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Whither Thanksgiving?

There have actually been occasions when I’ve written because I’ve been wrestling with a particular issue and the process of writing has helped to clarify points and issues for me.  This is going to be one of those articles and yes, it does pertain to how a larger American practice is impacting the PracticalDad household.  Most specifically, do I go out for “Black Friday” Christmas shopping on Thanksgiving Day itself?

In the past two decades, Black Friday has taken on an entirely new focus in American culture.  I used to think that the term was a pejorative amongst shoppers and retail staff to describe the conditions that prevailed as people crammed into stores and waited in lines for special loss leader products; I later learned that it actually referred to the accounting ledgers of many retailers, who hung on at a loss through the year as they awaited the post-Thanksgiving holiday buying season and the chance to move into the profitable black.  As a kid, I knew that the folks would take us out on the weekend immediately after Thanksgiving for a Christmas buying spree but over the ensuing decades, that time span between the holiday and the shopping start has shortened.  My own experience with Black Friday began more than a decade ago when a close friend – my may-as-well-be sister invited me to join her for a pre-dawn excursion to shop for presents at a now-defunct mall toy-retailer.  This entailed getting to the mall at 330 AM to find a good spot in line for the 530 AM store opening; the other mall stores would open around 6 or 7 AM.  This began more than a decade-long tradition of grabbing the pre-Thanksgiving newspaper for the shopping ads, which she and my wife would study to find those items that might best work for the Christmas lists for the half-dozen kids that comprised our two households.  It became an exercise in the travelling salesman problem as we would split up lists and hit multiple locations and the cellphone made it a logistical effort worthy of transporting an army battalion.  As our kids aged and wanted to get into the act, this would be multiplied and we’d have four or more individuals in multiple locations, all searching out their particular item for another person in one of the two families and it became a rite of passage for the youngsters to join in the fray.  The culmination of the experience would be lunch with any combination of the two families before heading home for a return to regular activities.  When Youngest was finally old enough to come along for this established tradition, the rest were old enough that they’d moved beyond the toy phase and time had worked it’s natural change upon the process.

Time also worked its own change upon the larger process as the stores opened earlier and earlier and that 530 AM opening became an almost quaint anachronism.  More stores opened at 530 AM and earlier and then the push to be first moved the opening times even earlier into the early morning hours.  This has become a vicious cycle as stores – desperate for sales in an economy with a faltering middle class – continuously pushed the time envelope back further and further until only the other year when suddenly, stores were opening on Thanksgiving evening itself.  As I sit here and think about it, three of the stores at the forefront of the early Black Friday morning sale – KB Toys, Circuit City and Linens ‘n Things – now defunct; it would seem that the desperation by these dying retailers fed a frenzy that’s taken on a life of it’s own.  But there’s now a pushback as stores now purposefully advertise their willingness to let the employees have time with their families and people take note of the seeming callousness of the ones opening Thanksgiving Day.

So here’s the crux of the situation.  I agree that the stores should stay closed on Thanksgiving and hadn’t planned to go out until early Friday morning.  Yet both Eldest and Middle will be working on Thanksgiving Day – one at a mall retailer and another at a local restaurant – and my own family’s Thanksgiving meal is purposefully being moved up to an earlier time to accommodate the evening work shifts.  Youngest has also asked for a specific item that’s being sold as a loss leader at a retailer with a 6 PM opening on Thanksgiving evening.  He’s agreed that the item is costly enough that he’s willing to contribute to defray the total cost and now the question is whether I go to the retailer in an attempt to purchase the item.  Given that it’s a loss leader that would be far more expensive elsewhere, it’s certain that I’d also be leaving far earlier in order to stand in line.  So do I just acknowledge the practicality and give in to an already shot family Turkey Day or do I say no?

So that’s where I’m at.  But whatever is decided, I hope that you and your family have a wonderful Thanksgiving.  We’ll see what happens.

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PracticalDad Price Index – November 2015:  Deflation Reigns…

When I began the PracticalDad Price Index in November 2010, there was significant controversy over the outcome of the untried experiments of the Fed’s Quantitative Easing:  would there be a rocketing ascent into a massive hyperinflation or would the economy collapse into a deflationary black hole?  Given the speed with which opposing events occurred both in the Weimar Republic’s Hyperinflationary spiral in the early 1920s and the Great Depression in the early 1930s, it was generally supposed that whatever occurred would be quick and massive.  But we’re now more than five years from the onset of the Index and the third and last QE program has finished and it’s only now that prices are moving far more quickly in one direction than the other.  In this case, downwards.

