It’s Not Just Gun Sales That Matter, It’s The Argument Behind The Guns.

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The FBI just released its figures for NICS background checks processed in March, and the number of background checks for gun transactions, as opposed to gun licenses, has swung slightly back up.  This information, of course, has unleashed paroxysms of joy in Gun-nut Nation, because everyone has been saying that gun sales will continue to slip during the Age of Trump. Now one month’s sales don’t really tell you all that much, particularly since I suspect that many of those sales represented consumers taking advantage of price cuts by gun retailers who have to move unsold inventory off their shelves.

 

lott

John Lott

To me, the much more important impact of the Trump election is not the impact on sales, but the degree to which his pro-gun stance alters the basic narrative about the value and importance of guns. Because let’s not forget that the NRA and the other purveyors of guns as the all-American item of choice were able to promote gun sales primarily by arguing, with some degree of truthfulness by the way, that a guy like Obama in the White House meant that guns might be taken away.  And the same argument was used against Hillary’s Presidential bid and the same arguments about alleged ‘threats’ to 2nd-Amendment ‘rights’ have been used to spur gun sales over the last twenty or thirty years.

But now the NRA is hoisted by its own petard, because you can accuse the Trump administration of all kinds of things, but one of the things you can’t accuse them of being is against guns. And just today our friends at The Trace posted a quick analysis of the views of incoming Justice Department attorneys, and all of them are decidedly (and somewhat stupidly) very pro-gun.

A secondary theme supporting the idea of a gun in every garage is the notion that we need all the protection we can get in an age when terrorists can penetrate the country as quickly as a new strain of the flu, and can or will mount deadly attacks wherever and whenever they please. But this argument also falls flat in the face of constant bromides from Herr Trump about how he’s going to keep us all safe. After all, if the new, tough Trump government is going all-out to protect us from harm, how can one argue that we should be concerned about personal protection at all?

So if the pro-gun narrative that preceded Trump is no longer working, what happens to the people and organizations whose mission is to spread that narrative every chance they get? I’m thinking, for example, about the fortunes of my good friend John Lott, whose books and lectures on the value of guns to protect us from violent crime has made him a visible media personality on shock-jock radio and FOX.

John runs something called the Crime Prevention Research Center, basically a home-grown website devoted to spreading his version of gun information far and wide. Actually, the site is an advertisement for his media appearances and public speeches; the truth is that John is an advocate much more than a researcher – I don’t recall the last time he actually published peer-reviewed research unless the definition of ‘research’ includes any time that someone opens their mouth.

The website and John’s advocacy activities are funded by donations from loyal supporters but the revenue levels recently haven’t done so well.  In 2013 the CPRC brought in $218,106, the following year donations zoomed upwards to $310,839, and then they dropped in 2015 to $166,736.  I don’t see the 2016 numbers but I did see an interesting comment from those idiots Doctors for Responsible Gun Ownership site, who quoted an email fundraising appeal from Lott: “Unfortunately, the CPRC is literally almost out of money.  Donations have fallen off dramatically since the election.”

Gee, what a surprise. Gun-nut Nation doesn’t have to worry about losing their toys so support for pro-gun noisemakers like Lott immediately dry up. Will the same situation also begin to impact the NRA?

Want To Buy Another Gun? There Are Plenty Lying Around.

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Now that America’s greatest all-time gun salesman has departed from 1600 Pennsylvania Avenue, leave it to the NRA to try and pretend that #45 is filling his shoes.  Because after ponying up $30 million for Trump television campaign ads, the last thing the boys in Fairfax will admit is that the result of spending all that dough given by their loyal members (like me) will result in the gun industry going down the tubes. And I guarantee you that as the purchase of new guns continues to slide, the NRA will push out this phony argument and those phony numbers again and again to pretend that Americans still want more guns.

bomber             The fact is that the gun industry has always been a boom-and-bust industry, sales trends driven by fears that guns might be taken away. There simply is no truth to the argument I hear from various Gun-nut Nation mouthpieces that all kinds of new demographics – women, minorities, millennials – are into guns. The percentage of American households that report legal gun ownership has declined by nearly half over the last twenty years, and the explosion of gun sales during the Obama ‘regime’ (at least we won’t hear Limbaugh ratcheting up that disgusting remark for the next four years) basically represented people who owned guns buying more guns.

