We measure the health of the American economy all kinds of ways: New housing starts, GDP, retail and unemployment.
Also? Pawn shops.
Cash America — the biggest pawn shop company in the country — said today profits probably won’t be as good as everybody’s expecting. The firm blames mostly weaker demand for both pawn and consumer loans. That lower demand could also mean that Americans are starting to feel a bit more financially stable.
Michael Mack is the owner of Max Pawn in Las Vegas. He says that the conventional wisdom that pawn shops doing well means a bad economy isn’t necessarily true.
“Pawn shops do well in most every economy,” he argues. “We loan more money in the downturn; we sell more merchandise in the upside. So we try to hedge ourself both ways.”
The last few years, demand for loans at pawn shops has been higher — even for loans in the tens of thousands of dollar range. At his shop, he’s seen cars, airplanes, and other seemingly weird items get put up.
“The demand for loans is still there,” he adds.
The news the country’s biggest pawn broker is hurting, explains Mack, isn’t just a sign that the economy is getting better.
“A lot of [pawn shops] have depended on that gold rush, where people were selling gold off at a high price. Of course, gold’s taken a big dip this year,” Mack points out. “That easy business of taking gold, refining it, making money, making a profit margin, is over.”
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