I wrote in a blog last year that the recession would end when the media said it had ended. My contention was that businesses and consumers were basing their buying decisions on their perception of the market as depicted in media reports. The news reports were full of panic, so consumers panicked. Joblessness hovered above 10 percent and people held onto their money out of fear.
Now the media tells us that the recession is over. Now we should be able to breathe a collective sigh of relief as the economy rises to its feet once again and we can go on with our consumer-minded lives. The problem is that the while the recession may be over, the danger is not. Businesses are using this “breathing room” as an opportunity to recoup losses from their profit margins during the recession. Consumer prices began spiking in December and continue to go up across all markets. Gas, groceries, dining out, cars, even cable and cell phone rates have all steadily increased since December.
The price of regular unleaded gas in the beginning of December in Houston was 2.69 and today it is 2.99; an increase of 30 cents in two months. At my local grocery store, Milk has gone up almost 50 cents per gallon while 75/25 ground beef has increased from $1.69/lb to $2.39/lb. The price of a soft drink at your average restaurant was $2.25 and it’s now $2.75 (one restaurant charged $2.90). Airlines are raising fares and baggage fees and phone providers are raising monthly service rates while cutting handset discounts. If businesses continue with the profit taking, we could risk another recession or even a complete collapse of the market.
Across the “free” market, profit taking is rampant and we the consumers are shelling out more of our hard earned money while our employers are not raising our pay to keep pace. I think we should all go to our bosses and say “In light of the current economy and market prices, the cost of my service is going up. My new rates will be X.XX per hour effective in the next billing cycle.” Of course if we did that, we would get an emphatic “no” or worse, we would get fired. Perhaps that is the attitude we should have when we shop.
We took my wife’s car in for a brake job to Just Brakes because they offered $99.88 service for all four wheels. They advertise that shoes, pads and machining rotors and drums are all included in that price “in most cases.” That kicker at the end is where they get you. If they don’t have your model in stock, you pay significantly more. I surmise that they have a stockroom the size of a breadbox. Our bill was $289, almost three times the offer price. I told them to put the wheels back on and I would do it myself. The manager looked at me like I was an alien from the planet crazy. Evidently no one refuses to pay the revised price. They are used to people kowtowing and paying whatever amount they’re told to pay. He asked why I wanted to leave without getting the service done and I told him flat out that I could do it myself significantly cheaper. They halved their estimate and we drove out with new brakes for $140.
In this free market, the freedom comes from choice. We can choose where we shop and what we buy and, to a lesser extent, how much we pay. Once was a time when prices were not set and bartering was the norm. A shopper could negotiate the price at the point of sale. What we have now is a population blindly handing their money over when the market tells them to and tells them how much to pay. A free market is like a free country: it is only as free as the people make it and only remains that way as long as the people work to keep it that way.