But leave it to the NRA to come up with a post-election narrative on gun sales which twists the facts in a way to prove that the gun industry will remain alive and well even when nobody needs to be worried about whether they can buy another gun.  Here’s the headline from the NRA-ILA blog: “‘Trump Slump’ Proved False By Strong Background Check Numbers,” a response to articles in the financial press predicting that gun sales in 2017 will decline by 20 percent.

Actually it should only be that background checks on over-the-counter sales in January and February dropped by 20 percent.  In fact, the 2017 drop so far is more like 50% from the monthly totals in November-December, 2016, with the NRA trying to claim that the February, 2017 sales were the ‘third-best’ February sales of all time. And the NRA also skimmed over the fact that since the FBI-NICS background check system went online in 1999, that checks for license applications and renewals last month exceeded background checks for gun transfers for the very first time.

There’s a reason why Smith & Wesson recently changed its corporate name and stock listing to something called American Outdoor Brands.  Never mind the fact that the company has never successfully sold anything except guns; back in 2005 they even tried to hondle bath towels, blankets, bed sheets, pots and pans. But as the Motley Fool politely noted, “The rugged outdoors business can help smooth out the peaks and valleys of the gun business.”

Peaks and valleys – I love it. How about peaks and ravines? Remember when you couldn’t find a Smith & Wesson AR-15 ‘modern sporting rifle’ for less than a grand?  You can buy them online now for $600 and change. Or how about the Model 637, the lightweight version of the little, snub-nose revolver which first rolled out when the factory was still located in downtown Springfield on Stockbridge Street? The company lists the MSRP at $469 but I can buy the gun right now for $359. When was the last time you could buy a new Honda for more than 20% under MSRP?  I’ll tell you when: never, as in not ever, okay?

The good news about the gun business is that, all the nonsense about the ‘armed citizen’ to the contrary, most of the customers are hobbyists and if a gun maker comes out with a new product there will always be some sales.  But designing and manufacturing a new product means investing profits from the sale of current products and right now those profits aren’t there. Sorry folks, but the NRA make-believe isn’t a substitute for hard cash.

 

 

Trump Won But The NRA’s Biggest Battle May Still Be Ahead.

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What A Surprise! Gun Sales Hit The Skids Under Trump.

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Want to make a million in the gun business? Start with two million.  It’s an old joke but it has a ring of truth to it because even though guns have been selling like hot cakes since you-know-who moved into the White House in 2009, now that he’s moved out, everyone’s predicting that the gun business will slow down.  And the problem with the gun business is that it’s always been boom-or-bust, driven primarily by the possibility that we won’t be able to get our hands on any more guns.

gun-sales        So when Trump pulled off the unthinkable on November 8th, given the fact that he had made gun-control (or I should say, less gun control) a central feature of his campaign, it was clear that the mad rush to stockpile guns during the Obama regime would come to an end. How much of an end?  The numbers so far are much worse than what people thought might occur.

Before I get into the bad news (or the good news, depending on your point of view,) I have to explain how to figure out how many guns are actually sold. Since more than 90% of the guns sold in the U.S. come from companies that are privately owned, we can’t get any kind of valid numbers from the gun makers themselves, but the FBI-NICS background check is extremely reliable for telling us how many new guns have been sold.

In that regard, a funny thing happened to new gun sales in January – they didn’t go down, they collapsed.  The drop in sales from December wasn’t in the nature of 20%, which is what the experts are saying will be the story for 2017; it was more like a drop of 50%, and I don’t ever recall something like that ever happening before. In that regard, Breitbart’s gun ‘expert,’ AWR Hawkins, got it all wrong when he said that background checks needed to be viewed with caution because since every purchase could represent multiple guns, 3 million checks could mean that 6 million new guns were purchased. Except that the monthly NICS report contains a separate category for multiple guns covered by the same call.

