Car Wash Economics - and a postscript on the coming election

"Cool, this won't take long" I said to my wife as we came to a stop second in line to mount the conveyer belt at Jack's Full Service Car Wash. "Whoa, where'd they come from" I said as we dismounted the belt and turned into the covered area where they do the vacuuming, wash your windows, etc. All three lanes were full. Windex bottles, rags and vacuum hoses were flying in all directions. What a contrast. Driving in you'd think business was hurting, particularly it being a Saturday afternoon. Driving out you'd think it was booming.

How would you view my scene in a car wash economic context? Taking it all in, I suspect you'd think the car wash economy, due to the short incoming line, is about to hit a soft patch. But what if I'd left out the first sentence altogether? You'd then surely think the car wash economy, due to the jam-packed finishing area, is in great shape.

And what if I had told an altogether different story. What if I'd said that while second in line I had noticed in the mirror that dozens of cars were filing in behind us, and that when we pulled into the finishing area, we drove to the very front of lane number one? I suspect you'd say the car wash economy is about to take off. But what if I'd left out the first sentence altogether? You'd surely think the car wash economy is in big trouble.

I could say here that there's no wonder car wash economists (like all other economists) seldom get it right. But of course any good car wash economist would have considered the whole scenario (the former); the booming finishing area and the very small number of waiting customers. He then could publish an analysis, and counsel his car wash owner clients accordingly. "Demand, as evidenced by incoming traffic, is waning - and we should all thus hunker down accordingly." That is until tomorrow's unanticipated rainstorm hits that neighborhood full of unwashed automobiles. There's no wonder economists, like stock market guessers, seldom get it right. There's just too many moving parts.

Speaking of market guessers: Let's say you're in the market to buy a car wash. And that you're savvier than the average bear. Jack's is a thing of beauty. Clean, well-kept, state of the art. Yes, business is slow, but you believe in the cyclicality of things, and the surrounding neighborhood looks to sport plenty of folks too lazy busy to break out their own hoses. And because he's been at it awhile, and things are unusually slow, Jack wants out. And, because things are slow, he's ready to deal, big time. I.e., you're in luck!

The best time to buy car washes, construction companies, chip makers, appliance manufacturers, movie makers, drug makers, insurance companies, phone companies, banks, etc., is when the average bear is running for the hills...

All things are cyclical my friends: Unemployment will remain above 8% until it doesn't. Corporations will hold onto their trillion-plus in cash until they don't. Banks will keep their trillions in excess reserves until they tire of earning one quarter of one percent (or [perhaps] until the Fed stops paying them one quarter of one percent). Interest rates will stay at record lows until they go up. Politicians will run deficits until voters no longer allow it. And, yes, cars will always get dirty...

P.s: As for the coming election, you'd think, given the present state of the economy, Romney would be sporting a double-digit lead - but, at this juncture, it's a horse race. I suppose it's all about thelike-ability factor (how can a guy as accomplished as Romney be so uninspiring on the stump?). I don't buy the "this is the most important election in our nation's history" line. Clearly, neither candidate [truly] subscribes to the ideology, let alone possesses the hutzpah, that would tilt policy toward getting Washington the hell out of the economy's way. We therefore, from a policy standpoint, tread water (in terms of the national debt and budget deficit) for another four - to eight - years. Change in Washington will come when we elect a [like-able] libertarian (a Ron Paul-type) and a like-minded Congress. In the meantime we go to work, build our homes, buy our computers and our coffee makers, go see Batman, fill our prescriptions, pay our premiums, upgrade to the iPhone 5, 6, 7, 8, etc., beef up our portfolios and, yes, wash our cars...