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My crystal ball says:
Gas prices - rise. I know we have had declining prices at the pump lately and I enjoy it but I don't think it can last. Oil wells take hundreds of years to replenish and demand is increasing fast in countries with huge populations. More and more competition for refined oil products plus higher and higher production costs as we shift to shale will raise prices. Higher prices make it more expensive to truck the stuff to the gas stations. In my lifetime a gallon of gas has gone from fifteen cents to three or four dollars. I won't go into shock about any future price.
Automobile business - drops. Until we get unhooked from gasoline car sales will probably decline. Electric or other alternative energy cars are not yet ready to satisfy the driving habits of today. As gas prices rise trends will be more public transportation use, more central city dwelling with no real need for a car, more working from home, fewer driving vacations. Fewer and smaller cars will produce less profit. Some manufacturers and dealers will go under.
Airlines - decline. The recent trends should continue. Airline traffic fell three or four percent in 2014 while bus travel increased steadily. Bus companies are adding routes, airlines are subtracting them. The inside of a bus is not seriously different from an airplane and is cheaper to use. No long security lines or examination of what you carry. Open seating, more relaxed atmosphere. Bus company growth is driven by younger people not so much married to cars and airplanes and by our growing low income population segment. Trading speed for affordable is a good option.
TV and internet shopping - grows. As we get more and more used to electronic shopping and the experience gets easier it becomes routine. Products can be sold cheaper with the same or better profit margins. For future generations shopping in stores will more novelty than way of life. As always, businesses will adjust or perish.
Bank branches - down. We need them less. We are already banking and paying bills online and banks love it. Automated service costs less. Cash physically changing hands happens less and less. Half or more of business receipts are on credit or debit cards. Much of our income is direct deposit. We can negotiate, borrow, move money around, handle most simple transactions electronically. Some banks are charging for counter service.
Big box stores - down. The cost of staffing, maintaining and supplying big retail sales buildings and parking lots seven days per week will drive more of them under. People will still enjoy the instant gratification of seeing, handling and owning the merchandise but in less profitable numbers. Some combination of electronic and physical shopping will survive but the trend will be down.
Small neighborhood stores - up. Mom and pop businesses within walking distance don't need thousands of customers each day, 24/7 coverage or big overhead and we get to deal with someone we know. As less driving is done the convenience offsets higher prices. During world war two big companies were manufacturing mostly war materials. Cars, gas and tires were scarce and a variety of small neighborhood shops did fine. We could have something like that again but hopefully without the war.
Health care - up and down. I felt that our system was unsustainable fifty years ago. Costs rose dramatically year after year and nobody cared. Employers provided free family coverage and simply added it to the price of products and services. Employees paid little or nothing for whatever health care they wanted. Physicians and hospitals charged whatever they pleased and the insurance companies simply raised the employer premiums.
The unemployed used hospital emergency rooms, could not be turned away, and paid nothing. It has now reached the tipping point. In a global market our employers can not compete with overseas manufacturers who can make and ship the products here for half as much. Employers are scheduling part time hours to avoid health insurance for as many as possible. Our population growth has slowed, people live longer, the average age is higher and in need of more medications and treatment. More and more of those services go unpaid. Hospitals are cutting staff and maintenance to a minimum or closing. Health care workers are wearing out, overworked, leaving the field. The up part is we will reach a sustainable level, the down part is the pain and suffering of getting there.
More later...
Gas prices - rise. I know we have had declining prices at the pump lately and I enjoy it but I don't think it can last. Oil wells take hundreds of years to replenish and demand is increasing fast in countries with huge populations. More and more competition for refined oil products plus higher and higher production costs as we shift to shale will raise prices. Higher prices make it more expensive to truck the stuff to the gas stations. In my lifetime a gallon of gas has gone from fifteen cents to three or four dollars. I won't go into shock about any future price.
Automobile business - drops. Until we get unhooked from gasoline car sales will probably decline. Electric or other alternative energy cars are not yet ready to satisfy the driving habits of today. As gas prices rise trends will be more public transportation use, more central city dwelling with no real need for a car, more working from home, fewer driving vacations. Fewer and smaller cars will produce less profit. Some manufacturers and dealers will go under.
Airlines - decline. The recent trends should continue. Airline traffic fell three or four percent in 2014 while bus travel increased steadily. Bus companies are adding routes, airlines are subtracting them. The inside of a bus is not seriously different from an airplane and is cheaper to use. No long security lines or examination of what you carry. Open seating, more relaxed atmosphere. Bus company growth is driven by younger people not so much married to cars and airplanes and by our growing low income population segment. Trading speed for affordable is a good option.
TV and internet shopping - grows. As we get more and more used to electronic shopping and the experience gets easier it becomes routine. Products can be sold cheaper with the same or better profit margins. For future generations shopping in stores will more novelty than way of life. As always, businesses will adjust or perish.
Bank branches - down. We need them less. We are already banking and paying bills online and banks love it. Automated service costs less. Cash physically changing hands happens less and less. Half or more of business receipts are on credit or debit cards. Much of our income is direct deposit. We can negotiate, borrow, move money around, handle most simple transactions electronically. Some banks are charging for counter service.
Big box stores - down. The cost of staffing, maintaining and supplying big retail sales buildings and parking lots seven days per week will drive more of them under. People will still enjoy the instant gratification of seeing, handling and owning the merchandise but in less profitable numbers. Some combination of electronic and physical shopping will survive but the trend will be down.
Small neighborhood stores - up. Mom and pop businesses within walking distance don't need thousands of customers each day, 24/7 coverage or big overhead and we get to deal with someone we know. As less driving is done the convenience offsets higher prices. During world war two big companies were manufacturing mostly war materials. Cars, gas and tires were scarce and a variety of small neighborhood shops did fine. We could have something like that again but hopefully without the war.
Health care - up and down. I felt that our system was unsustainable fifty years ago. Costs rose dramatically year after year and nobody cared. Employers provided free family coverage and simply added it to the price of products and services. Employees paid little or nothing for whatever health care they wanted. Physicians and hospitals charged whatever they pleased and the insurance companies simply raised the employer premiums.
The unemployed used hospital emergency rooms, could not be turned away, and paid nothing. It has now reached the tipping point. In a global market our employers can not compete with overseas manufacturers who can make and ship the products here for half as much. Employers are scheduling part time hours to avoid health insurance for as many as possible. Our population growth has slowed, people live longer, the average age is higher and in need of more medications and treatment. More and more of those services go unpaid. Hospitals are cutting staff and maintenance to a minimum or closing. Health care workers are wearing out, overworked, leaving the field. The up part is we will reach a sustainable level, the down part is the pain and suffering of getting there.
More later...
Ken Lind. Husband, father, grandfather, veteran, marketing
management major, corporate management and sales schools, award winning
salesman, manager, business owner, toastmasters president, business club
officer and board member, writer, author, insatiably curious.
http://www.homework4success.com
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