Have you done this lately? I headed into the convenience store to grab a coffee—I’ve never been a snob about these things—and felt just a small itch to eat something. Maybe a danish.
I looked at the various packaged rolls, packaged bars, or really just anything I could grab. I picked up the ingredients and looked at the small print. I never used to do this because I didn’t care.
Now that I know what I’m looking for—avoiding chemicals and corn syrup and the like—the thing is already off-putting in ways that are newly clear to me, thanks to all the attention these days on healthy eating and living.
Then I look at the price. A small treat is $4. Crazy. Why should I pay this much for something I will regret and probably harm me?
I’ve further figured out the ways in which credit card swiping is dangerous for personal finances. It seems like nothing costs anything. When we paid in cash, we could truly see the money leave our wallets. Now it all just seems like magic but it is not. The bills do in fact arrive.
People are newly aware that money does not flow like water, as it seemed to from 2020–2022. Now it is scarce, for most people. Accounting does not lie; it is a hard brick wall of reality that wakes up even those living in an inflationary dream state.
In tight economic times, with four years of hard hits on the real income of the U.S. household, the pain has finally come to convenience stores.
This is a dramatic decline and is causing a great deal of worry in the industry.
This is part of a larger trend of pullbacks in all areas of discretionary spending. Yes, this should have happened years ago, given the sad state of household finances, but better late than never.
It perhaps makes sense that this would hit now. In high inflationary times, consumers feel a rush to spend in advance of price increases later. These inflationary expectations have the impact of increasing the pace at which money changes hands and fueling the very thing against which people are trying to protect themselves.
The opposite effect happens when inflation subsides, as it is doing now. Consumers have a new reason to save money, given the possibility that items will be cheaper later. The pace at which money changes hands falls, putting further downward pressure on prices.
There is no real danger of deflation. The current rate of inflation is below target at 1.7 percent, but hardly a decline.
For some reason, people remain very confused about this topic. To say that the rate of inflation is declining is not the same thing as saying that prices are falling. They are just not rising as quickly as before. The inflation of the last four years has lost us about a quarter of every dollar in purchasing power.
That is not coming back. Poof, it’s gone, never to return.
All we can really hope for is that the pace of depreciation slows to a crawl.
Let’s just say there was a deflation, defined as a general decline in prices. For some reason, people are more scared of that than inflation, simply because the experts say that this always means terrible business conditions and even the onset of depression.
The experts are again wrong. Think back to the Great Depression. Terrible times. Jobs were scarce. Families were barely able to survive. You know what would have made the times even worse? Inflation. As it was, the deflation (the rise in purchasing power) was the one silver lining of the entire decade. At least things got cheaper and the money that you did have became more valuable.
The falling prices were not the cause of the Great Depression. They were the salve that made it livable.
So ideally, yes, I would like to see a 25 percent decline in prices so that we could all live in 2019 again. Sadly, barring some strange explosion of a debt bubble, I don’t think that can ever happen. All we can really hope for is a slowing of the pace of the increase of prices.
In the meantime, at least now the money we save is not eaten up as quickly as it was a year or two ago. That is precisely why consumers are pulling back. This is wise. Yes, this trend hits spontaneous purchases first, with convenience store snacks at the top of the list. But it will come for everything.
At that point, the national media will cry recession. It could technically qualify. But here again, let’s not make the solution the cause of the problem. A rise in savings is exactly what an economy needs to prepare the ground for the next round of economic growth.
The best thing the Trump administration has said since taking power is to admit that there could be tough times ahead. That is beautiful music to my ears. We’ve not heard of such an admission since 1981. Since those days, every president and every Fed chairman has essentially fibbed in telling people that there is no problem they cannot fix with the money printers. It was never true.
A bloated economy needs a correction. Ours certainly does. Ideally, that will include declining prices in some sectors.
I started this article highlighting the fall in convenience store sales and offered some brutal comments on packaged snack food.
That said, we must also point out that there are sections of this country—I’m thinking of Texas in particular—where some amazing chefs have set up shop in convenience stores. They wake up early to cook fantastic breakfasts for sale for everyone. I’ve had some of the best food I’ve ever eaten at Texas convenience stores.
The sausages and eggs and biscuits are outlandishly great, and I always go out of my way to praise the chef. This is precisely the kind of food we should be eating, not the packaged processed junk that tries to pass itself off as food when it is really just flavored plastic … or something along those lines.
This habit of having a great chef at a convenience store, selling products made right there on the grill, is not common in many parts of the country. But we see them in some areas. I hope they survive the convenience-store recession now in progress. As with many great things in life, they turn up in the places where you least expect them.
I’m saving as much money as I can these days but would gladly make an exception for one of those delicious sausage, egg, and biscuit sandwiches made in so many fantastic Texas roadside gas-station stores. When all the restaurants are bankrupt and consumers are entirely out of discretionary funds, these are the people who might save the day for the rest of us.
