Reversing Gear? What Does A Potential Economic Recession Mean For Gear?

As of this writing, the stock market has a had a notably volatile week. Lots of things can affect the performance of the stock market and a week (or even a month) is but a blip in the overall scheme of things. However, it is one of several factors out there that folks in the economic biz are pointing to as an indicator of a potential economic recession.

Before we get any further, let’s get this disclaimer out of the way: We here at TheToneKing.com are not economists and are not purporting to give you, our loyal readers, any sort of astounding or unique economic analysis, insight, or detailed predictions supported by robust research. Instead, we’re going to view the news and discuss some potential outcomes in a context we do know: gear.

OK, back to it. What is an economic recession anyways? Generally speaking, it’s a slowdown in economic growth. Unemployment may go up, consumer spending may go down, or businesses may have a harder time earning income (or may have to shutter altogether). Not a good thing, generally speaking. Economists look at a number of factors, everything from interest rates to stock market performance to consumer spending to the Gross Domestic Product, to determine whether a slow down is taking place, or predict when one might take place. Apparently, a lot of smart economic folks think we might have a recession coming down the pike.

How good those estimates are and what that means for your family and mine are topics for another article (by a smarter writer in another outlet, like the Wall Street Journal or New York Times), but, assuming a general condition of less disposable income we here at TheToneKing.com can take some good, educated guesses about what it means for the music gear buyer. This is a definitely a topic ripe for discussion, so we encourage you to take a look and then add your own thoughts in the comments.

Guess-timate #1: Gear-Spending Slows Down

Admittedly, this isn’t much of a stretch. Lower consumer spending is one factor some economists use to figure out whether or recession is here or on the way. So, it makes sense that if folks aren’t spending money on other things, they’re not spending money on gear either. Even folks who could comfortably ride out a difficult economic period or don’t suffer from job or wage loss may decide it’s better to hang on to their cash or keep their credit card balances in check until things pick up again.

Guess-timate #2: The Used Gear Market Gets Flooded

This ain’t much of a reach other. If a recession does hit, players may find their work hours or paying gigs reduced. That means real life, in the form of bills and expenses, can begin rearing it’s ugly head, causing some gear hounds to find it necessary “cash in” some of their equipment to keep gas in the ride, food on the table, or the lights in the crash pad on.

But there’s another side to this situation that deserves attention. A massive used gear market also means that prices on many used pieces of gear could end up going down due to competition. If thirty different sellers are offering the same guitar, saavy buyers will probably play one bidder off the other, trying to get the best deal.

The motivation for selling gear in a recession also changes. As mentioned earlier, there are going to be some folks selling more or less against their will; they need to pay bills. If they have a drop dead date to move a piece of gear, chances are good they’ll take whatever they can afford to get, which could be far lower than market price.

Guess-timate #3: Premium Gear Also Takes a Sales Hit

Now, a recession is going to affect everyone differently. Just because one is in play doesn’t mean everyone is now reduced to rolling blackouts, water-thin gruel for every meal, and busking for pennies on street corners. There are going to be folks that still maintain a high standard of living and have plenty of disposable cash. Professional musicians may also be able to find ways to keep stocked with premium gear when they choose to do so.

But the rest of the musician population may be a little more hesitant to take the plunge. Disposable income may be limited, and the ability to take out new lines of credit to finance a purchase may not be appealing. Of course, there is always the option to move some gear already on hand to fund a new purchase, but remember our guesstimate #2; the gear market has exploded and it may be harder to move pieces for sufficiently attractive prices, if they can be moved at all.

Plus, there’s a massive range of affordable gear that delivers exceptional value for the money out there.

Guess-timate #4: Smaller Manufacturers Feel the Pressure in Unique Ways

Given some of the factors we’ve discussed above, surely everyone on the supply side (that is, manufacturers and builders) is going to feel a bit of smushing if a recession does take hold. But the big dogs in the pound, your Fenders, Gibsons, Marshalls, and the like, probably have enough financial bench strength to plod through these sorts of economic squalls.

But what about smaller, “mom and pop” type builders, like our friends at Pedal Evolution? Obviously, we don’t know all of the details with respect to their balance sheet, but smaller builders without a more firmly established customer base or well-known product many have to approach things a lot differently in a recession. Do they scale back marketing and ad buys, the very things that are intended to help raise their profile and, hopefully, their sales? Do they cut costs and thin out the margins that are responsible for helping keep their effort moving?

Big companies face these sorts of questions too, but for smaller builders attempting to establish familiarity and rapport with potential customers, these can be the difference between continuing on or closing up shop.

Guess-timate #5: Everything Prediction I Just Made Will Be Wrong (Except For This One).

If this writer is being honest with himself, most of these predictions aren’t massive stretches. They could probably be applied to just about anything else; cars, houses, computers, etc.  They also probably wouldn’t impress anyone who actually knows about this sort of thing, but we think they’re interesting and useful tidbits for the gear community to consider.

But this writer would also offer that the gear community is an unpredictable lot in ways people outside it can’t really understand. We’re certainly not the most practical folks on Earth; if we were, G.A.S. wouldn’t be a thing. We’d all have one electric guitar, one amp, and that one amp would probably have any and all effects pre-loaded. Because you really don’t need much more than that to actually make music.

However, inspiration and creativity play huge roles in what we do, and different pieces of gear inspire us to create differently. If that one fuzz pedal or electric 12-string or modeling amp is going to fuel our creative fires, even the worst recession in history (would that actually be a depression? I don’t know!) is probably not going to suppress that urge to acquire.

Tiny URL for this post: