EDITORIAL: Driving Confidence
August 4, 2011
About two years ago, at the height of the recession, my car was in the finally stages of a complete and utter break down. It was a jet black 1998 Jeep Cherokee, a powerful six cylinder, four-wheel drive beast that was great for bad weather, going off-road and toting everything from bicycles to motor boats. I loved that car; the significant other and I called it the Super Jeep.
But by the summer of 2009, the Super Jeep was no longer, well, super. It developed a “death wobble” that made it impossible to steer if you went over 50. Drive it on a hot day, and the clutch would smoke ominously when idling. It was time for a new car.
The problem: we were both unemployed, for more than a year by that summer. We weren’t suffering, but things were starting to get tight; and with no full-time employment opportunities in sight for either of us, we knew what money we had would have to last. But thanks to the Cash for Clunkers program and good credit history, most cars were in our price range when we went shopping for a new one. Still, recognizing our then economic situation, we decided to purchase the least expensive car we could find, a “get us by” vehicle that we would immediately replace when our job situations improved and finances rebounded. We found just such a car-a bright gold Kia Rio, a four-door compact made of Korea’s finest tin that looked like a gnat alongside the Cherokee, and cost a third as much as I paid for the Jeep in 1998.
There was no denying it-the new car was a step down from what we owned before. We consoled ourselves by saying it was only temporary, and we would make up for it when things improved.
Funny thing happened though-it’s two years later, we’re both working and can afford a more impressive car and...we are sticking with the Kia Rio. We’ve grown to love the Kia as much as the Jeep. Sure, it has no power, but it is nimble, quick, reliable, easy to park and, oh yeah, it gets 30 freakin’ miles per gallon of gas! (compared to 17 miles per gallon for the Cherokee). We even named it-we’re calling it Golden Boy.
Gas mileage is not the only reason we’re keeping our current car. For me, there’s also the unspoken fear that comes from being a “99er,” a person without a job for two years or more who has exhausted all their unemployment benefits and extensions: What if the current economic recovery is false? What if the economy is a decade from full recovery? What if things never return to the way they once were? When economic uncertainty abounds, isn’t it better to be cautious, to save rather than spend? I think that was the mindset of my grandparents who lived through the Great Depression and that I never fully understood until now.
In this way, I think I’m no different from today’s average casino customer-it is hard to spend money on extravagances such as gaming when aspects of personal economy such as continued employment and property values are so unsettled and uncertain. All signs point to the national economy being on the cusp of full recovery, but it will be years before consumer confidence and spending is back to normal, let alone growing, for all segments of the economy, including casino gaming.
So the watch word for the domestic gaming industry going forward, at least when it comes to consumer spend, is patience. Essentially, the industry needs to take a page from its customers and adopt the worldview of slightly diminished expectations-operate as efficiently as possible, be happy with small gains, avoid massive expenditures and have something put away for a rainy day. This may sound old fashioned, but for the time being it is the new normal.
The good news in this scenario is that the casino growth vehicle continues to move forward, even if it’s at the pace of a Kia instead of a Maserati.