El and Bill
New member
Way back in January '08 we started a post called Uh Oh about the possibility of an economic recession and asked for speculation about the effect this might have on us as individual boaters and on the boating industry. There have been many interesting posts through the years as we (and the industry) did fall into recession.
www.c-brats.com/viewtopic.php?t=7851&po ... sc&start=0
Participants did a great job keeping the focus on our boating and the industry.
So, we thought it could be interesting to continue the economic discussion in the pub by bringing up the subject of deleveraging and its potential effect on us and the boating industry.
Deleveraging is a fancy word meaning reducing debt. It is usually used with respect to businesses. But, many have broadened this to personal debt reduction and government debt reduction. (now again, let's stay away from the politics)
There are good data to show that businesses in general are 'squirreling' away some of their profits by reducing corporate debt (and banks are leaving more money 'in the bank' to cover possible bad loans) They are doing this, more than in the recent past, instead of funding salaries for more employees, or investing in r and d, or banks loaning without as much collateral. Hence unemployment remains higher than usual after past recessions, salaried workers are working longer hours, innovative new products are perhaps fewer, and it is more difficult for consumers to borrow for 'big ticket' items.
Families are doing the same thing - they are paying down mortgages, or if that's impossible, going into bankruptcy or foreclosure. Credit card debt is falling (and now harder to get). Folks are saving more of their incomes - savings rates just 5 years ago were about 2%, and have gone to 7% last year (although falling to a still above average 5%) in the 4th quarter last year.
Governments at all levels are considering all their expenses more carefully in order to reduce indebtedness - national debates are active on the subject.
So most are becoming more frugal and careful with our spending and considering saving more of our income, if possible. We are learning to live within our means or suffer the consequences.
All areas of our culture are either considering deleveraging, or actively reducing debt. Our grandparents, who lived through the consequences of the Great Depression, are standing 'in the wings' cheering this rediscovery of frugality.
Oh, there are some who might still think building debt is a good way to leverage more material things out of life (perhaps with the hope that future inflation will allow the payback of debt with cheap dollars).
However, we believe there is another significant factor that must be considered by us as individuals or collectively as a society - demographics. The Boomers are retiring - and there are lots of them. And the population of youngsters is dropping in developed countries. Population growth has been about 1.5% for developed countries, but has dropped to 1% growth for the next 10-20 years.
So more geezers and fewer tweeners.
Geezers spend their savings, but spend far less on material things than younger folks with incomes and dependents. So fewer 'things' (houses, cars, vacations, boats?) are bought - fewer consumers as a percentage of population, and more retirees who don't spend as much money - the economy suffers.
Health care costs skyrocket as the population grows older - geezers hold back on spending to cover (now near-future) health costs. Medicare/medicaid costs go up. Unfunded pension costs rise sharply, causing geezer poverty or high costs on younger workers.
Japan in the past decade has shown what happens when deleveraging hits demographics - a frozen economy and inter-generational conflicts.
Now - another important economic area closer to my experience - many resources are being depleted. Costs for remaining resource is rising. Gasoline costs now are a good example. Climate changes may impact resources - particularly food prices. So more costs loom.
Whew - what does this mean to boaters?
Well, here's some speculation:
Some of us will work longer to secure finances for retirement.
We will personally spend more for insurance to cover health costs our savings may no longer cover - long-term care, medi-gap, etc.
Geezers may not want to spend as much on boating (or buy more economical boats) to protect their retirement savings.
Younger folk may have more tax burden (and perhaps fewer pay raises) as the economy may not go up as fast as the past 30 years - so be more cautious about spending on boats and boating.
Extras on a boat (paneling, enclosed head, boat size, tow vehicle required) may be more seriously considered.
Perhaps the changes we have observed and discussed, over the past several years under the uh oh! discussion, will extend into the future in various ways we can consider on this thread.
For instance:
With an aging population, perhaps with many less affluent, what will retirement with a boat mean? Shorter cruising time or distance? Smaller boats become more the norm as we 'scale down' our 'needs?
Younger folks, with aging parents, and more tax or insurance costs and a less 'aggressive' economy for jobs - how will they view boating and boating expenses?
The top 1% of wage-earners in this country earn disproportionately so much more than the bottom 95% - how will this affect the boating industry? Where do the greatest profits lie? - with high-end (but fewer) boats or mass-produced low-cost boats?
