Why are people still buying stuff?

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Morgan3820

Morgan3820

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Early springtime there was a thread that asked "How far will plane prices drop in 2020 due to the pandemic?" Yet plane prices/sales seem to be more than holding there own. A friend is looking at trucks and says that there are no real deals to be found. That while there is the usual mark up to show a mark down, there doesn't seem to be any desperation to get people to buy. Full size trucks are starting at close to $40K. I am shopping for motorcycles and the same thing seems to apply. The salesman I spoke to said that if everyone qualified for financing, he would have no units on the floor. HD seems to be the only brand with sales problems. Older, used bikes do not seem to be moving but late models (less than 3 years old) go quick. Heck, I even heard that lumber is in short supply due to everyone doing home remodeling jobs.

How can this be? What about the record unemployment that I read about? I see no evidence of it where I live. My college age daughter had no trouble finding two well paying summer jobs.
 
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There is a shortage of vehicles from the manufacturers so dealers are holding the prices up. (dealer lots here locally are looking really empty) Plane prices are still up because well, most people who affords a plane anyway were immune from the shut downs. All my speculation of course..
 
Here in Nebraska, people seem to be buying stuff, too. The manager at the local car dealership said they had a good May; I haven't seen him yet this month so I don't know if they had a good June, too. I still see many temporary tags, suggesting people were buying in June, too.

Some companies here are putting people on furlough as the workers get pretty much full pay with the state unemployment combined with the extra $600 from the feds. If that is being done elsewhere, that drives the unemployment numbers up based on applications for the benefits, but people aren't being "hurt" as they usually would be. Some companies are doing this furlough one week in the month, and everyone works the rest of the month. That should end very soon as the fed money ends either the last week in July, or the second to last week. If companies across the country are doing this, look for unemployment numbers to decrease going into August.

It will be interesting to hear what other people are actually observing.
 
The bike shop I deal with most cant keep up. they said usually on a good month they sell 100 units. leas month they sole 425 units!
people are spending money like crazy including me. I got a garage full of new bikes. LOL!
 
I have a trek cobia that I've ridden like 4 times. a buddy of mine was like u should sell that now, u can get good money for it. I may consider that.
 
The scuttlebut is that around our area a lot of people have made more money on unemployment than they did working. Some restaurants have claimed they are having trouble getting staff to come back for that reason. IDK if that’s true or not but when I venture out into the world it looks like most places are doing brisk business with only a handful of mask wearers to suggest anything is different than last year.

What I also know is when I looked at the lists of ‘essential’ businesses in my state when the lockdown started, more things were allowed open than not.

I know we were more effected by boredom, the virus has zero financial consequences for us and we got the stimulus + savings from being stuck at home for a month. Many projects were started. Many non-essential things purchased to keep busy. I was even looking for a new project car but still haven’t found the right one.

I know some people took a beating but I suspect most of us aren’t much worse off than we were 6mo ago.
 
So, when is the music going to end? I hate paying MSRP for anything.
 
Cap'n Jack said:
Here in Nebraska, people seem to be buying stuff, too. The manager at the local car dealership said they had a good May; I haven't seen him yet this month so I don't know if they had a good June, too. I still see many temporary tags, suggesting people were buying in June, too.

Some companies here are putting people on furlough as the workers get pretty much full pay with the state unemployment combined with the extra $600 from the feds. If that is being done elsewhere, that drives the unemployment numbers up based on applications for the benefits, but people aren't being "hurt" as they usually would be. Some companies are doing this furlough one week in the month, and everyone works the rest of the month. That should end very soon as the fed money ends either the last week in July, or the second to last week. If companies across the country are doing this, look for unemployment numbers to decrease going into August.

It will be interesting to hear what other people are actually observing.
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Can you list unemployment benefits as income when financing stuff? I wouldn't think that the finance companies would go for that.
 
