obviously, it isn’t doing well, as evidenced by the latest job figures. Several years ago, I created the Quality of Life Index to track socio-economic conditions in Los Angeles, and I was struck at the relatively low unemployment figures (around 5%). How could this be in an area with such high levels of poverty? The problem then wasn’t finding work; it was finding work that paid a decent wage. Well, that’s changed today, and unfortunately not for the better. As this chart shows, unemployment is up overall in the U.S., but it is rising even faster in LA, now approaching 11%, double what it was just 14 months ago.
With all this bad news, those who can are saving more. As Justin Fox explored recently in an interesting essay in Time Magazine, this thriftiness can be damaging in the short term, though it is still important in the long term (if we’ve learned anything from this crisis, that is). I’ll try to do my part in helping out retailers when I can, while at the same time heeding wise words from Fox’s column:
Don’t spend more than you make. Don’t buy things you don’t need. Save for a rainy day. Saving stimulates investment. Careful stewardship of resources brings prosperity. Frugality is its own reward.