Are you being tossed by a fiscal storm?
“A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily.” – Ben Bernanke
A couple of weeks ago, the New York Times offered six interviews with New Yorkers Tossed By a Fiscal Storm:
A small-business owner in Brooklyn worries about making the payroll. A homeowner in Queens faces foreclosure. A suburban stay-at-home mother cuts back on luxuries. A retiree watches rent, food and cable bills rise while her income stays flat. An aspiring musician chooses between recording fees and a trip to see his family at Christmas. A head of a nonprofit group sees grants disappear.
In the print version, the vignettes were just pictures and captions… the online version had the full story. The story about the struggling musician emphasizes how interdependent our economy is in most cities. His primary source of income comes from bartending and he noted:
What I can see from last year to this year is that the season is definitely slower. I’m making less money because less people are going out. And when they go out, they spend less than what they used to. I’ve been doing the same, I’ve been having friends together in my house, to drink bottles of wine, instead of going out to bars. It’s kind of like a chain. I make less money, and I stop going out too.
The domino effect: Whenever I travel for work and jump in a taxi, I always ask the driver how business is in their city. In the past couple of months, I’ve been in taxis from San Francisco to Silicon Valley, New York City to Kansas City and of course, I typically take one back and forth from my house to the airport in Orange County. They all are saying the same thing. Business is slow. This summer their primary complaint focused on people staying home and not taking vacations. Now the cabbies are all saying that the business people are cutting back too. One guy told me that he works four days just to earn enough money to pay the cab company for the right to drive the cab. The fifth day is what he takes home.
So what’s he doing to make up the difference? He’s working six and seven days. And when he’s working, he’s not out spending money with his family on the weekends. He said, “That’s not good for the economy either. It’s a vicious cycle.” He also is considering working the night shift, because about the only thing that hasn’t changed with this economy: people are still getting drunk. Paula already covered this nicely in her post, Economy is Down but Booze Sales are Up. Although I remember chatting up a cabbie in Las Vegas back in 2006 and while people were still partying in Vegas, he was already moaning about how gas prices had impacted his margins.
The New York Times article gives a pretty good cross section of the population in New York, but what’s the experience in other parts of the country. I’d love to hear from our readers in places like Dallas, Chicago, and Cincinnati. Of course, if you live on one coast or the other, in a big city or small… we’d love to hear your stories too. How are you weathering the fiscal storm?
Photo credit: stock.xchng.