Please don’t tell me that talk of “recession” is just Democrats and the “liberal media” hoping for an economic downturn to fuel their own political fortunes. Republican U.S. Senate candidate Scyller Borglum warns in her Wooden Nickel Plan announcement that financial “disaster” is coming:
Borglum believes the Wooden Nickel Plan is just one way to help mitigate the projected financial disaster making its way into the news cycle. She believes South Dakotans want to hold congress accountable and send someone to Washington who will work hard to address these real problems. Someone who will not be bought by special interest groups, but will truly listen and work for the people [Scyller Borglum for Senate, press release, 2019.08.22].
Hmm… maybe Borglum’s name for her budget-referendum plan deliberately harkens to the Depression, during which wooden nickels became popular as something like today’s Chamber Bucks.
Other bigger capitalists than Borglum see a downturn coming. They are investing in where the soon-to-be-whacked 99% will spend their remaining nickels—the dollar stores:
More investors are watching the shares of discount retailers like Dollar General Corp and Dollar Tree Inc , which perform better during economic downturns, in the hopes of gauging changes in consumer behavior, though higher tariffs may erode the companies’ ability to act as economic bellwethers.
Fund managers and analysts say that they are looking for signs of a so-called “trade-down trade”, in which consumers forgo shopping at higher-end department stores or supermarkets in favor of the more limited selection but lower prices at deep discounters. Between December 2008 and December 2011, for instance, shares of Dollar Tree soared nearly 200% as consumers pinched pennies during the Great Recession, while the benchmark S&P 500 gained just 39% over the same time.
For the year to date, shares of Dollar Tree are up 7.3% as it integrates its purchase of former competitor Family Dollar, while shares of Dollar General are up 28.4%. Both companies are scheduled to report earnings Aug. 29 [David Randall, “Investors Look at Dollar Stores as U.S. Recession Fears Increase,” Reuters via KELO Radio, 2019.08.23].
As investors and a Republican Senate candidate warn us that financial trouble looms, Borglum will have to reconcile how she can talk about the “common sense” of the White House occupant who himself has greatly increased the chances of a recession.