No Bull Market on Main Street

Wall Street-types (except those who were laid off from one of the many poorly managed firms that got caught on the wrong side of the credit bubble) often forget that economics is about more than statistics and trendlines.

Increasing layoffs means a lot of people are having a hard time paying the mortgage or the rent. A surge in foreclosures means a big jump in the number of those who are living in shelters or on the streets. And rising prices for gas and food means some of those in the world's richest country can't feed their family or get to where they need to go, like school or work.

Nowadays, things are getting so bad, as the following Associated Press report reveals, that some "Americans [Have to] Unload Prized Belongings to Make Ends Meet."

The for-sale listings on the online hub Craigslist come with plaintive notices, like the one from the teenager in Georgia who said her mother lost her job and pleaded, "Please buy anything you can to help out."

Or the seller in Milwaukee who wrote in one post of needing to pay bills—and put a diamond engagement ring up for bids to do it.

Struggling with mounting debt and rising prices, faced with the toughest economic times since the early 1990s, Americans are selling prized possessions online and at flea markets at alarming rates.

To meet higher gas, food and prescription drug bills, they are selling off grandmother's dishes and their own belongings. Some of the household purging has been extremely painful—families forced to part with heirlooms.

"This is not about downsizing. It's about needing gas money," said Nancy Baughman, founder of eBizAuctions, an online auction service she runs out of her garage in Raleigh, N.C. One former affluent customer is now unemployed and had to unload Hermes leather jackets and Versace jeans and silk shirts.

At Craigslist, which has become a kind of online flea market for the world, the number of for-sale listings has soared 70 percent since last July. In March, the number of listings more than doubled to almost 15 million from the year-ago period.

Craigslist CEO Jeff Buckmaster acknowledged the increasing popularity of selling all sort of items on the Web, but said the rate of growth is "moving above the usual trend line." He said he was amazed at the desperate tone in some ads.

In Daleville, Ala., Ellona Bateman-Lee has turned to eBay and flea markets to empty her three-bedroom mobile home of DVDs, VCRs, stereos and televisions.

She said she needs the cash to help pay for soaring food and utility bills and mounting health care expenses since her husband, Bob, suffered an electric shock on the job as a dump truck driver in 2006 and is now disabled.

Among her most painful sales: her grandmother's teakettle. She sold it for $6 on eBay.

"My grandmother raised me, so it hurt," she said. "We've had bouts here and there, but we always got by. This time it's different."

Economists say it is difficult to compare the selling trend with other tough times because the Internet, only in wide use since the mid- has made it much easier to unload goods than, say, at pawn shops.

But clearly, cash-strapped people are selling their belongings at bargain prices, with a flood of listings for secondhand cars, clothing and furniture hitting the market in recent months, particularly since January.

Earlier this decade, people tapped their inflated home equity and credit cards to fuel a buying binge. Now, slumping home values and a credit crisis have sapped sources of cash.

Meanwhile, soaring gas and food prices haven't kept pace with meager wage growth. Gas prices have already hit $4 per gallon in some places, and that could become more widespread this summer. The weakening job market is another big worry.

Christine Hadley, a 53-year-old registered nurse from Reading, Pa., says she used to be "a clotheshorse," splurging on pricey Dooney & Bourke handbags. But her live-in boyfriend left last year, and she has had trouble finding a job.

Piles of unpaid bills forced her to sell more than 80 items, including the handbags, which went for more than $1,000 on a site called AuctionPal.com. Now, except for some artwork and threadbare furniture, her house is looking sparse.

"I need the money for essentials—to pay my bills and to eat," Hadley said.

At AuctionPal.com, which helps novices sell things online, for-sale listings rose 66 percent from February to March, much faster than the 25 percent to 30 percent average monthly pace since the company was formed in September, CEO Maureen Ellenberger said. She said she was surprised to see that most of her clients desperately needed to sell items to raise cash.

For LiveDeal.com, a classifieds and business directory site, for-sale listings for January through March rose 10 percent from the previous year.

"We can definitely detect economic stress on the part of the consumer," said John Raven, the site's chief operating officer.

On Craigslist, Buckmaster said, three of the four fastest-growing for- sale categories are tied to gas—recreational vehicles like campers and trailers, cars and trucks, and boats.

Raven noted more and more listings for furniture, particularly in areas around Miami and Las Vegas and other regions hardest hit by the housing crisis.

Baughman, who runs eBizAuctions, said that over the past four months she's been working with mostly desperate sellers instead of mainly casual ones. Most are middle-class customers who can't pay their bills and now want to be paid up front for the items instead of waiting until they are sold, she said.

The trend may be hurting secondhand stores too. Donations to the Salvation Army were down 20 percent in the January-to-March period. George Hood, the charity's national community relations and development secretary, said that was probably partly because people were selling their belongings instead.

And secondhand buyers want better deals now as well, driving prices down. Secondhand merchandise online is going for 25 to 35 percent below what it commanded a year ago, estimated Brian Riley, senior analyst at research firm The TowerGroup.

"It won't hit the saturation point until the (economy) hits the bottom and right now, we don't know when that is," he said.

In Alabama, Bateman-Lee said that she only received $30 for her TV and $45 for her DVD player at a local flea market. She doesn't have too much left to sell, but she's going back to "sort through more things."

Her $30 water bill is due this week.

Comments

[roger pasa]

most people dealing in markets/economics/speculation etc..live in a very abstract world it is nice to see that this blog is managed by a decent/warm human being

[Jes]

It'd be interesting to know how well these used items are selling. There's more competition and prices are lower than last year, but also does it take longer to sell? When the used stuff doesn't find any buyers is about when we'll have some modern day version of hopeless men on street corners selling apples.

[Deus Ex Machina]

I was just looking at Craigslist for the first time, after reading about it here, and noticed a harsh reality: most stuff is still really overpriced. The new economy hasn't truly set in for most folks.

People are still surviving beyond their means on stored wealth. This crap they are all selling off on Craigslist and Ebay will run out. Then the shitstorm will really set in for the Middle Class. By that point the poor in America will really be at full bore 3rd world poor status - and ready for revolution. So, the future looks interesting!

I hope I'm wrong, all I can look at is the past as a pattern though!

[FB]

Cheney's former firm accused of financial abuses in war-linked contracts
Tue, 29 Apr 2008
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