Leisure industry not having much fun
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KAI RYSSDAL: Enjoy it while you can. There’s officially less than a month of summer left. In reality there are only 10 days until Labor Day. So it’s time to kick back and unwind. Hopefully, you’ve had a better couple of months than the leisure industry. It’s been a long and not-so-hot summer for companies that sell things like jet skies and motorcycles. Mike Rhee has a look at why people aren’t splurging on summer fun.
MIKE RHEE: The leisure industry typically runs in cycles, in line with the economy. When things are looking good, well, so does that motorcycle.
Dusty McCoy is CEO of Brunswick, the largest recreational boatmaker in the world. He says the industry’s current trouble is different from previous downturns.
DUSTY MCCOY: Past downcycles have always been part of a recession in the US economy, and fundamentally there’s not any indication that there’s a real recession across the entire economy.
McCoy says the main drop in sales has been in smaller to mid-sized boats. There’s a possibility the trend could continue, or get worse, and McCoy says the company will then have to focus more on developing new products and adjusting price points.
Economist Diane Swonk says gas prices are mainly to blame. She says consumers are now budgeting for higher fuel costs.
DIANE SWONK: There was a sense of: “This is just temporary, things are gonna get better and I can squeeze a little bit now, you know, stretch my dollar a little bit now, but it’ll be OK. I’ll take on a little debt and then pay it back later when prices come down.” And that’s not the feeling anymore.
BILL STRAUSS: If consumers begin to get a little bit worrisome about the outlook for the future of the economy, they tend to hold off on this type of fun spending.
Bill Strauss is an economic advisor for the Federal Reserve Bank of Chicago. He says incomes over the past few years have not kept pace with spending. Savings are in the negative. Strauss says a cooler housing market also means people might not have the financial buffer of their homes anymore.
STRAUSS: So with leisure spending slowing down, that certainly is suggestive of a slowing in economic activity for the US economy.
Still, Strauss points out the economy is growing, even if it’s at a more moderate pace than previous years.
It’s a warm, sunny weekend afternoon at a harbor on Chicago’s South Side. Most of the boats are sitting in their slips.
Brian Larson’s 26-foot powerboat is docked with the engine off while his wife and daughter listen to the Cubs game. Larson says fuel prices do make an impact.
BRIAN LARSON: I mean, obviously, it puts a dent in it. But I’ll tell you what I’ve seen a lot more of this year, is a lot of people anchoring off. Where before you’d see people zipping all up and down the lake, now they’re anchoring, swimming more, hanging out on their boat, but not necessarily running their boat so much.
Larson says boating’s a lifestyle. And he says it’ll take a lot more than high gas prices to keep him off the water.
In Chicago, I’m Mike Rhee for Marketplace.
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