Do you think this business is recession resistant?

cd34 · 2007-03-15, 12:08 PM

If you look at the stock market trends, during times of recession, oddly, restaurants and entertainment venues have had upticks. The explanation has always been that people actually go out to dinner, go to movies, etc as an 'escape'

I don't think the industry is recession resistant, perhaps more tolerant.

I think that today's issues are caused by people that lived beyond their means by sucking every bit of equity out of their house, or taking advantage of the teaser interest rates on adjustable rate mortgages. I didn't understand that trend... fixed rate mortgages had been at their lowest in years, but, in that quest to save 2% on their APR, people got variable interest rate mortgages -- knowing that interest rates probably couldn't ever go any lower and could only go up.

As a result, certain segments of the industry are probably hit harder than other segments. College grads/attendees may be less likely to whip out their credit cards.

Even though the real estate market is in a bit of turmoil in Florida, our local Aston Martin/Lotus/Range Rover dealer seems to have problems keeping enough cars in stock because they are selling too quickly.

That dealer was interviewed right after 9/11 when GM, Ford and Chrysler all started doing the 0% loans and they asked -- with the average purchase price of your cars being $120k, you still hold your interest rates at 12%, does that affect your business?

The Manager replied, I really cannot recall the last time we financed a car here.

Linkster · 2007-03-15, 12:59 PM

The real estate market is having a little trouble all over the country - right now foreclosures are up 48% from this time last year - although it really started around June of last year

As far as what people will spend their money on during a recession - I tend to look at the US census/consumption data - and usually pick something like liquor/beer sales - looking back over the last 10 recession cycles, there has either been no change or an increase in spending on liquor during recessions - although overall in the US it has declined significantly over the last 100 years, the spending sure hasnt changed (adjusted of course)
I figure if the guy can go buy a six pack he can afford the 2.95 for a trial

2007-03-15, 12:08 PM	#1
cd34 a.k.a. Sparky Join Date: Sep 2004 Location: West Palm Beach, FL, USA Posts: 2,396	If you look at the stock market trends, during times of recession, oddly, restaurants and entertainment venues have had upticks. The explanation has always been that people actually go out to dinner, go to movies, etc as an 'escape' I don't think the industry is recession resistant, perhaps more tolerant. I think that today's issues are caused by people that lived beyond their means by sucking every bit of equity out of their house, or taking advantage of the teaser interest rates on adjustable rate mortgages. I didn't understand that trend... fixed rate mortgages had been at their lowest in years, but, in that quest to save 2% on their APR, people got variable interest rate mortgages -- knowing that interest rates probably couldn't ever go any lower and could only go up. As a result, certain segments of the industry are probably hit harder than other segments. College grads/attendees may be less likely to whip out their credit cards. Even though the real estate market is in a bit of turmoil in Florida, our local Aston Martin/Lotus/Range Rover dealer seems to have problems keeping enough cars in stock because they are selling too quickly. That dealer was interviewed right after 9/11 when GM, Ford and Chrysler all started doing the 0% loans and they asked -- with the average purchase price of your cars being $120k, you still hold your interest rates at 12%, does that affect your business? The Manager replied, I really cannot recall the last time we financed a car here. __________________ SnapReplay.com a different way to share photos - iPhone & Android

2007-03-15, 12:59 PM	#2
Linkster NO! Im not a female - but being a dragon, I do eat them. Join Date: Mar 2003 Location: Sex Delta Posts: 5,084	The real estate market is having a little trouble all over the country - right now foreclosures are up 48% from this time last year - although it really started around June of last year As far as what people will spend their money on during a recession - I tend to look at the US census/consumption data - and usually pick something like liquor/beer sales - looking back over the last 10 recession cycles, there has either been no change or an increase in spending on liquor during recessions - although overall in the US it has declined significantly over the last 100 years, the spending sure hasnt changed (adjusted of course) I figure if the guy can go buy a six pack he can afford the 2.95 for a trial __________________ Pussy Chompers Porn Links NSCash