"First Time Of Adversity" Effect

There was a recent article in The Wall Street Journal titled "Detroit's Food Banks Strain to Serve Middle Class":

http://online.wsj.com/article/SB124718194179420129.html

One aspect that caught my attention was the mention of people who are receiving aid for the first time. In fact, the story points out that some people who used to be donors to the pantry are now requesting assistance.

During this period of economic weakness, this "first time of adversity" effect seems especially commonplace. It can take many forms, from those who are being laid off for the first time, to those who are receiving food assistance for the first time, to those who are unable to make payments for the first time, etc.

This "first time of adversity" effect is also very prevalent in many aspects of business as well. For example, I recently heard of a retail store that has been in the same location for 30 years, and now has decided not to renew its lease.

The prevalence of this "first time of adversity" effect supports my theory, mentioned previously on this blog, that we are in a "new (economic) environment." Many people as well as businesses that have never before encountered difficulties are now (unfortunately) doing so.

In my opinion this "first time of adversity" effect is very important information; and the "new (economic) environment" theory/reality is of tremendous importance.

SPX at 922.25 as this post is written


Copyright 2009 by Ted Kavadas