Bubble in Firearms

[harryford]

As a graduate student of economics I am amazed by the size of the increase in demand for firearms that the recent tragedy and the ensuing politics has created. Most ar's have seemed to double in price, magazines and other such items seem to be going for multiples of what they were selling for just a month ago.
I do not see this as a paradigm shift, however. Most likely this is only future demand pulled forward by the fear that one will not be able to acquire these items in the future. Producers will respond to this with increasing production and consumers will have gone through significant future purchases. Once this fever has passed and the AWB comes to nothing(Over half of the members of congress have an "A" from the NRA), I believe there will be a massive drop in prices to overly deflated levels lower than they were two months ago. Perhaps the community will endure it's own miniature bubble and ensuing recession.

[Capybara]

The people who stocked up two years ago and have remained calm and not engaged in panic buying hope that you are right. The people who did engage in panic buying are hoping you are wrong.

Don't forget that even if the Federal AWB ban fails, we are facing our own issues here with Yee and De Leon's bills that will affect rifles and ammo so California is in a different position than the rest of the country. What could have been stupid to engage in if you live in a free state could have been a smart decision if you live here.

[scrubb]

As a graduate student of economics I am amazed by the size of the increase in demand for firearms that the recent tragedy and the ensuing politics has created. Most ar's have seemed to double in price, magazines and other such items seem to be going for multiples of what they were selling for just a month ago.
I do not see this as a paradigm shift, however. Most likely this is only future demand pulled forward by the fear that one will not be able to acquire these items in the future. Producers will respond to this with increasing production and consumers will have gone through significant future purchases. Once this fever has passed and the AWB comes to nothing(Over half of the members of congress have an "A" from the NRA), I believe there will be a massive drop in prices to overly deflated levels lower than they were two months ago. Perhaps the community will endure it's own miniature bubble and ensuing recession.

Dun dun dun....Captain obvious is here to save the day!!!

[SilverTauron]

As a graduate student of economics I am amazed by the size of the increase in demand for firearms that the recent tragedy and the ensuing politics has created. Most ar's have seemed to double in price, magazines and other such items seem to be going for multiples of what they were selling for just a month ago.
I do not see this as a paradigm shift, however. Most likely this is only future demand pulled forward by the fear that one will not be able to acquire these items in the future. Producers will respond to this with increasing production and consumers will have gone through significant future purchases. Once this fever has passed and the AWB comes to nothing(Over half of the members of congress have an "A" from the NRA), I believe there will be a massive drop in prices to overly deflated levels lower than they were two months ago. Perhaps the community will endure it's own miniature bubble and ensuing recession.

Im just a puny undergrad in Economics, so maybe you know more about the topic then I do.

On paper you're absolutely correct. However, when it comes to discussing the actions of people no formula can be 100% accurate in describing a situation. In a laboratory sense, you're right-but we don't live in a lab.

Your conclusion is based on two outcomes. One, that Reps in Congress won't sell us down the river. Two, there won't be another criminal incident/ spree shooting which starts another run on firearms like Newtown did.

Note that in NY State a lot of gun owners didn't think the SAFE act would pass due to the Republicans in the state house. We see now that conclusion was dead wrong. While I have little doubt a majority of conservative reps will in principle oppose another AWB, things get muddier in the cesspool of DC. Lets say for moment Obama agrees to make a deal on debt reduction and get an honest budget passed-in exchange for Republican votes on an AWB.

Many A+ rated NRA reps would justify such a horse trade as a long-run cost-benefit for their constituents. If the choice is lower taxes versus owning AR15s, most mainstream Joe Schmoes will take the lower taxes over gun rights.

The second point is relevant even if we do shut down an AWB in Washington. Obama will remain POTUS for another 4 years, and we have the current Congressional makeup for another 12+ months. Someone else goes postal with an AR15, and we're back to square 1 all over again. Given the realities of living in a country of 310 million people, its a matter of time before another Newtown happens again, AWB or no.

If the Democrats retake the House of Representatives, fugedeboutit. $2000 per AR15 will be a bargain if that comes to pass.

Its the ugly nature of what happens when a product's sale is inexorably tied to unpredictable political action, which is why I think the classic Supply & Demand model won't work for this market.

[8mmFMJ]

Either the ban happens and ARs are worthless, or the ban doesnt happen and prices drop to near normal.

When the demand decreases the supply will increase and prices will drop. It doesn't cost any more to produce an AR today then it did last year. Manufacturers will compete again soon to have the best priced AR. But for now thy don't have to. They are naming prices and the morons are paying it.

Kinda fun to watch.

[ptoguy2002]

The current potential ban issues aside, IMHO:
The firearms / EBR market has been on an extended bubble for a while now. In the last 10 years we've seen:
-the expiration of the federal AWB
-rise of online forums, like arfcom (advertising like never before & the "cool, gotta have that" factor)
-CA OLL movement
-Obama election
-Obama re-election

All have fueled sales. For the AR world, eventually people will have all the cool rails and sights they want for all their rifles, and the market will come down to new buyers of AR's only, and new products. Sales of used stuff will cut into the market.

[NikePenguin]

If you really want to demonstrate some economic knowledge, do an analysis of the current ammo price "bubble" and forecast when that bubble will burst. I suspect demand to consume ammo (actually buying then shooting the stuff) has not changed significantly. The short-term demand from hoarding ammo, however, has shifted dramatically. So, when will the demand from haording shift back once buyers have either reached thier financial limit to hoard (most people can't or won't maintain higher x% of income spent on ammo every month) or have reached thier desired quantity to hoard?

[tcrpe]

Note that in NY State a lot of gun owners didn't think the SAFE act would pass due to the Republicans in the state house. We see now that conclusion was dead wrong.

Thread jack on.

In the run-up to the election, we were assured here many times that obama was too smart to push for an AWB.

Then he did just that.

Then we were assured many times here that the Republicans in the House would never allow it.

And look at what that Republican controlled body did, it did just that.

Also we have been reassured many times here that the Supreme Court would never allow a gun grab.

The same Supreme Court that affirmed obamacare.

Thread jack off.

[Rob454]

Dun dun dun....Captain obvious is here to save the day!!!

Hey man obvious is a capital O when used as a proper noun Sorry, couldn't help myself

[tcrpe]

Hey man obvious is a capital O when used as a proper noun Sorry, couldn't help myself

Correct, and sentences terminate with a period.

[JDay]

Anyone think this is going to be just like 2008?

[Rob454]

Correct, and sentences terminate with a period.

WHAT? You're having your period?

Anyone think this is going to be just like 2008?

Seriously this is much worse than 2008 ever was. You could still find guns in the store.