As odd as it may sound, for years the Barrett-Jackson Scottsdale auction has mirrored the buying and spending habits of the everyday man on the street.
Yeah, I know that sounds odd to use Barrett-Jackson and everyday man on the street in the same sentence, but how the car collectors act seems to be pretty close to how the economy acts and the people on the street.
For the past couple of years BJ has had a pretty good attendance, but the people sat on their hands. That's not to say a select few didn't make some stupid deals, but by and large they window shopped rather than really buying. BJ even got rid of their reserves on cars because an embarrassing large number didn't sell.
Things changed this year. They generated more than $92M in gross sales which was a 32% increase over last year and had a 16% increase in attendance over last year. Here's a startling fact, more than 50% of the bidders were new/first time bidders. Also nearly half of the consignees were new.
This tells me "THEY" are right when they say 2012 will be a much better year than 2011. Well that is if all the election garbage doesn't destroy it.
It already is a better year. Just looking at my current scheadule.. thngs are starting early in Atlantic City. Usually we coast through January, February, and March and do not start picking up till april.. this year I will be busy starting in Feb
We're busier than we should be. Not complaining but skeptical.
Until unemployment drops and homes go back up in value, we will only partially recover. In our business, which is also up, what we are seeing is that companies can only put off purchases for so long until they have to replace machinery. It's more because of that than a recovery of the economy.
I don't think I agree about BJ being any kind of economic indicator. The buyers there are for the most part very rich whose buying practices are not as effected by the economy as thee middle and lower class. Hell, one guy at this years auction spent a bunch of money there. He must have bought at least a dozen cars.
In years gone-by Thanksgiving has been the end of my money making year up till the following February then business would take off. Well 2011 went out like a LION the shop was pedal to the metal up till last week and things are still not doing bad (which is a very good thing).
How will the rest of the year go ? I do not know.
Paul B
I think theres a real effort in the media to publish doom and gloom - scary headlines sell papers...err....webspace?!? well you get my point.
Also, if big money is getting spent, anywhere, that wasnt spent last year, it will translate into some form of growth in the unemployment front - maybe not unilaterally. Perhaps the machine shop that sees the initial sales bump sits on the cash, meaning - they dont hire new people, they just save the extra duckets. But they will pay the shipping company more this year than last, to ship the machines they sold. Increased production means that they have to use more cleaning products to clean up. They will have to pay more for the billing paperwork at the printers. The shipping co hires more drivers as they see more business. The janitor supply hires more guys at their warehouse to cover the increased distribution, and the printing press hires more mechanics to fix the machines that are now working harder - it all comes back around.
Well bravenrace, home sales were up for the past 3 months, more in December than they expected (from 3-15%). State unemployment is down.
"In January, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — increased nine points to 12 from December's reading of 3."
Exports are at an all time high.
And yes in real life BJ actually does pretty well mirror public sentiment and spending. Look back over several years and you'll see Scottdale attendance and sales were very close to what happened out on the streets. These may be rich, fat cats, but when they are running scared so do most of the other people.
I don't know if it's that these guys have businesses that are dependent upon what common people are doing and spending or what, it just works out that way. So I don't know WHY, I just know it DOES.
We are DEAD in the shop right now. Our car count is half of what it should be, if not less. We twiddle our thumbs and I surf on here most of the day, as we've already done everything productive. I sure hope it changes for the better.
Conquest351 wrote:
We are DEAD in the shop right now. Our car count is half of what it should be, if not less. We twiddle our thumbs and I surf on here most of the day, as we've already done everything productive. I sure hope it changes for the better.
Ah yes, the January doldrums. Been there many times. It's the reality of all that excessive Christmas spending coming back to roost. It will pick up around the first of Feb when the first tax return anticipation loans start popping up and continue as the tax refunds start coming in.
It's pretty dead in the bike shop right now too, but give us two nice 70° weekends in a row and we will be off like a rocketbike. 
Usually I have the January doldrums but things are pretty exciting around here right now. I'm sooooo glad!
November, December and so far January have been above normal.
If SEMA and PRI were any indication, the Automotive aftermarket business is going to have a good year. This year's shows were the best since 2007.
