Traditionally, our office is swamped after Halloween with all the candy that our associates didn’t give away. Despite all appearances to the contrary, I don’t eat a lot of the stuff throughout the remainder of the year. However, my willpower tends to fly out the window during the first week in November.
Those little nugget-sized Milky Ways and Reese’s peanut butter cups? So-called fun-sized Almond Joys and Mounds? Little bags of Skittles and M&M’s? Man, fuhgeddaboudit. It is definitely not kosher how I go ham on that goodness.
But this year? Not so much. No, I didn’t summon any newfound self-control. Not in the slightest. Simply put, no one on our floor brought in any. If they did, they kept it to themselves, and didn’t put it in the common area.
When I lamented this to co-worker, they responded with: “John, did you see how expensive candy was this year? People probably didn’t buy as much. I know we didn’t.” In truth, we didn’t either. However, my wife was the one who picked it up. What’s more, it didn’t seem like there were as many mini-Kit Kats in the bag as in previous years.
But, in all fairness, I didn’t count them before wolfing them down.
With that in mind, I stopped by the local Winn-Dixie on Tuesday night. Since I wasn’t getting my candy fix at the office—and was already there—I decided to check out how much the store had marked down its candy. After all, Halloween had come and gone, and I was sure plenty remained unsold.
While I was right about that, the discounts were, shall we say, disappointing. Buy one get one 50% off? That might work on some items, but Halloween candy? Further, the price for one bag wasn’t exactly cheap. In fact, I was surprised by just how expensive it was. They were like airport or movie theater prices.
Suffice it to say, I probably didn’t appreciate the mini-Kits Kats I had eaten anywhere near enough. Had I known they were so expensive, I would have taken things much slower than I did.
I will freely admit this makes me sound cheap. However, those that know me well know that I can be — very much so. Further, I will acknowledge I have used my propensity to be, um, parsimonious, to make a point in this newsletter in the past. So, no, a bag of candy isn’t going to put me in the poor house, and I won’t begrudge the money while on my deathbed.
However, it is fair to say that the amount I demanded at the price the store charged was effectively zero. Don’t give me any of this “buy one get one 50% off” nonsense. I was looking for something along the lines of “buy one get two free.”
I suppose it is for the best.
But so what? Candy, especially chocolate candy, is more expensive this year due to rising cocoa prices and the like. It is what it is, and folks don’t have to buy it if they don’t want to do so. To be sure, no one made me do so.
However, the so what of it all is IF I am shocked by the price of candy (let alone beef and a lot of other stuff at the grocery), then what about the so-called average American? Households around the median income? How are they not struggling to some degree? If struggling seems too strong of a verb, how are they not doing more with less?
After all, money is more finite than the Congress seems to think it, especially at the “micro” level.
Now, what I am about to say/argue/write might seem more political than I intend for it to be. It is merely my observation on the passing economic scene.
This past week, media reports stated that the shareholders at Tesla, Inc., approved a nearly $1 trillion overall pay package for CEO Elon Musk. Of course, it is heavy on the performance incentives, which appear to be pretty aggressive. As such, there is no guarantee Musk will be able to collect on this eye-watering sum. It almost makes you wonder what John Doe and Joe 6-Pack think about such a thing.
$1 trillion? That is almost unfathomable.
Also as unfathomable, or it would have been not so long ago, was the outcome of last week’s mayoral election in New York. I won’t mince words. The winner Zohran Mamdani and I appear to have very different worldviews. Further, it would seem the most capitalist city in the world has elected a decidedly non-capitalist to lead it.
I won’t rehash all of the mayor-elect’s economic platform, but it is safe to say he envisions a much more expanded role for the municipal government. Free buses and childcare. Government-run grocery stores. Rent freezes, and as democracycollarorative.org phrased it: “…to construct 200,000 new units of permanently affordable, union-built, rent-stabilized homes – over the next 10 years.”
The Wall Street Journal outlined some of the bigger proposals in an excellent article you can find here.
Here is the thing: people tend to like free stuff. It is just basic economics. When, in this case, the government holds prices below the “market clearing rate,” demand will be greater than the supply. Think about it. How many $10 bags of candy will you buy? Okay, now how bags of free candy will you take?
So, all that free stuff Mr. Mamdani is promising? He won’t be able to deliver it all, no matter how much he taxes corporations and rich people. His price ceiling of $0 ensures there will always be a shortage of whatever it is. That is as long as people find any value, even a penny’s worth, in whatever the city is giving away for free. Why? Because price ceilings below the market clearing rate will always result in a shortfall. Period. If not, we can throw everything we think to be true about economics out of the window.
But why would people fall for such economic promises?
Have I mentioned that we live in a country where a man stands to make $1 trillion while a good chunk of the population is shocked by the price of a bag of Halloween candy? At some point, some segment of the population will contend the system just isn’t working for them, and there isn’t any harm in trying something different.
Think of it this way: “You know, a lot of that stuff he is promising seems to be good to be true, and it probably is. However, the way it is now, I am having trouble justifying buying a candy bar. So, yeah, I am willing to give this guy a shot.”
Trust me, that isn’t as far fetched as it might seem. I mean, why would anyone want the government that involved in their lives if they thought things were getting better or, at least, had the potential to better?
To that end, I am quite certain Elon Musk would not have voted for Mr. Mamdani had he been able to do so.
In conclusion, it is kind of funny how the price of Halloween candy can shed light on the precarious situation in which many consumers find themselves. Couple this with headlines and social media feeds that constantly show “others” spending lavishly and seemingly getting ahead financially, and you get elections like the one we had last week in New York. One where a large swatch of primarily young people looked around themselves and think: “anything is better than what I have now. Let’s give this guy a chance.”
In the meantime, while New York starts to sort itself out, I will go back to the Winn-Dixie over the weekend to see if they have sweetened the deal on their sweets. Let’s hope so, because anything is better than the prices they were showing the other day.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this and every day. Also, please be sure to tune into our educational podcast, Trading Perspectives, which is available on every platform.
John Norris
Chief Economist / Chief Investment Officer, Oakworth Asset Management
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