In December, 2016 the NICS call center logged 2,763,115 calls.  In January, 2017 total calls were 2,032,108.  Hold on you say, that’s only a decline of 26%, which happens to be, by the way, the biggest month-to-month drop since December-January, 2015-2016. But there’s only one little problem: of the slightly more than 2 million calls in January, more than one million were calls for license checks, pawn redemptions and private sales.  In fact, January 2017 marked the first time that calls for background checks on over-the-counter purchases were less than half the total calls handled by NICS. Gun sale checks were 976,341, which meant the month-to-month calls for background checks on gun sales dropped by nearly 55%.

Neither the NRA nor the NSSF has let out a peep about the January NICS numbers, as opposed to previous months when they couldn‘t wait to let everyone know that background checks for gun sales kept going up. If this trend continues, gun sales are to go back to where they were at the beginning of 2012, before Sandy Hook and before Obama got on his high horse about regulating guns.

No wonder Wayne-o went to CPAC and pledged that the NRA would become the first line of defense against violent, left-wing thugs. After all, if Trump gets his way with immigration, we won’t have all those undocumented, criminally-disposed ‘illegals’ top kick around any more. And unless Gun-nut Nation can come up with a new threat to hearth and home, it may not be long until the shrunken January gun numbers will be a pleasant memory compared to what gun sales might really become.

Wouldn’t it be funny if the NRA is secretly funding Obama’s ‘secret coup?’

Guess What? The FBI Is Now Reporting Background Checks on Private Sales!

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I’m not one to go around patting government bureaucracies on the back, but I have to admit that one such bureaucracy of which I have been less than positive in the past has made an important change in the way it conducts its regulatory activity, and it’s a change that’s positive in every respect.  I am referring to the new 4473 background check form which the ATF released in 2016 but it now required for every FFL-transaction beginning January 1st of the current year. And what this change amounts to is an additional data field on the form that describes the transaction as a sale, a pawn redemption or – and here’s the dooda – a transaction to ‘facilitate a private transfer.’

atf            What this means is that, for the first time, the FBI-NICS data, which is published monthly on a state-by-state basis, will be able to show how many private transactions are now going through the same background-check process that is required for all dealer sales.  According to the Law Center, there are 10 states (plus DC) that currently require background checks on all private sales.  There’s also an additional eight states that require background checks on handguns or transactions conducted at gun shows, so we still have a long way to go. But the year-end FBI-NICS report for 2016 should be looked at in detail, because it tells a different story about the whole regulatory environment than what Gun-nut Nation would like to believe.

Back in October, Fox trumpeted that the background check numbers indicated that 2016 would set another record for gun sales, a claim that was joyously validated by the Washington Examiner when year-end NICS totals were released. And while it’s true that background checks for gun sales did go up 11% year-over-year, calls to the FBI-NICS phone bank to validate or check license and permits jumped by one-third! Of the 27.4 million NICS calls that set the all-time record in 2016, almost half of the telephone traffic (including pawn redemptions) were calls that had nothing to do with gun sales at all.  Of course if you’re a gun manufacturer, being in an industry that sold more than 14 million guns isn’t chopped liver, but 14 million guns ain’t 27 million guns, which is what the intrepid reporters at Fox and other pro-gun outlets would like you to believe.

The year-end NICS number for private transactions was 26,641, of which 14,561 were handguns, 11,042 were long guns and 1,038 were ‘other’ guns which, in case you were wondering, normally means serialized AR receivers and other junk like that.  But while this is a tiny number when compared to background checks on primary sales, it’s interesting to note that dealers in only 8 states reported no private transactions at all. Which means that FBI-NICS checks on private transfers are taking place in many more states than the 18 states where private-sale background checks are required by law.  Remember when Hot Air Queen Laura Ingraham scoffed at the surveys which showed that a majority of gun owners favored private-sale NICS checks?

Obviously the states that require universal checks registered most of the private sales in 2016 – New York, for example, had almost 25% of the year-end total for all 50 states; tiny little Delaware added 3%, Massachusetts chipped in another 6%, and so on down the line. But let’s remember that until 2017 numbers start coming in for background checks, we really won’t know how many gun owners really use the NICS system since the new 4473 was optional until this current year.