The glass is 1/2 full!
In reply to carguy123:
Maybe I should have said when unemployment and home values return to a somewhat normal level.
Given that the construction market greatly effects my business, and is also a pretty strong economic indicator, I'll just offer this quick example (since I was just on the can reading it).
Construction Equipment Magazine just released it's annual Report and Forecast.
Here are all of the article headlines that dealt with the economy:
Construction Limps Along
Markets at the Bottom of the Long Trough
Pessimism Prevails
Sinking to New Lows
Outdated and Overextended
Home Builders Upbeat About Growth for 2012
Unexpected Pessimism
Few Silver Linings for 2012
Doesn't sound very optimistic to me. And we aren't even considering the effect of our out of control national debt.
carguy123 wrote:
Well bravenrace, home sales were up for the past 3 months, more in December than they expected (from 3-15%). State unemployment is down.
"In January, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — increased nine points to 12 from December's reading of 3."
Exports are at an all time high.
And yes in real life BJ actually does pretty well mirror public sentiment and spending. Look back over several years and you'll see Scottdale attendance and sales were very close to what happened out on the streets. These may be rich, fat cats, but when they are running scared so do most of the other people.
I don't know if it's that these guys have businesses that are dependent upon what common people are doing and spending or what, it just works out that way. So I don't know WHY, I just know it DOES.
Just curious - What's your source for all this information?
We've got cars stacked up for V8 conversions. The last couple of years have actually been pretty good for us, but they've been bursty to use a networking term. Some months rock, some are stagnant. More so than historically. Probably depends on what Fox News is telling people today.
In reply to Keith:
MIatae must be near the bottom of the depreciation curve right now
In reply to carguy123:
Some additional information:
70% of the 1.98 million jobs lost since 2005 were in the residential construction industry.
Heading into 2012, housing starts are off a jaw-dropping 69% since the market peak in 2005.
Average US home prices continue to hoever at mid-2003 levels.
It's great that housing starts are up, but that in no way indicates that we have recovered. We still have a long way to go.
What an outsider thinks;
http://www.thestarphoenix.com/business/Carney+says+full+recovery+unlikely+economy/6035609/story.html
Housing debt, both bank and individually held are the key. watch those figures for indication when/if a real recovery begins.
Banks have too much debt tied up in property, and so do individuals. This was the biggest snowball in all the other things that went wrong with the economy.
Watching the spending habits of those more insulated is helpful, but not a good universal indicator. most of those people don't operate with much debt.
4cylndrfury wrote:
In reply to Keith:
MIatae must be near the bottom of the depreciation curve right now
Some of them. Others are being built RIGHT NOW! The cars coming in for V8 swaps are not at the nadir of their value. They're usually pretty darn sparkly. We have seen some products fall off, but the big-ticket sales keep coming.
In reply to Keith:
Unfortunately, a spike in one small companies business only indicates an uptick for them, not the country as a whole. But good for you!
madmallard wrote:
Housing debt, both bank and individually held are the key. watch those figures for indication when/if a real recovery begins.
Banks have too much debt tied up in property, and so do individuals. This was the biggest snowball in all the other things that went wrong with the economy.
Watching the spending habits of those more insulated is helpful, but not a good universal indicator. most of those people don't operate with much debt.
This is true, but also greatly effected by home values, since lower values can result in an upside down mortgage.
Bravenrace I sent you a PM. The residential real estate market is near and dear to my heart as well as that's what (almost) pays the bills.
So you'll be happy to know that the latest stats show an expected 12% increase in home building this next year. They are even building in Cali again.
I just had an appointment with a high muckety muck at one of the major clothing manufacturers and afterward we were talking and swapping indicators. It was funny, because I mentioned the B-JI and he laughed and said that someone else in his office had also made the same connection to B-J. It seems the company has made a projection of a 30% increase in 2012 and everyone has been poo pooing that as way too high but one of their guys just used the Barrett-Jackson numbers to argue that maybe the projection could be right. I'll be interested to see how their numbers play out. And now I have an inside source into that industry and we've promised to continue to swap data points.
