Pawn Shops Experience Customer Surge as Fuel Costs Escalate During Iran War
Pawn shops are witnessing a notable spike in customer activity amid the ongoing conflict between the United States and Iran, according to a recent report. The surge is directly linked to rising gas prices, which have escalated due to Iran's leadership limiting access to the Strait of Hormuz. This critical trade artery facilitates the shipment of nearly 20 percent of the world's oil and gas, and its stranglehold has caused oil prices to skyrocket.
Increased Demand for Pawn Services
Tim Cassidy, owner of Cassidy's Jewelry & Loan in Stockton, California, explained to Bloomberg that the situation is driving more individuals to his store. "We're making a lot more loans," Cassidy said. "They have to have that gas, they have to get to work." This trend is not limited to lower-income consumers; middle-income earners are also increasingly turning to pawn shops for financial assistance.
Abigail Mielcarek, co-founder of Abby's Pawn and Coin in Santa Rosa, noted that expensive items like watches are appearing more frequently in her shop. "Some of the people who have more money are also feeling what's going on," she told Bloomberg. Additionally, Mel Mason, a regular at Ponders Pawnbrokers in Lakewood, Washington, shared that he pawned a gun for $200 to cover a $150 veterinarian bill for his dog, highlighting the diverse financial pressures faced by customers.
Countercyclical Nature of Pawn Business
Brian C. McNamara, an analyst at Canaccord Genuity covering pawn giants EZCORP, Inc. and FirstCash Holdings, Inc., described the pawn business as "countercyclical." "If pawn shops are doing well, it probably means that some part of the economy is not," he explained to Bloomberg. McNamara conducts a quarterly survey of 47 stores and found that 25 percent were busier in the first quarter compared to the previous year. He remarked on the fuel price impact, saying, "You have gas prices that are just slapping people across the face."
Rising Gas Prices and Inflation
Gas prices have surged dramatically since the conflict began. According to GasBuddy:
- Prices started at $2.92 per gallon in early February.
- By late March, nearly a month into the war, they rose to $3.7 per gallon.
- On April 1, prices leaped to $4.12 per gallon.
Inflation has also rocketed alongside gas prices. The Consumer Price Index for March recorded a 0.9 percent jump from February, with the all-items index increasing by 3.3 percent over the past 12 months before seasonal adjustment.
Economic Experts Warn of Broader Impacts
Steve Hanke, a professor of applied economics at Johns Hopkins University, offered a blunt assessment to Fortune: "Good for Russia, good for China, bad for America." Wayne Winegarden, a senior fellow at the Pacific Research Institute, warned that the war's impact could resemble "the inflationary 70s." He added that if the conflict persists and the Strait of Hormuz remains closed, a recession could occur, creating a "stagflationary" feel in the economy.
The situation underscores how geopolitical tensions are directly affecting everyday Americans, forcing many to seek alternative financial solutions through pawn shops as they grapple with escalating costs.