My son has been substitute teaching working a few days a week making about $100 a day. He is now getting $150 on unemployment and with the extra 600 a week he is making $750 a week. In the last few months he bought a new computer, all the accessories, an ipad, an apple watch and has managed to put a bunch in the bank. Of course he hasn't seen fit to start paying the back rent he owes me yet. Guess I need to get on that.

ETA: Oh yeah the $1200 stimulus as well.
 
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Most of the unemployment is in the lower incomes; notice I said "most". Many are making more on unemployment with the extra $600/wk and the $1200 stimulus check.

Lots of us are working from home. Our IT teams are putting in more hours now than before. We're mostly salary, so we are not making more, but with zero travel, no sporting events, no movies and no commuting costs we have money to spend.



Wayne
 
My local European motorcycle dealer is doing record business right now. No price breaks either.
 
Morgan3820 said:
Can you list unemployment benefits as income when financing stuff? I wouldn't think that the finance companies would go for that.
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I'm pretty sure you can't list unemployment benefits as income. I understand why you asked that question. I think there are (at least) 2 groups of people; one group is getting the unemployment benefits. There's another group that seem to be doing quite well and buying the new cars, and other stuff noted in the other replies. There is a third group comprised of people I know were permanently terminated from their employer, but I'm not sure how many. There's a hotel near me which seems to be doing fair business, judging from the out-of state cars, but I can't tell how much business they are really doing because the gym across the street is a COVID testing facility. The gym parking lot has been taken for testing, so the gym employees are parking behind the hotel.

All my meetings and trade shows are canceled the rest of the year, so no commercial flying or hotels/car rentals for me. No customer visits, either. I suspect this is generally true across the country, so the travel industry is probably hurting.
 
My business is a service-based one, where users pay with discretionary income.
We are going gangbusters and can't keep up. (it's actually threatening my health)
I am squirreling away nuts in case the bust happens.
 
A lot of the big reasons have been hit already, but I’ll add this. Since March, our local Pt 61 school has seen a much higher student load and has added another 172 on leaseback. 100hr inspections aren’t getting more frequent on almost all the training fleet.

Most of the new students are folks who are in a position to buy when they’re done and many do. Instead of a travel trailer/motor home, a plane is the ticket to travel and there’s plenty of destinations within 4hrs flying time.

Professionally, we’re beginning to tighten our credit limits, underwriting criteria, and reducing our marketing with the expectation that the federal government is going to have a tough kickoff to the fiscal year until either a) 20Q4 after the election; or b) 21Q2 depending on which way it goes.

Many times, the deals lag the hit so I don’t expect any serious deals until this time next year, unless the FAA stops being generous with regulatory relief and even then I don’t really expect significant savings.
 
My bosses daughter just graduated HS. She found a part time summer job working with kids at a day camp put on by the township. First day, someone who had tested positive thought it would be a good idea to send their kids to the day camp. That got the program shut down and there went her summer job.

She's never had a job in her life, never received a paycheck and never paid a dime into unemployment. She applied anyway, ticked the box that said her job was impacted by Covid-19 and ticked the box that said she had been seeking employment since March (because she applied to one fast food place). The next day $8000 was in her bank account ($600/wk going back to March or April).

Give people free money and they're going to spend it. Pretty simple.
 
Tried to buy a new car. None to be found. Combination of production shutdown and people flush with government cash.
 
We have seen a huge uptick in spending on motorcycles and nice atvs. The ppl I know of it’s mostly the combo of a tax return and extra 6 hundi from covid lay-off.
But drunken ATV accidents and deaths are on the rise in our area. So there’s that.
 
Dealers of boats, campers, motorcycles, cars, bikes, guns, etc. have all had a record May/June according to just about every financial report. Many people got some extra cash between stimulus and greater unemployment income than their normal wages while on furlough. Easy to get a loan when you are still technically employed but end up with a couple grand extra in your pocket than you were expecting and you're looking for things to entertain you away from the house. I'd expect the used boat/camper market to have quite a few items come available in about 1-2 years when people realize they have to keep making payments on that $50K boat that's now worth $35K and they only use it 3 or 4 times per year. Not to mention storage costs and maintenance when their wages go back to normal.
 
