You know times are tough when bankers and lawyers are standing alongside journalists and factory workers in the unemployment line. When a CNN poll finds 60 percent of Americans believe that the country's headed for another Great Depression. When a presidential candidate gets on the stump and announces that the United States is facing the greatest financial crisis in 80 years.
Even Vogue, the epitome of aspirationalism, has deigned to use the words "Shopping on a Budget" on its November cover. No reports yet of Hoovervilles or an upswing in hobos, but usually the first thing people do when the economy goes in the tank is sell their stuff for cash.
"People that are doing miserably, who bought things in good times, tend to get rid of what they have in order to pay expenses," says Michele Boldrin, chair of Washington University's economics department.
"At this time of year, September and October, we usually see an increase in business because of kids going back to school," says Ray Weber, owner of AJ&R Pawn Shop in south city. "Parents are needing money for clothes. Perhaps this year, we've seen a little more than normal.
"People don't just need money for school clothes," he continues. "They need to pay their bills, normal household bills. Perhaps things aren't stretching as well as they used to. Being in this business, you always hear sad stories about why people need money."
Most customers, Weber notes, are still coming back to get their belongings out of hock within 30 days, but lately he's getting more cautious about the goods he accepts. "Even in the best economy we always loan money. Today we have to watch what we're doing or we won't be able to recoup the money."
Ronnie Light of Sam Light Loan Company, another pawn shop west of downtown, has seen roughly 10 percent more forfeitures than usual. But, he says, "The economy hasn't really affected our business yet. Call me back after the first of the year. We're going to have a bad, bad holiday season. But people have been selling their gold and silver. Coin shops are doing very, very well."
"We've had a large increase in business right now," says Mark Reid, owner of Clayton Rare Coins & Jewelry Gallery. "But a lot of people are purchasing rather than selling. They want to accumulate gold to protect themselves from an economic or electoral disaster. In Germany in the 1920s, paper money had no value. A wheelbarrow of bills would be worth one silver dime."
Whenever Reid does buy gold, like a one-ounce gold coin known as an Eagle, he usually manages to resell it within "three nanoseconds" of the customer leaving his store.
Like the stock market, the market price of gold has been fluctuating over the past few weeks. Reid doesn't think hoarding gold bars will be of much help if the economy does collapse. "They think the end of the world is coming," he says of the hoarders. "I don't. There's maybe a 1 percent chance of that happening. When I was getting my MBA, my professor told us it's best to diversify your portfolio: stocks, bonds, real estate, gold. That way you'll be really protected."
Wash. U.'s Boldrin cautions that "it's hard to tell systematically" if resale businesses will do better during a recession.
Nonetheless, local consignment stores have been doing a brisk business, with people whose portfolios are mostly in their closets.
"We're doing better than the department stores," says Mary Kammermeyer, a manager at Back on the Rack in Brentwood. "But we've also been doing more advertising than normal, and this time of year is usually good for us. People get tired of their summer clothes."
Sue McCarthy, owner of the Women's Closet Exchange in west county, is much more unequivocal. "Sales are way up," she says. "We've been in business for 22 years and sales have climbed every year, but now we've reached new highs.
"And the quality of what we have is skyrocketing," she adds. "Our customers still want quality but they don't want to have to pay full price. Many have never considered shopping resale, but they hear what we have and come in and then they're hooked for life. They realize it's crazy to buy brand-new Chanel bags."
McCarthy's consignment customers receive 50 percent of the sales from their donations. "They get a handsome return," she says. "They do better with us than they would on eBay. We pay top dollar."
Not all of McCarthy's customers, though, are desperate to pay their bills.
"We take people who are financially secure, who need to turn their Chanel bag around to get the most for it."
Wouldn't they just use it?
"No," explains McCarthy. "These people have five. They used to give [an extra bag] to their maids, but now they bring it in here. Or they have their maids do it."
Subscribe now to get the latest news delivered right to your inbox.