Recreational activities that were once affordable to just about every family with earned income have slowly but surely become unaffordable to all but the top 10%.
Longtime correspondent Kevin K. responded to my recent blog entry on recreational vehicles with an eye-opening commentary on the skyrocketing costs of what were once working-class and middle class recreations, boating/fishing and skiing:
"I was just talking to a friend about how expensive it is to go boating. As a kid in the late 70s my great uncle took me fishing in Lake Tahoe in his boat and probably spent a total of $5 (including sandwiches and bait). Last year when I borrowed a friend's boat I was amazed what it cost just to use it for one day:
Tahoe inspection $55 (NA in the 70's)
Tahoe decontamination (guy pouring some bleach in the bilge) $25 (NA in the 70's)
Launch Fee $39 (Free in the 70's)
Parking with Trailer at Launch $20 (Free in the 70's)
Fishing License for one day $14 each person (Not sure of cost, but we didn't get them)
Gas for cars around Tahoe $4.60/gallon (<$0.50 in the early 70's)
Gas for boats on the lake $7.00/gallon (<$0.65 in the early 70's)
Sandwiches and bait (a lot more than the 70's)
Today (depending on how far you drive and how much fuel you burn in the boat) it will cost $100 to $300 for just one day on Lake Tahoe fishing with one kid.
In the same time period (the late 70s), my Dad (a hero to other parents) would drive me and my sisters and two friends each up to Squaw Valley in our '73 Dodge Van for the day.
At the time adult lift tickets were $13 and kids under 12 (or who were 13 or 14 and and said they were 12) skiied FREE. We always had peanut butter and jelly sandwiches with dried fruit (that my Mom dehydrated herself with her food dehydrator) and a bag of mini Snickers for lunch. On the way home we would stop at Burger King in Auburn for dinner.
Today the average family makes about 3x what they made in the late 70's but if an Adult wants to take 9 kids skiing at Squaw last year (I looked and the new rates are not posted yet) it would cost almost $600!! (46x more) at $99 for Adults and $55 for kids ("peak season" tickets last year were over $100 and over $60 around Christmas).
In High School I bought a new pair of ski boots for $53 and used them until well after college when I bought a new pair in the 90's for ~$300. This past winter I went in to the "Surefoot" custom boot shop in Squaw Valley thinking I have had my boots for over 15 years and I'm doing OK maybe I'll look in to some custom boots. When the guy quoted me $1,300 I walked out thinking that even if I was worth $50 million I could not spend $1,300 on a pair of ski boots...."
What caused the cost of recreational activities to rise far faster than wages or official inflation?
In a follow-up email, Kevin referenced the Ratchet Effect, a dynamic I've often covered in the blog: costs advance incrementally without too much resistance but any decline faces enormous resistance.
As noted in the blog entry on RVs, one factor is consumer choice: people could still choose to tent-camp or use a rowboat, for example, but instead the majority have opted for the comfort (and perhaps prestige/status) of large RVs, trailers, boats, pickups, SUVs, etc. This reflects the power of marketing and America's quasi-religious devotion to comfort/convenience as the highest and most desirable good.
Another factor is government increasing revenues not by raising taxes but by increasing fees and imposing a multitude of junk fees for activities that were once free. Recreation is an obvious choice because it presumes people with disposable income can afford the higher fees and won't complain in politically meaningful ways.
The relatively low cost of air travel may also be a factor, as cheap airfare (in the early 1970s, regulated and high cost) has enabled millions of people to pursue recreation far from home. A rowboat is replaced by a rental boat, for example.
Recreation has become name-branded and technologically sophisticated, both of which drive prices higher. Equipment for activities such as golf, fishing and skiing have soared in cost as a result.
An enormous net of regulations designed to increase safety have imposed higher costs on providers, and the out-of-control cost of healthcare has further imposed a 15% tax on all labor.
If we add up these dynamics, we find them everywhere in the economy. Recreation is simply one egregious example of how costs rising far faster than wages end up crimping what was once affordable for the majority. Luckily, we still have tent-camping (oops, tents can cost a pretty penny now, too...)
Best Thing That Happened to Me This Week
Experiencing daily life in another country and culture.
Market Musings
Technicians are highlighting plentiful evidence of an extended (i.e. bubble-like) stock market, for example high margin debt and low CPC (put-call ratio), both of which reflect complacency and a bullish belief that being long is the rewarding trade.
Those of us who have been around for a 15 years have seen this before, in 1999 and 2007: market internals are weakening, as are corporate earnings, but the market just keeps extending further. The rubber band analogy is appropriate: the rubber band keeps stretching, but the point at which it snaps is impossible to predict.
Technicians have a bag of tricks to project prices, but if prices rise above projections then a new set of projections come into play. As a result, technicians don't forecast absolute tops or bottoms as much as way stations on a trend.
Many technicians have listed SPX 1,760 - 1,780 as a target for quite some time, and a few have noted 1,800. At 1,759.82, the market has essentially hit the lower band of projections. Now we must wait to see if this level is merely a resting place on the journey to 1,800 or higher, or if the internal weakening will start eroding a potentially fragile global stock market.
Those who stayed in the game in 1999 and 2007 were rewarded, but their rewards were snatched from them if they didn't sell as the market topped.
Put another way: markets have lifted away from prudent fundamentals even as they have become increasingly dependent on credit creation and central bank "free money," and that increases systemic risk of a reversal. We have recent history to remind us of these dynamics.
From Left Field
Russell Brand on revolution: We no longer have the luxury of tradition: "Total revolution of consciousness and our entire social, political and economic system is what interests me, but that’s not on the ballot."
The ocean is broken (via U. Doran) "But this time, on that whole long leg of sea journey, the total catch was two."
The Incredible Shrinking Plane Seat: American Airlines, United and Other Carriers Are Wedging an Extra Seat Into Each Coach Row -- use miles to upgrade to "coach plus"?
Plantation Economics: "What makes today’s trend toward slavery so insidious is that it is not slavery by force; it's slavery by submission."
Why have young people in Japan stopped having sex? (via Cheryl A.) What happens to a country when its young people stop having sex? Japan is finding out.... social depression has all sorts of manifestations....