SoonerAviator said:
Dealers of boats, campers, motorcycles, cars, bikes, guns, etc. have all had a record May/June according to just about every financial report. Many people got some extra cash between stimulus and greater unemployment income than their normal wages while on furlough. Easy to get a loan when you are still technically employed but end up with a couple grand extra in your pocket than you were expecting and you're looking for things to entertain you away from the house. I'd expect the used boat/camper market to have quite a few items come available in about 1-2 years when people realize they have to keep making payments on that $50K boat that's now worth $35K and they only use it 3 or 4 times per year. Not to mention storage costs and maintenance when their wages go back to normal.
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Yes, the boat dealer that I pass on the way into work, had a jam packed lot full of nice 18'-30' boats. I thought oh man are you screwed. But, I was wrong again. There might be two boats left. So, do I have to wait 2 years before I can get a motorcycle at a decent price?
 
Also if you think there's a crash coming, some people prefer to have their "money" in assets vs the bank. I'm looking at a plane, too...
 
What form would a crash take?
Hyperinflation?
Stock market anviling?

What reasonable steps are going to help you preserve your financial stability?
 
My sister is looking at buying a house. Isn't quite ready yet but wanted to do a walk through of one that is to go on the market in a few days. She got a call this morning that it sold... before it was even officially listed. In my area homes around 200k just aren't out there, they're being bought that fast.
 
RyanShort1 said:
Also if you think there's a crash coming, some people prefer to have their "money" in assets vs the bank. I'm looking at a plane, too...
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I just refinanced to take advantage of the low rates and the massive equity in my property. I bought at the absolute bottom in 2012. My mortgage stays the same and I get 30k back. Was going to turn my 750sq ft detached 2 car garage into a loft/mancave/bar above the garage. But I've also had my eye on a Cherokee 160 that's a few serial numbers off my dad's first plane. Really aren't any deals out there.
 
My company sells furniture and we are breaking records daily and out of stock on so many items. People are spending more than ever.
May , June, July are typically the 3 worst months of the year for us. I don't understand it at all.

Well early on, it was all home office furniture and crafting type tables which makes sense but now it is everything.
 
Morgan3820 said:
But drunken ATV accidents and deaths are on the rise in our area. So there’s that.
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In the middle of the shutdown, we never had a shortage of ATV and dirtbike accidents to keep us going. I quipped to the staff that 'the dirtbike seems to be the preferred local tool for social distancing'.
 
I e worked from home since March 16. There are no immediate plans for us to return to office. I pulled money from investments and paid off my house instead. Houses are selling like crazy, frequently for more than asking price, in our neighborhood. With kids gone, we’re talking down sizing house with a bit more property for a shop/barn...possibly runway if right property is located.

Automotive after-market company I work for is doing very well. Investments, while still down somewhat have come way back from where it was and getting back close pre-crash. I’m debt-free and with both wife and my paychecks uninterrupted, we are are banking lots of cash and have done several home projects deferred maintenance.

Now I just need to get my J-3 annual completed and flying again. Been down for awhile for fuel tank leak. Got it replaced and started annual. Flying the RV-4 some to keep it exercised but not really going anywhere.


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Racerx said:
My sister is looking at buying a house. Isn't quite ready yet but wanted to do a walk through of one that is to go on the market in a few days. She got a call this morning that it sold... before it was even officially listed. In my area homes around 200k just aren't out there, they're being bought that fast.
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The housing market here is that way, mainly because there aren't enough houses. We flip houses and sold one recently at full asking price right in the height of Covid. its crazy, got another about to be completed. Hard thing is we cant find deals on new ones for us.
 
Keep in mind we've had a complete upheaval in routine for basically the entire country, and we're coming off of a record high stock market, and the government quickly dumped a bunch of stimulus money into the economy when all of this started. I think a lot of people are spending more time at home and/or doing other things (especially at first) and that's resulted in a lot of spending.