They also saw a big uptick in numbers in November (not the usual Christmas uptick) that still hasn't slowed down.
madmallard wrote:
Housing debt, both bank and individually held are the key. watch those figures for indication when/if a real recovery begins.
Banks have too much debt tied up in property, and so do individuals. This was the biggest snowball in all the other things that went wrong with the economy.
Watching the spending habits of those more insulated is helpful, but not a good universal indicator. most of those people don't operate with much debt.
Housing debt isn't going to go anywhere anytime soon- most of the debt is being carried in long term loans. that's plus the fact that much of the housing buble is very made up (speculation drove the market over actual land shortage demand)- I don't think housing is a good indicator of the economy.
OTOH, the next largest purchase- vehicles- has been up for a few years, and continues to grow. Since other consumer good sales has been catching up to that, and there IS a demand for workers in many areas, mainly skilled professional, there is growth that needs filled. One big problem is that there isn't a good pool to fill it, outside of importing skilled workers (which is being done).
One final reason why housing is a bad indicator- the amount of foreclosures is high, sure- on a relative basis. But most people are buying their homes correctly. That, and much of the paperwork for foreclosures is being held up because of quite a few reasons (one being- who the heck actuall owns the loan)- I would not think that foreclosures are going to go away anytime soon.
And even WITH all of that, carguy123 is showing that there's an expected improvement.
Again, everything else is up- I see cruise ships that are full, airplanes that are full, spending on going to entertainment seems to be there.
There's alot more to the economy that what we are being fed. If you belive what you are told- places like Puerto Rico should be one big slum island. It's not. There are a lot of poor- sure, but there are a LOT of prosperous people. You see a LOT of new cars driving around.
BTW, every Big 3 is hiring. You wanna job?
To Carkid:
Well I'm not happy at all, since I'm in more debt and my house is worth less and I have kids going to college in 1-1/2 years. I'm thankful to have a job, but I'm just not feeling this big recovery you talk about.
I'd really like to know where you get your information, because I can't find anywhere that agrees with it. Believe me, I hope you are right, but right now there are too many vacant homes and foreclosed properties for the housing market to recover any time soon. In my case (which I in no way represent as the average for the country), my house is worth $50k less than I paid for it 10 years ago. Until that recovers, you won't find me spending large amounts of money on anything.
Below is some addition information I was able to find while also trying to get some work done. It's just more reference points.
Here's one take:
This is from the CBO:
"Construction of new homes has fallen sharply over the past two years (see Figure 1).
Starts of new housing units peaked at an annual rate of just over 2.1 million in the
first quarter of 2006, buoyed by low mortgage interest rates, expectations of continued
rapid increases in home prices, and lax lending standards. By the second quarter
of 2008, lower expectations of home price increases and tighter lending conditions
had combined with a glut of vacant units to cut housing starts by more than half, to
an annual rate of barely 1.0 million. The resulting decline in real (inflation-adjusted)
residential construction over that period subtracted an average of 1.0 percentage point
from the annualized growth rate of real gross domestic product (GDP). Housing
starts fell again in the third quarter, to an annual rate of less than 900,000.
The number of housing starts over the next few years will depend on three factors: the
underlying demand for new housing units; cyclical and financial conditions, such as
unemployment rates and lending standards; and the number of excess vacant units
(that is, vacancies exceeding those observed under normal conditions). The Congressional
Budget Office (CBO) expects that housing starts will fall far enough below
underlying demand for a long enough period to eliminate the current glut of vacant
units and adjust to any temporary shortfall of demand due to adverse cyclical and
financial conditions. Depending on the number of excess vacant units and the severity
of adverse cyclical and financial conditions, several paths are possible, ranging from a
fairly quick turnaround to a housing depression that lasts several years. This paper
presents three possible scenarios for housing starts:
B An “optimistic” scenario, under which housing starts return to normal underlying
levels by the end of 2009;
B A “cyclical downturn” scenario, under which the return to underlying levels does
not occur until early 2011; and
B A “pessimistic” scenario, under which the return to underlying levels occurs in the
second half of 2012."
