Could a recession be coming? Misplaced groceries, strip clubs might tell us when
What do misplaced groceries, slow restaurants, empty strip clubs, and traffic patterns have in common?
They could all potentially be early indicators of a recession, according to Jim Vleming, a regional labor economist at the Washington Employment Security Department for several counties, including Pierce, Thurston and Mason.
“There’s so much psychology involved in an economy,” he told McClatchy.
Vleming explained that once people start making tough decisions at grocery stores, with travel and with other leisure activities, it eventually plays a role in the rest of the economy, which can continue into a recession if the downturn persists.
The National Bureau of Economic Research determines when the U.S. is in a recession by measuring factors such as high unemployment, low sales and production, GDP and income decline and a decline in spending by consumers.
But Yael Jacobs, an assistant economics professor at the University of Washington, agreed with Vleming that “folk indicators” of recessions can potentially be reliable for predicting downturns as well.
Seeing more misplaced groceries in a store, for example — such as peanut butter haphazardly left on a shelf where it doesn’t belong — “suggests a story of consumers making hard choices between goods that they recently bought without facing a dilemma,” Jacobs said.
“This also links well with the idea in macroeconomics that it is unexpected changes in inventories that turn unexpectedly low demand into low production, becoming a recession: when consumers buy less than firms expected, they will have more product remaining on their shelves, so they won’t produce as much as they had been producing, leading to lower output in the near future,” she added.
Then there’s the strip club theory: Strip clubs experiencing less business is another reliable “folk indicator,” perhaps as a sign of less disposable income.
Recently, a viral tweet suggested that empty strip clubs are a “leading indicator” of a recession, a statement supported by the downturn in business during the 2020 recession that was caused by the pandemic.
Not all communities experience recessions the same way, however.
The makeup of a local workforce can have an impact on the way a community feels a recession, Vleming said. The 2008 recession, for example, wasn’t as difficult in Thurston County as it was in other areas, he said.
“Really it wasn’t that big of an impact because we’ve got the state capitol and state employees and there weren’t a lot of layoffs at that point,” he said. “There’s not a lot of impact in a county that has a lot of state employment unless there’s some sort of state employment cuts.”
Instead, rural areas are the places most impacted because of bigger job losses and higher unemployment rates, Vleming explained. Areas such as Lewis and Grays Harbor counties, which are already economically more depressed than other counties, are the places that are impacted the most financially during a recession, he said.
Younger, newer employees, and older employees close to retirement are the population segments who typically get the brunt of unemployment and job loss during a recession, Vleming said.
Even still, industries such as restaurants, hotels, retailers and strip clubs feel the initial pressure the most as a recession looms, and they are not impervious to the effects even in areas with stronger economies.
Anecdotally, Vleming said traffic patterns also can be a good indicator: The less people can afford gas, the less traffic.
But, for now, Vleming said he thinks Washingtonians still have the summer and the fall before the economy slows, potentially leading into a recession sometime next year.
Other economists and economic forecasters also predict that the U.S. may be headed into a recession in the coming months as well.
The U.S. has had 19 recessions since 1893.
This story was originally published June 9, 2022 at 5:00 AM with the headline "Could a recession be coming? Misplaced groceries, strip clubs might tell us when."
