A Look At The 4th Of July Economy

by Gabe Bullard on July 3, 2008

This July 4th, Americans face the highest gas prices in history and a tough economy all around. We wondered what that economy is doing to traditional Independence Day celebrations. WFPL’s Stephanie Sanders, Gabe Bullard and Kristin Espeland went shopping for holiday supplies.

Stephanie Sanders – Cookout Foods

If your family is anything like mine, you’re having a cookout for the Fourth of July.  And if your mom is anything like mine, she’s sending you to the store for some last-minute items. Some things never change. But something that will be different this year is how much those items will cost.

So you’re picking up some more cheddar cheese to top those famous hamburgers – that cheese will cost about 92-cents more per pound than it did last year.  It’s just another example of high gas prices trickling into costs of other goods.

Kentucky Farm Bureau President Marshall Coyle says the more processing the food needs, the more energy is used to produce it, the more likely those costs get passed along to the consumer.

“All of us are facing the increase in energy costs, as well as the processor. Not only just transportation, but the increase in energy costs within those plants where the food is being processed is up as well as the increase in energy costs for the grocery store,” says Coyle.

Next on that list from mom?  Corn oil for her homemade salad dressing. A 32-ounce bottle of corn oil has increased 76-cents from last year.  Part of the reason is ethanol production.

Agricultural economist Chad Hart with Iowa State University says early ethanol technology used up all the corn kernel, and that drove up prices because some of the country’s corn harvest was going strictly to ethanol.

“But at the same time, we’ve got some plants in the ethanol industry that are looking at trying to pull the corn oil out of the distillers drains, and as they look to add that technology that actually will mean that with ethanol you would get an increase in corn oil production,” says Hart.

And an increase in production means a decrease in prices. Hart says that technology is new, and may take a few years before its mainstream in the industry.

The last thing on the list is a few more t-bone steaks. Those steaks are going to run you about 74-cents per pound more than last year, mostly because of last summer’s drought.

Cattle farmers couldn’t get their hands on viable hay and grain to feed their herd last year, so they pared down their numbers, and Coyle says the country saw the smallest calf crop in 56 years.

“The cow inventory in this country was 338,000 cows less than it was last year. And the bulk of that reduction came in the southeast region,” says Coyle.

There are a few items that haven’t increased in price since last year – so if you want to have a cookout with only cucumbers, canned tomatoes, and soy sauce, you’re good to go.

Gabe Bullard – Fireworks

After a meal and a nap, you may want to go see a fireworks show. But if crowds and gas prices are too much to handle, a backyard display could be the answer, if it’s legal,  and if you can afford it.  I went to Phantom Fireworks in Clarksville, Indiana to price some pyrotechnics.  Store manager Darren McKinley gave me a tour.

“Light one fuse and you get one hundred golden pearls of glitter,” says McKinley, examining a piece of fireworks.

But this year, the price of golden pearls is rising.

“The expense of shipping has gone up which transfers into the cost of the products,” says McKinley.

“How much has the price gone up?” I ask.

“Roughly 15% across the board,” he replies.

A shortage of fireworks in China, rising fuel costs and a weakened dollar have driven prices up and supplies down. But it hasn’t really affected high-end retailers or customers.

“The people who are doing well are buying more than ever,” says McKinley.

“People like the big stuff, the small stuff doesn’t really sell. People like the big bang, the big show,” says Ben Phillips.

Phillips is the manager of Celebration Fireworks, also in Clarksville. He says the big spenders are still spending, but casual buyers don’t have the disposable income they once had, and while they stay home, less-expensive items like firecrackers are staying on the shelves.

“Probably, our sales are probably down half from last year,” he says.

Which says a lot. In 2003, Americans bought nearly 221 million pounds of fireworks. Mostly around the 4th of July and New Years’, which are the only times Phillips’ shop is open.

And many of the casual buyers who do show up have been saving up for their purchases. Mary Arnold-Wood and her family made Phillips’ shop a part of their road trip. They were spending big on fireworks, even after a vacation to Virginia.

“We budgeted for both,” she says. “We planned on stopping in. My boys love them.”

All the other customers I talked to had been budgeting most of the year for their fireworks.   Clarksville vendor Ben Phillips figures many of his customers from years past are simply choosing gasoline over bottle rockets this year.

Besides, most states don’t even allow much beyond sparklers and snap-pops, unless it’s a professional display.

So, if you have some spare gas and live in Kentucky, legally you’ll need to go to a Hoosier’s house to enjoy golden pearls of glitter in the backyard.…and you may have to chip in for it.

Kristin Espeland – Tchotchkes

Happy birthday, America!

Oh, and in case you were worried we’d skimp on your party because of that pesky little economic downturn, don’t be.

“You know, when times are down, a party, what better way to forget about your financial troubles, and this is the place to do it.”

Tina should know. She’s tidying the 4th of July party goods section at Horner’s novelty: 31 thousand square feet of party goods in downtown Jeffersonville, Indiana. On offer:

“…Red, white, and blue plates…”

“…Hats, horns, vests…”

“…Red, white, and blue bunting that we’ve got in all different sizes…”

“…Or a red, white, and blue wig!”

“…Bubble necklaces that say I love USA and stars and fireworks…”

Horner’s owner Chuck Mattingly says sales this year are even with last year’s.  In a conference room behind the rows of favors and decorations, he says the party supplies business seems to be recession-proof.

“I’ve been in this business for 27 years. And I have seen that when the economy turns a little bit on the rough side, the party industry is pretty much safe from that.  And my reasoning for that is we all want a party, we all want a good time in life,” says Mattingly.

The National Retail Federation reports that 4th of July spending on patriotic merchandise has stayed strong, and even risen, since 2003, with only a slight dip this year.

Business consultant Kristin Zhivago says that may be because, when money’s tight, consumers tend to feel more comfortable splurging on small-ticket luxuries.  And they also tend to stay home more.

“I think what’s happening is people are wanting to spend more on family-oriented items and relationships, so parties are going to fall into that category,” says Zhivago.

Mattingly says he has noticed two small impacts of a weak economy, mostly tied to the price of oil and gas. Customers might call first to ask if he stocks a product, rather than drive over to find out.  And many of his products cost more this year than last.

“The items that are definitely going up are any items that would have an oil base. A lot of our balloons, plastic items,” says Mattingly.
But again, Mattingly says that doesn’t seem to deter would-be revelers. There’s no stopping the barbecues, parades, or parties.

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