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Thread: Deflation and excess inventory

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    Senior Member razz's Avatar
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    Deflation and excess inventory

    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/fro...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?
    As Cicero said, “Gratitude is not only the greatest of virtues, but the parent of all the others.”

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    Could this also be a trend in more people becoming less materialistic and craving more experiences? Maybe?
    To give pleasure to a single heart by a single act is better than a thousand heads bowing in prayer." Mahatma Gandhi
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    Quote Originally Posted by happystuff View Post
    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?

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    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.
    If you want something to get done, ask a busy person. If you want them to have a nervous breakdown that is.

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    Senior Member catherine's Avatar
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    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.
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    Quote Originally Posted by catherine View Post
    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
    To give pleasure to a single heart by a single act is better than a thousand heads bowing in prayer." Mahatma Gandhi
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    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.
    If you want something to get done, ask a busy person. If you want them to have a nervous breakdown that is.

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    Senior Member SteveinMN's Avatar
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    Quote Originally Posted by happystuff View Post
    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.
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    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
    If you want something to get done, ask a busy person. If you want them to have a nervous breakdown that is.

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    Senior Member iris lilies's Avatar
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    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.

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