Pawn Shops: Economic Barometer?
National Pawnbrokers Association



Why is the pawn industry generating so much attention as a "barometer of the economy"? Reports show that the three publicly traded pawn companies reported significantly increased earnings during the last two fiscal quarters. A historic increase in gold value and the "Cash for Gold" craze have shown record numbers of people trading in old jewelry and coins for cash. Perhaps the perception could be based on speculation that in hard times, people pawn. However, there is a larger, more compelling story about the pawn industry.

The National Pawnbrokers Association reports that there are over 30 million pawn store customers per year and they appreciate this unique form of credit and tend to borrow only what they need, as evidenced by the relatively low national average loan amount of $80. NPA President and pawn shop owner Dave Crume says, "Pawn customers repay their loans and redeem their collateral at a correspondingly high average national redemption rate of 80 percent. These parameters appear to be holding constant, despite the current economy."

The industry as a whole is impossible to track, as only publicly traded pawn corporations are required to report their earnings. Most of the 13,000+ pawn stores in the US are small, privately owned businesses and do not report their earnings publicly. American businesses across the board are experiencing fiscal turmoil, unprecedented layoffs and a severe credit crunch. One of the industries that have seemingly grown during the recent financial crisis is the pawn industry. The three publicly traded pawn corporations at least doubled their stock values within the last 12 months. However, these earnings are not solely attributed to pawn loans or the retail side of a pawn business. They incorporate a complex mix of financial services as well as new business derived from the sky-rocketing price of gold and increased revenue due to business consolidation. It is inaccurate to take a snapshot of these companies which control less than 10% of the pawn shops in the US and determine that the industry is prospering.

The pawn business model is diverse, including retail, jewelry sales and pawn loans. While one element of the pawn business may thrive in a slow economy, such as pawn loans, other elements such as retail sales, will decrease. Dave Crume notes, "While many of our association members are making it through the dip in the economy, there are many pawn shops in the US that are struggling and closing. Just like all sectors of the American economy, the pawn industry is challenged by the recent economic trends."

NPA's Musical Instrument Gift Day A Success
December 6, 2009

The National Pawnbrokers Association held its 1st annual Musical Instrument Gift Day on December 6th.  Pawn shops in 14 states across the country joined forces this holiday season to provide underprivileged children with over 300 musical instruments. Inspiration for the national charity drive came from the example set by St. Nicholas, patron saint of pawnbroking, who was famed for secretly throwing 3 bags of gold into his neighbor’s window in hopes that the neighbor’s daughters would be spared from a life of servitude.  In the spirit of this generosity, Gift Day strives to put musical instruments into the hands of those who need them the most. Read more of this article on the Pawn Shops Today BLOG>

WDEF News 12: Senate Bill May Stop Pawn Shop Loans

VIDEO report about the effects of SB 500 on the Pawn shop industry...television news report.

http://www.wdef.com/video

KSEE 24 News: Pawn Shops Threatened By Senate Bill

This VIDEO report takes you inside a pawn shop and shows what items are piling up on the shelves, and what effect the bill has on the owners if it passes.

http://www.ksee24.com/news/local

Macon County News: Congressional bill could put an end to pawn shops

This news article breaks down the interest rates, and explains why the interest rates included in SB 500 would not be enough to keep pawn shops open.

http://www.maconnews.com/index.php?option=com

KSN 3 News: Bill would cap loan interest at pawn shops, lending centers

http://www.ksn.com/news/local/story/Bill

This news article explains the importance of keeping pawn shops open. With the current state of the economy, pawn shops are necessary for some people to get loans to make ends meet.

www.Senatus.com: Pawn Shop Owners Fearful of Durbin Bill

http://senatus.wordpress.com/2009/04/12/pawn

This news article describes the pawn shop industry as a "lifeline" for consumers. The passing of SB 500 would cause pawnshops to close, taking away a lifeline for Americans.

CBS 11 TV: Pawn Shop Owners, Customers Fear Lending Bill

http://cbs11tv.com/local/pawn.shop.lending.2.996555.html

This news article includes quotes from people who have already signed the petition against SB 500, and why they did it.

Federal Law Could Put Pressure On Pawn Shops

http://www.nbc4i.com/cmh/news/local/article

This news article is a reaction to the possible effect of the bill on pawn shops in the midwest. Including "reader reactions".

Feeling the pain

http://www.tribtoday.com/page/

This news article gives examples of operating pawn shops in Ohio. If the bill passes, they will all have to downsize or close...the industry is seeing an increase in customers, but a decrease in repeat customers