Is it the economy, stupid?

Over the past couple of years, I have heard many dealers observe that business has declined dramatically. Tias.com reported just today that the trade has "suffer[ed] through a major downturn over the past few years." Some believe that the collector group has aged with no younger replacements in sight.

I have been collecting since I was seven, and can tell you that I see no difference between then and now in the demographics of the collector. In the early 1960's, when I started collecting, the typical collector was in the late 30's through the late 60's. Today, I still see the average collector in the same age range. I do not believe that the collector is dying off. We need to look at other reasons for the downturn.

One thing we need to remember is that the antiques trade comprises the sale of a non-essential good. Therefore antiques and collectibles will be among the first things to be cut when consumer confidence is low.

Here in central Pennsylvania, everyone I talk to who talks about the downturn in sales says it happened to them in October/November of 2006. How serious is the downturn? An unscientific survey of vendors at the Nittany Antique Machinery Association's September 2007 flea market revealed a 40-60% decline in sales from the fall 2006 show for many vendors. Some vendors saw an even greater decline.

Lets take a look at what happened in the past few years that may have affected sales.

According to USA Today, "From 2001 to 2004, average family income fell 2.3%". Median family income rose by 1.1% from 2006-2007. However, "real, inflation-adjusted wages are down 1% the past four years" according to another USA Today article. So, wages have been stagnant or declining based on inflation. Remember, inflation figures do not include fuel or food.

In 2006, gasoline first approached $3.00/gallon. From May-August 2006, gasoline hovered in the $2.90 - $2.99/gallon range. Home heating oil was $0.60 - $1.00/gallon above what it was just 16 months previous.

According to the Bureau of Labor Statistics, the most recent Consumer Price Index shows energy prices up 21.4% between November 2006 and November 2007. Food prices has increased 4.8% during that same period. Housing was up by 3.1%.

Credit card debt doubled since 2001. According to money-zine.com "The average household in 2007 carried nearly $8,500 in credit card debt." Credit card delinquencies increased by 26% from October 2006 to October 2007. Credit card defaults increased by 18% during the same period. According to the Associated Press, "...what is coming into sharper focus from the detailed monthly SEC filings from the trusts is a snapshot of the worrisome state of Americans' ability to juggle growing and expensive credit card debt."

With this information, it is clear that the middle class, who are the purchasers of most lower to mid-range antiques and collectibles, are feeling the pinch. The whole picture is beginning to look bleak.

What does this tell us about the antiques trade? Well, it tells me that the trade acts much like a canary in a coal mine. It is an early foreteller of an economic downturn. It dies as the economy slows.

Will the business recover? I suspect it will. However, I do not expect this turnaround to come soon. Reports coming down the pike paint a picture of a stormy next few months or possibly even years.

Jon Boi

By the way, if you are in the trade and would like to get your 2 cent piece in on the discussion - if you have an expertise in marketing or business practices and would like to share with other dealers - drop me a line and I will do what it takes to get your voice heard.