Eyeing a possible recession, California wineries cut back on production — and farmers suffer: SF Chronicle

When do their federal grape subsidies kick in?

The Gallo-Constellation deal was for only $1.7 million? For 30 brands? So $50,000 a brand? Either that’s an error or the wine business must be very low margin

Yeah, that’s a typo. It was $1.7 billion.

Still cheap too.

The recession is already here folks. A year ago it was a mile away, 6 months ago a half mile, and now its knocking on the front door. A lot of people are ignoring the knock, pretending it will go away with a magical resolution to the trade war, or suddenly the Federal Reserve will actually become effective at their job (and not just blow asset bubbles and cause credit/asset implosions).

Time to buckle up and tighten the belts if need be, because no amount of praying to Donald or Jerome is going to lead to it turning around and walking away.

No grapes, no pickers, no problems. [cheers.gif]

I wonder who much of this is just too many grapes as a result of bountiful crops with the drought conditions softening

Maybe the wineries got too ambitious with raising the bottle costs of wine and we are getting smarter about not buying when that price crosses a certain threshold. There are definitely wines and wineries I have stopped buying from after seeing massive price escalation in a short period of time. Doesn’t take too long browsing the forum to see that happening for others here as well.

The economy is strong right now. This recession talk is just talk for now.

Along with over-planting. Lots of new or expanded vineyards planted over the past decade.

“The economy is strong right now. This recession talk is just talk for now.”

Lets see:

manufacturing plummeting (check)
services trending down (check)
consumer sentiment falling from highs (check) (this is always the last data point to begin declining)
unemployment weakening (check) (see above, consumer confidence) (unemployment rate is massaged- true unemployment and underemployment is MUCH higher than 3.5% folks)
business optimism/ CFO outlook surveys falling (check)
transport spot prices cratering (check) (see recent trucking and shipping data)

One last thing- as most (should) know, the S&P 500 is NOT the Economy.

My prediction- we are heading towards Stagflation. Slowing economy and rising inflation. The worst combination there is.

You have no idea - how low margin we work on

The wine hobby has been doing this to me for years. [cheers.gif]

There are days where I can’t afford to drink wine I already own!

the next step is to go into the wine business - and it sounds like you are very close

Please let this zombie idea die. There are measures of all of those items, each of which has been measured the same way for a long time. The headline unemployment number is one of many measures. If you want to talk about trends in “underemployment” then go for it. BLS publishes all of these constantly. Just don’t compare one measure to the other and say the headline number is invalid.

While I dont disagree with Brian about the direction of the economy I’ve learned over time that for luxury goods like wine (and housing in So Cal) that the buyers can mostly afford these things regardless of the economy. There is a huge psychological component involved and people reign in purchases as soon as the economy slows or turns down in case of the worst case scenario. Of course it never comes into play as its the worst case scenario after all! Once they realize the world isn’t coming to an end they resume purchases with fervor and in many cases play catch up on what appear to be sale prices. Wash…rinse…repeat

“Please let this zombie idea die. There are measures of all of those items, each of which has been measured the same way for a long time. The headline unemployment number is one of many measures. If you want to talk about trends in “underemployment” then go for it. BLS publishes all of these constantly. Just don’t compare one measure to the other and say the headline number is invalid.”

It is invalid, due to their criteria for someone counting as “in the work force” or not. If you aren’t actively looking for a job, then they dump you out of the workforce. and voila, you aren’t counted as unemployed. The trend in underemployment is going up, as in people who may want to work a full 40 hour work, and are unable to do so.

And, not saying that you do, but if you believe the official employment numbers, then I have a bridge in Brooklyn that I would like to sell to you.

If low production couldnt that mean rise in price?

You don’t have to “believe” anything. The same survey and calculation methods are employed, so comparing any point in time to another point in time allows you to compare apples to apples. However, a simple search will lead you to the “other” measure of unemployment, which is dubbed “underutilization” and is what you’re talking about. As you’ll see, though one is apples and the other is oranges, they track similarly. It’s a really beautiful chart. BTW, I agree with the general argument that indicators point toward a downturn of some sort – this is simply not the one that demonstrates it.

Funny that unemployment is as low as it has been since 1969. Yeah the sky is absolutely falling. I assume all you folks saying a recession is coming (and I don’t deny that fact as we are way over due based on historical trends) do not have your money invested in the stock market. For now however, where is the rest of the world going to invest their money?