"Wow, I knew my home was ugly but now I actually spend time here" and there goes a bunch of furniture sales, money spent with contractors (who then spend money elsewhere), money spent at home improvement stores.

"I should exercise more and I'm at home so I can" and there go sales of new exercise equipment.

"I should ride a motorcycle to get out of the house" and people buy motorcycles... or substitute a boat, a car, etc.

"I'm at home now and have some extra time to do [insert list of projects that you didn't have time to do]"

And adding to that how most of us have saved a ton of money on commuting costs. We normally drove 500-700 miles a week between the two of us, now it's maybe 500 miles a month. Since we drive gas guzzlers, that's a lot of gas, and money in our pocket. And gas is cheaper than it was before.

While unemployment peaked at some high number, it's back down to 11% now. A lot of businesses are opening back up and a lot of new jobs have opened up (especially in the transport/delivery realm). Now, later this year? Good question.

Incidentally, we fall into basically all of the categories that I listed above. Our house isn't ugly but we've had a lot of projects that we've been able to make progress on since being at home. We've signed on building a new shop, close to signing on a new deck (and removed the old one). Laurie's had other outdoor and indoor projects. We bought a new play set for the kids (the old one was falling apart anyway), and bought the Guzzi as my birthday present (which I have been enjoying... rode it probably 50-60 miles today). We bought a rowing machine and some dumbbells which we have been using, I also ordered a stationary bike attachment for my bicycle (which I fixed early on as one of my project).

While a lot of people aren't enjoying working from home, on the whole I'm loving it. It is harder when I'm solo at home with the kids (tomorrow will be day 10 of Laurie's 12 day shift...) but we have a routine down that works. I'm not in a hurry to return to the office.
 
simtech said:
The housing market here is that way, mainly because there aren't enough houses. We flip houses and sold one recently at full asking price right in the height of Covid. its crazy, got another about to be completed. Hard thing is we cant find deals on new ones for us.
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We’re trying to buy another couple of rentals. Every single house that goes up for sale is either a complete and total POS (and priced 30% or more over what it’s worth), or it sells within a day at ridiculous terms. Over asking price (which is invariably too high to begin with) and no home inspection. One needed extensive work and went for $32K over what I thought was a somewhat optimistic listing price. It’s just nuts, I tell ya.
 
I stopped by my favorite local pawn shop today for the first time in months. They usually have around 80-100 shotguns and rifles in the racks, and more than 50 handguns in display cases.

Today they had two shotguns, two rifles, and three handguns. The guitar racks usually carry about thirty instruments, there were six on display. Their normal excellent stock of tools was similarly depleted. I asked the owner if they were making a lot of loans, and he said not at all. People he's never seen before are coming in and buying everything in the store.
 
Ok, so it is not just me then.

Now the $64,000 question is, when and how is this going to end?
 
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Well the $600 Gub'mnt checks stop flowing at the end of this month. The spending from that might continue for another month or so before it tapers off. By then we'll be getting into fall which is when many scientists are predicting a seasonal rise in covid numbers. Which could lead to shut downs and unemployment. But with an election in the works, I would expect more free fed money to be dispensed so... No idea when or how the spending the spree will end.
 
3393RP said:
I stopped by my favorite local pawn shop today for the first time in months. They usually have around 80-100 shotguns and rifles in the racks, and more than 50 handguns in display cases.

Today they had two shotguns, two rifles, and three handguns. The guitar racks usually carry about thirty instruments, there were six on display. Their normal excellent stock of tools was similarly depleted. I asked the owner if they were making a lot of loans, and he said not at all. People he's never seen before are coming in and buying everything in the store.
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Same here. I want to get another .38 snub so I stopped in at a couple of pawn shops on Monday. The places were nearly empty. People have been on a buying spree.

I did manage to pick up a nice little 6-wt fly rod for $7, though. Now all I need is an evening without thunderstorms and a pond full of bluegill. :)
 
My DPE said he's done 30% more checkrides during the pandemic.
 
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