The index began with a baseline of 100 as of November 2010.  The 47 item marketbasket, priced at three separate and unrelated grocery stores, consisted of 37 foodstuff items and 10 non-food items commonly purchased at the grocery (soap, kitchen trash bags, aluminum foil, ibuprofen and the like).  From this data each month was derived the Total Index (November 2010 = 100) and the Food-Only Subindex for the 37 foodstuff items (again, November 2010 = 100).  While the QE programs existed, both the Total Index and the Subindex rose upwards, although not at a constant or large rate.  The Food-Only Subindex actually peaked in December 2014 at a reading of 115.13; the cost of the consistently priced average basket had maxed at 15.13% higher than at the inception over four years previously.  But since then, the Subindex has dragged the Total Index downwards at a stunning rate.  As of the November 2015 data collection in the three stores, the Subindex has again dropped from October’s level of 107.07 to 104.79; this is a full 68% decline from the high reached eleven months previously.

Here’s some perspective:  it took more than four years for a consistently priced market basket to reach a high 15% above it’s starting point.  And it’s only taken less than a quarter of that time to give back more than two-thirds of that increase.

So what’s behind the collapse in the market basket’s food prices?  This is absolutely deflationary, but why?

Understand more than anything else that inflation is not a monolith.  It might be a wild beast when utterly untamed, such as in the 1920s German Weimar Republic, 1990s Zimbabwe or even today’s Venezuela…but it’s a Hydra and each head is one of the various sources of price increases.  One source of price increases comes from hot money flowing into a particular area of the economy, such as San Francisco in the years prior to 2006.  There’s only a limited supply of something – San Francisco properties – and everybody with money has to have some, so prices go up.  Until they don’t any longer.  Another source is when there are only a limited number of significant suppliers of a particular item and one or more decide to raise prices to pad the profit margin.  This was the case with Kimberly-Clark raising the price of adult diapers because they wanted to pad the profit margin.  This is also now the reason that housing rental rates are higher and growing moreso as the predominant American landlord is no longer some Mom-and-Pop but instead Blackstone Investment Group of downtown Manhattan.  Have you ever seen the neatly printed yard and corner signs offering a toll-free phone number and a standing offer to buy your house for cash?  Have you ever wondered who that is with all of the cash?  That’s Blackstone, at least in my neck of the woods.

Bastards.

But the biggest head on Hydra is the money supply, most notably measured in Economics by both velocity – the number of times that a dollar is turned over in the economy during a specified timeframe – and family income.  We all know that family incomes have declined but the monetary velocity for the supply of money (M2 as measured by the St Louis Federal Reserve Bank) has decreased to lows unseen in the lifetimes of most Americans.  When a family gets a dollar, they will now sit on it, far moreso than in the previous six decades. 

So apart from housing, what is the other principal category upon which a family spends it’s money?  Food.  And it’s here amongst the thin-profit-margin grocers that deflation truly seems to be appearing.  The grocers – corporate and independent alike – understand that their customers are stretched and are doing all manner of change to maintain sales and profits.  The Fed is terrified of a return to Great Depression-style deflation because the businesses lost all control of pricing as money disappeared from the economy and went out of business.  Today’s competition amongst the grocers is no longer based upon upscale stores and coffee kiosks but instead pricing, and bare-knuckle at that.  When a supplier is deemed to no be longer able to provide a cost-beneficial product, that supplier will be replaced by another that will; this is perhaps the key reason that the prices in the three local grocers are declining.

One of the parameters of the survey since its inception is that unless unavailable, all products within the PracticalDad market basket are store brand items.  If one of the three did not have a store brand item, then I shifted to a name brand across all three but that’s only occurred in a handful of the surveyed items.  The idea behind the parameter was that budget minded shoppers will generally forego a name brand in favor of the store brand based upon price considerations.  It is also far more sensitive and responsive to prevailing economic factors than the name brands’ manufacturers, who usually have the financial strength to absorb periodic downturns.  One of the grocers surveyed completely swapped it’s store brand supplier for another several months ago and across the line of products within that store’s basket, the prices declined.  What occurred this month was that another grocer found an even cheaper supplier and introduced some items from that supplier alongside their store brand products.  There’s been a tie-breaking rule that I adopted at the outset of the Index project in late 2010 and have used only rarely since:  in the event of any question, what would a true budget-driven consumer do?  I invoked the rule this month and used the lower priced item, even if not a store brand; the file has been amended and this grocer’s items will be used in lieu of the store brand products.  These items at one grocer were the movers behind the Index decline and should the same situation occur again, the rule will be invoked again.  So that is why we stand where we stand at the moment.  Families must stretch earned dollars and food benefit dollars further to stay afloat and it’s here at the most local level, the grocery store, that the stretch is occurring.  Because the grocers have competition to meet for the dollars and none of them will throw a family to the curb when the rent isn’t met.

