What Biden's $3.5 Trillion Package Means For Closeouts.
Biden's tax plan is to hike federal spending by about $3.5 trillion over the next 10 years—paid for with a combination of huge tax increases and up to $1.75 trillion in new borrowing —it is possible this will decrease future economic growth and reduce private wealth, according to a new analysis from the Penn Wharton Budget Model (PWBM), a macroeconomic forecasting project based at the University of Pennsylvania. For those who liquidate inventory and sell closeouts for a living this might mean good times ahead. It is plausible this kind of unprecedented spending can lead to a recession causing a slowdown in economic activity. Recessions are often good for the closeout business because closeout brokers that sell excess inventory will be busy with slow selling and liquidation inventory.
Closeouts and overstock inventory often flood into the marketplace during recessionary times because business slows down and companies sell excess inventory to increase cash flow. There are other reasons companies liquidate inventory, including moving old merchandise to make room in the warehouse and also replacing slow moving stock with new, fresher goods.
Over the years we have seen sweeping changes both ways when Republicans and Democrats change power. It does seem more spending does not always lead to economic growth so the argument can be made that passage of this bill will lead to increased inflation, lower growth, and even recession. Discount stores tend to flourish in economic downturns because consumers, often unemployed or spending dollars that are worth less, are looking to get more bang for their buck. More value for their hard earned cash. Closeouts, surplus, and discontinued inventory is often priced lower than regular imports, and retail operators turn to closeout brokers to help fill their shelves with these deals.
If you look at past recessions in 1990, 2001, 2007 and now 2020, in each time period there was an advance in the presence of retail discount sellers. Now, in the past it was solely expansion of brick and mortar stores selling closeouts. But today, we have deal sites, or closeout websites offering the consumer fantastic buys on overstock and liquidation deals. These are often goods that either didn't sell at the original price or were marked down to liquidate for other reasons.
Closeouts come in all shapes and sizes, and cover all product categories. Closeout websites like eBay, liquidation.com and overstock.com all offer closeouts of housewares, toys, lawn and garden, sporting goods, home accents and much more. As more companies learn about the benefits available when they sell excess inventory and obsolete merchandise, there will be more online and brick and mortar stores selling these goods. Some sellers of surplus inventory get such good deals they are able to offer their customers up to 75% off.
