Deflation and excess inventory

[razz]

Something that I had not considered before so sharing.

Never thought about it but recent info is that manufactured goods are only 1/3 of a country like the US's GDP.Services are 2/3 of GDP.

Quote:https://www.mauldineconomics.com/frontlinethoughts/deflation-talk

"Goods are only one-third of consumption in the GDP accounts. Services are two-thirds. What I think is going to happen now is businesses are scrambling like crazy to keep up with demand. They can't. They got way behind. They're… double and triple and quadruple ordering. That's the first thing. The consumer, yes, has been spending aggressively on goods, but probably is about to shift the mix back towards services, maybe disproportionately. I think we're going to end up with a massive inventory problem towards the end of this year or into next year. We see three sources of deflation on the horizon. The first is that one, and that's inventory-driven and very commodities-oriented."

Can you imagine the amount of goods in inventory over the next year because businesses have ordered so much extra based on the demand of the past year where people could only spend on limited goods and mostly for the home. As restrictions are eased and life reverts to its new- normal which includes more service-based businesses, the inventory should rise substantially. Will that mean reduced prices for goods for us?

[happystuff]

Could this also be a trend in more people becoming less materialistic and craving more experiences? Maybe?

[Gardnr]

Could this also be a trend in more people becoming less materialistic and craving more experiences? Maybe?

Wouldn't that be the most awesome thing to result from the Pandemic?

[ApatheticNoMore]

I have often thought it is a bit foolish to jump into the fray now when everyone is buying stuff. Unless it can't wait or whatever. But aren't things likely to be more sane later? There is very little I even have in mind mind you, a piece of furniture maybe.

[catherine]

Yes, it sounds like the picture they paint is reduced costs for goods, and more positive wages for people who provide services. I've often thought about that--when people criticize simple living because "if everybody lived simply society would collapse because we need to make stuff because people need to have some way to make money." In other words, manufacturing is essential because it's a pillar of the work force. So our "obligation" as a citizen is to keep buying stuff.

But we can be more creative than that! We can pull back on manufacturing and have more teachers, more healthcare workers, more landscape designers, more tour guides, etc. Pull back on manufacturing and we can have more craftspeople, more cobblers. My son was going to buy new shoes, and my frugal son-in-law told him that there's a cobbler in town. So my son took his shoes there and had them resoled and polished up. I can't remember the last time I took a pair of shoes to the cobbler. Shame on me.

I would like to see some type of shift such as the kind mentioned in the article in terms of deflation in manufactured goods. I do think the younger generations are thankfully less addicted to Big Spending on stuff.

[happystuff]

But we can be more creative than that! We can pull back on manufacturing and have more teachers, more healthcare workers, more landscape designers, more tour guides, etc. Pull back on manufacturing and we can have more craftspeople, more cobblers. My son was going to buy new shoes, and my frugal son-in-law told him that there's a cobbler in town. So my son took his shoes there and had them resoled and polished up. I can't remember the last time I took a pair of shoes to the cobbler. Shame on me.

I would like to see some type of shift such as the kind mentioned in the article in terms of deflation in manufactured goods. I do think the younger generations are thankfully less addicted to Big Spending on stuff.

Your cobbler reference bought back some memories as my dh used to take his good work shoes in to be resoled when needed. I don't know if the place even exists any more, but I may remind him.

Your post also made me think of this commercial - https://www.youtube.com/watch?v=GNb0B8Hf6eI

[ApatheticNoMore]

But we can be more creative than that! We can pull back on manufacturing and have more teachers, more healthcare workers, more landscape designers, more tour guides, etc. Pull back on manufacturing and we can have more craftspeople, more cobblers. My son was going to buy new shoes, and my frugal son-in-law told him that there's a cobbler in town. So my son took his shoes there and had them resoled and polished up. I can't remember the last time I took a pair of shoes to the cobbler. Shame on me.

I would like to see some type of shift such as the kind mentioned in the article in terms of deflation in manufactured goods. I do think the younger generations are thankfully less addicted to Big Spending on stuff.

it's kind of a green growth argument, it's just unlikely to be possible, as there is no evidence of green growth. And as most services have a material element. Teachers, there is a reduction in traffic here every year when school is out of session (also in a pandemic when schools are closed sure, but I mean more normal times when the only factor is school). I think we genuinely *need* more healthcare workers, that we don't have enough per population period, so I won't argue that, but I'm not sure it's green per se, just a need and basic needs should be met. landscape designers were all those plants transported from where, coming in plastic containers etc.. tour guides, how far did the people on tour travel and by which means, I mean maybe they are taking tours of their own city and so the answer is not much, but that's probably the exception. It's not that everything is as it has to be, but just schools increase traffic enough that you know kids aren't all walking to the local school or something anymore.

I bought my last new shoes, well one pair of athletic shoes had the bottom plastic coming off in several pieces plus plastic on the side etc., does anyone even fix that, I had glued it at one point, but that had worn off, oh well it was 10 years old. Another two pairs had velcro that stopped working, does anyone even fix that? I will never buy shoes or probably anything much with velcro again in my life. So that's the story of the 3 pairs of shoes I bought in the pandemic to have two work shoes (even though I was barely going in to work), and a gym shoe.

