Monday, August 6, 2012

A Very Different Type of Economic Recovery

This recovery has been inconsistent, sporadic, and unpredictable.  At times it looks like the economy is getting stronger and starting to zoom.  At other times it has looked so feeble that you question if we are making much progress at all.

This recovery is certainly very different from past recoveries.  To get a ground-level perspective on how things are progressing, let’s go back and look at that distressed business district near my home in Stark County, Ohio.

This is the place I have written about before, where things were so bad that the self-serve car wash was encouraging people to bring their buckets with them to wash their cars.   During the depths of the Great Recession about half of the business along this nearly two-mile stretch closed up shop. 

It is interesting to note that the first business to close up was the dancer bar / strip joint.  This happened before the recession actually started.  I believe strippers are a good economic indicator.   This industry is based on disposable, discretionary, male, entertainment, spending.   This type of spending is the first to be cut during bad economic times and should be the last to return in a full recovery.  I think an economics student needs to do a doctorate thesis to prove this.  There is a connection here and of course the research would not be boring.

The owner of the strip club tore down the existing old building and put the property up for sale.  I doubt that he has heard from any interested buyers in years.  And the car wash will still let you “bucket wash”, but business is still slow.

There are signs of recovery in the distressed district.  About half of the vacant buildings have new businesses.  But the types of new businesses that moved in give an indication about the nature and quality of the recovery.  Let’s look at a few of the more interesting ones:
Internet Café

This is the ultimate in misnomers because it does not offer Internet service nor is it a coffee shop.   You buy time on terminals that allow you to win money if you are able to click on targets at just the right moment.  They say they are games of skill, but of course it is really just gambling.  Actually it is worse than gambling because it is unregulated which means that payouts are just high enough to keep the pathetic customer hooked.  So far law enforcement has not shut them down and there are many of these “cafes” opening all over Ohio.

Dog and Cat Shampoo 
Kitty right before the shampoo
I am guessing the owner started this business at home and after building up a customer base, moved out into a building.  This is a tough business to grow in a slow economy because people can wash their own pets if necessary.   But this can be a tough job.  Many breeds of dogs will not resist bathing, but cats are another story.  Shampooing a cat can be dangerous for all involved, so the proprietor must be good at what she does.  Many she can video the cat shampooing sessions and then sell DVDs for entertainment.

Arabian Food Market

This business moved into a building where there has been much turnover.  However, I think this business is going to do well.  There is a growing Arab population in the area and there is no competition of any sort for miles.  The location is also close to the interstate which means it can draw customers from a wide area. 

The Gift Boutique

According to an article in the local newspaper, this business opened based on a permit to sell retail purses, women’s wallets, scarves and knick-knacks.  They must believe that it is very stressful for men to shop for these gifts because in the back of the store they offer full-body massages performed by unlicensed masseuses.  Unlicensed masseuses often rub their customers the “wrong way”.  I don’t know whether the opening of the boutique has resulting in greater employment, but it can be assumed that it has resulted in an increase in the number of “jobs”.  A police spokesperson said they are “accessing” the situation, but the business still appears to be open.

The Church 

A local factory closed and put its large warehouse and surrounding property up for sale. This facility was a prime business property because it was situated right off the interstate and just over 10 miles away from an intersecting interstate.  It would have been a great property for a new factory or distribution facility.  

But who bought it?  It was an expanding church.  I have no problem with a church buying the facility.  They renovated the place and it is much better than having the building sit idle.  However something is wrong with your local economy when the organization that is able to gain the most value (by paying the highest price) from this property is a church and not an expanding business.

The Conclusion

Regarding this business district, this is an economic recovery built on saints, sinners, hungry Arabs and smelly cats.  No wonder it is inconsistent and unpredictable.


  1. My friend Renee wants to say: "It is sad that after the US government has pumped trillions of dollars into the economy that this is all we get!".

  2. " I believe strippers are a good economic indicator."

    I swear, I was only in the strip club doing economic research. Really. You can ask Don. He'll tell you.

  3. Now it looks like I may have generated a renewed interest in economics!

  4. That factory building used to make products that suck. Now it houses an organization that sucks money out of their congregation. Some irony here...