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Veterans Day

Scrolling through the feed on the Facebook timeline brings a litany of thank you for your service messages to all manner of Facebook friends and their family members.  It is a well-deserved custom that’s spawned from the disgust at how the Vietnam vets were treated when they returned home.  Yet we need to be careful that it doesn’t become a thoughtless, de rigeur statement that’s thrown off as easily as a meaningless compliment because many of us never served – a large percentage of the population hasn’t served – and we generally don’t have a solid grasp of history and the fights in which they’ve been involved.  It’s changed cinematically as many have now seen the early carnage of the seasonal replays of Spielberg’s Saving Private Ryan or Ridley Scott’s Black Hawk Down, but there’s still a quantum leap between the family sofa and hunkering down behind a pile of rubble.  We say the right thing, but the great majority simply don’t get it.

While I think about my own father often, I always reflect more on Veteran’s Day and reading all of the thank yous made me even more thoughtful.  Dad’s been dead for almost 14 years.  We knew growing up only that he’d been in the service during the Korean War but it was something that he never – never – discussed.  I once asked him when I joined Boy Scouts if he’d come along camping with me and he demurred with a gruff I spent a year sleeping outside and I promised myself that I’d goddamned well never do it again so no, I won’t. But he’d say no more than that.  Since this was an old established troop with a strong tradition of outdoorsmanship, I caved in to my intimidation and quit.  When I later asked him – during middle school – about his experiences, he simple refused to discuss it and the matter was dropped.  It wasn’t until many years later, when he learned that my then-medical student wife was doing a rotation at the local VA, that he opened up one evening and began to talk and between that evening and the years afterwards, the stories flowed and so much that I couldn’t puzzle out in my youth became clear. 

Dad had been in Korea at the outset, a mere tech sergeant doing work near the 38th parallel when the North Koreans invaded; he and his squadmates were cut off and spent days – with the loss of several of his men – escaping before being found by American troops and receiving what he termed a battlefield transfer.  This receiving unit was the 27th Infantry Regiment, the Wolfhounds, and he spent almost the next year with them before finally rotating back stateside to finish his enlistment as a drill instructor.  He related incidents of leaving a makeshift bar in a shack in Pusan to literally cross the road to repel a massed North Korean attack in the blackest days of that conflict, of seeing his buddy so drained by the violence that he killed one of his own pilots in a barfight after warning him to stop badmouthing the infantry who were being pushed relentlessly backwards.  A few years before he died, I learned that whenever he was in the Midwest on business, he’d take an extra day and stop at Fort Leavenworth to visit this man.  Dad spoke of massed Chinese attacks after they entered the war and how the differential in sizes between the American bayonet and the outsized Chinese bayonet, aka the pigsticker, gave birth to decades of nightmares.  There were other stories but it was even later after his retirement in 1991, that more became evident.  Dad finally came to terms with his experience and contacted his congressman to help in obtaining the citations for which he knew that he’d been nominated but had opted to never touch before then; it required additional effort since the Veteran’s archive in which his records were kept was badly damaged in a fire decades before with the loss of an untold number of servicemen’s records.  When the congressman’s office finally finished helping him, we found that these included the Purple Heart and a Bronze Star for courage under fire.

I have no photos of my father in uniform, although I do recall seeing one photo of a young man wearing glasses and a helmet, kneeling in the dirt outside of Fort Bliss, Texas.  It wouldn’t surprise me if he handled them the way that he handled all of his camping and hunting equipment when he later returned home to the Laurel Highlands of Western Pennsylvania…he simply got rid of all of it and promised himself to never do them again.  His decorations and division and regimental insignia are safely put away although I do, on occasion, pull them out to look at them and think about the old man.  He certainly mellowed with age but the experience changed him forever.  I recall seeing him watch an Army recruitment commercial – Be all that you can be…– and just rolling his eyes while he shook his head.  When I discussed with him the idea of enrolling in ROTC during college, he argued against it and persuaded me to put the notion to rest and that there was no reason to feel guilt for not doing so. 

So would I tell my father thank you for your service, as insufficient as it might seem?  Now it would seem to be the least that I could do, although it absolutely isn’t enough and his response would be a typical if you feel that strongly about it, then get your head out of your ass and actually do something.  And that’s what we should do for these men and women who are serving.  Pay closer attention to the controversy occurring in the Veteran’s Administration and if you aren’t vocal, become moreso.  Learn about the service dogs that are increasingly taking an important role to provide an emotional anchor for returning vets and throw support to those who raise and train them; in a short attention span society, we forget that the effects of combat stress can last for decades and the canines won’t be a one-off effort.  Most important is this, however:  understand that we are now entering a time in which the promises made to all of the various constituencies in American society can no longer be supported by the resources available to us.  We can no longer run endless deficits without burning out the engine and at that time, we’re going to have to renegotiate the social contracts that have bound us together and it will be a truly ugly process.  It will be then that you’ll have to remember what many of the vets suffered through and advocate forcefully on their behalf and in that way, you can begin to repay the debt owed them and show that their service truly isn’t forgotten.