[SteveinMN]

Your cobbler reference bought back some memories as my dh used to take his good work shoes in to be resoled when needed. I don't know if the place even exists any more, but I may remind him.
This past year I replaced my boots. After many years the old ones were totally worn out. I was a little shocked at how much you can spend for boots that have soles that are glued on and, therefore, are not repairable except in only minor situations. Given what many people can spend on boots, how many cobblers can make a living resoling shoes?

Having a more service-oriented economy is great, but some of that depends heavily on having an audience: people who will spend the money on things like repairable shoes and on electronic devices that are designed to be repaired and upgraded and people who will insist on personal service rather than diving for the self-checkout or just clicking the Buy Now button rather than shopping in a store.

[ApatheticNoMore]

It's complex some of it depends on the customer (assuming the item is even available for anyone to buy) such as buying items that are repairable.

Things like self check out are deliberately pushed on people more or less, the store will hire too few check out people, and then as a result the line for checked out will be way excessive (I don't remember them being so long in the past), and most people won't wait in it for 2 items of something. It's a hard nudge to produce certain behavior - using the self checkout, it doesn't occur in a vacuum but as a result of understaffing. And a lot is convenience because modern life is too demanding, so you don't take short cuts and overwhelm yourself with tasks to do (me before the pandemic) or you take short cuts and manage the overwhelm a bit better (me adapting behavior as made sense for the pandemic anyway). Sometimes the short cut is online shopping (I'd say it's the buy now button only i don't actually use the buy now buttom), maybe sometimes it's using an atm rather than going to the bank :~) truthfully I still don't have an atm card

[iris lilies]

Shoe repair: I dont even know when we have had a pair of shoes in this household that are repairable. maybe DH’s steel toed work shoes?

yet within the past decade, and also before, when people in my neighborhood are asked about urban plans and what businesses they want to see here, someone always pipes up with “shoe repair.” I shake my head thinking that is preposterously impractical. But those people must buy Important Shoes.

I certainly cannot say I buy cheap shoes because I do spend $75 -$120 on tennis shoes, but those are not repairable.

[ToomuchStuff]

I am not quite sure how inventories will rise substantially?
So many places do JIT inventories (Just in time) and ordering is up in part due to shortages (ordering more because only getting partial deliveries), and not all places are automatic backorders (order more now, get regular order and never order or get the rest) and some backorders have to be opted in.
There are places that claim they are updating their manufacture to be able to provide more, bullets come to mind. Most of the manufacturing equipment I am aware of, is pre WWII and both running full speed and being patched together (wore out), with it not being cost effective to manufacture that equipment often. One part of the shortage was due to a manufacturer going out of business/bankrupt, but now they have been bought out and restarted, prices have come down, while demand is still high. Nobody I have talked to expects to ever get as low as 2019 levels anymore.
Restaurant I am aware of, has been going this whole time. Was given a warning of an expected shortage and like most, if it has a shelf life, can get more while the supply is there, to hopefully get through the rough patch, or they remove items from the menu/adapt if perishable.
Meat plants, may put out more (normal levels), as covid restrictions ease up on spacing, but it has always been a commodity market.
As for cobblers, they still exist in industries (amputee/chiropractic shoes, high end boots, etc), however they are as uncommon now as farriers were common in the 18th and 19th centuries.

[happystuff]

I'm thinking that even if inventories rise, those holding onto them will reduce their prices to the degree necessary to reduce the inventories... probably to make way for "new" inventory. Sadly, that does seem to be the cycle and will continue to be until consumers says "Enough is enough!". (not holding my breath - lol)

And back to cobblers, specifically, while they may be harder to find, I believe they are still out there, but have also adapted. The one we used to use way back when had a shop of find leather goods - very artisan-type shop.

[Tradd]

I just looked on Google Maps. There are 7-8 shoe/luggage/leather goods repair places within a 10-11 mile radius of where I live. NW Chicago suburbs.

[Alan]

I just looked on Google Maps. There are 7-8 shoe/luggage/leather goods repair places within a 10-11 mile radius of where I live. NW Chicago suburbs.
When I worked downtown there were several cobblers within walking distance of the office. The location was great because the business district was filled with traditional Oxford shoes who's only real weakness was the leather soles, a good cobbler could keep them looking good for years on end. I think I still have several pair in my closet with their 2nd or 3rd soles.

[rosarugosa]

There is a great cobbler in Boston. I had a beloved pair of short black dress boots that I put new heels on so many times, and soles once. They finally got kind of worn inside too, and that is when I retired them. I sure got my money's worth from those boots!
Now that I am a retiree who dresses uber casual, I'm afraid I will not be bringing much business to a cobbler.

[Tradd]

My shoes now run to purple Crocs (no one at work bats an eye at them!), Teva sandals, or Merrell lace up hiking shoes.

[happystuff]

My favorite shoes right now are Sketchers. Yeah, I know... one of my kids teases me all the time. But I like them!!! LOL.