OK enuf of this. Sitting on anchor, drifting around at the end of the rode and breeze, sipping on a sun-downer, these are the things El and I are prone to ponder. What steps do we take to maintain a secure (but interesting and exciting) boating future for us? How about you?
www.c-brats.com/viewtopic.php?t=7851&po ... sc&start=0
Participants did a great job keeping the focus on our boating and the industry.
So, we thought it could be interesting to continue the economic discussion in the pub by bringing up the subject of deleveraging and its potential effect on us and the boating industry.
Deleveraging is a fancy word meaning reducing debt. It is usually used with respect to businesses. But, many have broadened this to personal debt reduction and government debt reduction. (now again, let's stay away from the politics)
There are good data to show that businesses in general are 'squirreling' away some of their profits by reducing corporate debt (and banks are leaving more money 'in the bank' to cover possible bad loans) They are doing this, more than in the recent past, instead of funding salaries for more employees, or investing in r and d, or banks loaning without as much collateral. Hence unemployment remains higher than usual after past recessions, salaried workers are working longer hours, innovative new products are perhaps fewer, and it is more difficult for consumers to borrow for 'big ticket' items.
Families are doing the same thing - they are paying down mortgages, or if that's impossible, going into bankruptcy or foreclosure. Credit card debt is falling (and now harder to get). Folks are saving more of their incomes - savings rates just 5 years ago were about 2%, and have gone to 7% last year (although falling to a still above average 5%) in the 4th quarter last year.
Governments at all levels are considering all their expenses more carefully in order to reduce indebtedness - national debates are active on the subject.
So most are becoming more frugal and careful with our spending and considering saving more of our income, if possible. We are learning to live within our means or suffer the consequences.
All areas of our culture are either considering deleveraging, or actively reducing debt. Our grandparents, who lived through the consequences of the Great Depression, are standing 'in the wings' cheering this rediscovery of frugality.
Oh, there are some who might still think building debt is a good way to leverage more material things out of life (perhaps with the hope that future inflation will allow the payback of debt with cheap dollars).
However, we believe there is another significant factor that must be considered by us as individuals or collectively as a society - demographics. The Boomers are retiring - and there are lots of them. And the population of youngsters is dropping in developed countries. Population growth has been about 1.5% for developed countries, but has dropped to 1% growth for the next 10-20 years.
So more geezers and fewer tweeners.
Geezers spend their savings, but spend far less on material things than younger folks with incomes and dependents. So fewer 'things' (houses, cars, vacations, boats?) are bought - fewer consumers as a percentage of population, and more retirees who don't spend as much money - the economy suffers.
Health care costs skyrocket as the population grows older - geezers hold back on spending to cover (now near-future) health costs. Medicare/medicaid costs go up. Unfunded pension costs rise sharply, causing geezer poverty or high costs on younger workers.
Japan in the past decade has shown what happens when deleveraging hits demographics - a frozen economy and inter-generational conflicts.
Now - another important economic area closer to my experience - many resources are being depleted. Costs for remaining resource is rising. Gasoline costs now are a good example. Climate changes may impact resources - particularly food prices. So more costs loom.
Whew - what does this mean to boaters?
Well, here's some speculation:
Some of us will work longer to secure finances for retirement.
We will personally spend more for insurance to cover health costs our savings may no longer cover - long-term care, medi-gap, etc.
Geezers may not want to spend as much on boating (or buy more economical boats) to protect their retirement savings.
Younger folk may have more tax burden (and perhaps fewer pay raises) as the economy may not go up as fast as the past 30 years - so be more cautious about spending on boats and boating.
Extras on a boat (paneling, enclosed head, boat size, tow vehicle required) may be more seriously considered.
Perhaps the changes we have observed and discussed, over the past several years under the uh oh! discussion, will extend into the future in various ways we can consider on this thread.
For instance:
With an aging population, perhaps with many less affluent, what will retirement with a boat mean? Shorter cruising time or distance? Smaller boats become more the norm as we 'scale down' our 'needs?
Younger folks, with aging parents, and more tax or insurance costs and a less 'aggressive' economy for jobs - how will they view boating and boating expenses?
The top 1% of wage-earners in this country earn disproportionately so much more than the bottom 95% - how will this affect the boating industry? Where do the greatest profits lie? - with high-end (but fewer) boats or mass-produced low-cost boats?
OK enuf of this. Sitting on anchor, drifting around at the end of the rode and breeze, sipping on a sun-downer, these are the things El and I are prone to ponder. What steps do we take to maintain a secure (but interesting and exciting) boating future for us? How about you?