On the other hand, it’s interesting to note that of the 26,000 private transactions captured by NICS in 2016, almost 54% involved the transfer of handguns, which is where the whole issue of unregulated gun transfers really lies.  Because when Grandpa’s old shotgun is sold at a tag sale for ten bucks, this transaction really won’t change gun violence numbers one bit. But 14,000 private handgun transfers that required NICS checks is a good thing.

 

Want To Make A Million In The Gun Business? Start With Two Million.

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Although it’s less than a month before the replacement of that notorious gun-grabbing President with a guy who really understands the need to carry a gun for self-defense, the real question is whether the next four years will be a milestone or a millstone for the gun industry, since gun sales have traditionally been a function of whether or not you can buy a gun. And if there’s a chance you won’t be able to buy a gun, you run out and grab as many as you can. But if there’s no gun ban on the horizon, oh well, need a new set of tires for the car.

trump5            The problem in trying to figure out whether the gun industry will continue strong under (ugh) Trump or begin to slow down is difficult to figure out because it’s next to impossible to get a real fix on exactly how many guns are actually sold.  Or to put it more exactly, how many new guns are sold.  Because remember, a NICS background check is conducted every time a gun goes across a dealer’s counter, and since most gun shops carry a healthy assortment of used guns, many NICS phone calls just mean that a gun already in the civilian arsenal is changing hands. Ditto for many of the guns which go from an auction website to a dealer’s shop, particularly for interstate sales.  Obviously, the civilian gun arsenal increased enormously under Obama – Smith & Wesson stock didn’t jump from $5 to $30 between 2009 and 2016 just because the company makes some nice-looking guns. On the other hand, that same stock has lost 30% in value since November 8th, which says something about the industry’s future prospects under a President named (ugh) Trump.

But if I had a nickel for every time a stock went up or down because market predictions turned out to be incorrect, I also could buy a new set of tires for my Subaru without selling one of my guns.  Remember when gasoline prices went over $2 a gallon back in 2005 and the experts were all predicting a $10 price by the end of the decade?  We’ll have some rough idea about the health of the gun market when Smith & Wesson releases its 10-Q for the quarter ending September, 2017.  But the number of new guns produced and sold each year is not necessarily an accurate measure of whether a pro-gun President like (ugh) Trump will help or hurt gun sales.

The real problem is trying to figure out the size of the potential market; i.e., how many people out there might be interested in buying a gun. Because when all is said and done, the success of any consumer product is based not so much on its replacement rate (consumers who already own the product buying a new one) but on the number of new consumers who decide that a particular product is something they just must have.

What apparently has happened under Obama is that the replacement rate for guns has soared – the same people who started out as gun owners in 2008 just kept buying more and more guns. These folks didn’t need to be educated on why Obama was a threat; as long-time gun owners they always knew that a gun ban might be in the works. And most gun owners had lived through the terrible Clinton gun and magazine bans enacted in 1994.

As for new consumers entering the gun market, I’m not so sure that the slow but steady decline in the percentage of American households with a legal gun will continue under (ugh) Trump, and I’m going to tell you why. Because what this election showed, if nothing else, is that a lot of people bought Trump’s message that government doesn’t work.  Which is exactly the long-time message used by the gun industry to sell self-defense guns. On the other hand, if Trump (ugh) makes government more efficient, do you really need to protect yourself with a gun?

              Wishing Everyone a Healthy and Happy 2017.

 

Has The Number Of Gun Dealers Declined? Not Lately.

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Our friends at the Violence Policy Center (VPC) have just released a new report which details a 77% decline in federal gun dealers since 1994, which they believe reduces the number of dealers who might be “a known source of weapons for criminal gun traffickers.”  Exactly how large a role FFL-dealers actually play in pushing guns into the ‘wrong hands’ has never been adequately analyzed or explained, but looking for any piece of silver lining when it comes to regulating guns in the Age of Trump isn’t a bad thing.

vpc             The only problem with this particular piece of silver lining, however, is that the data actually gives a somewhat different perspective on the whole issue of FFL-dealers than what the VPC would like us to believe. Because while it is true that the number of FFL licenses has declined by more than two-thirds over the past twenty years, the number has actually increased by more than ten percent in the last nine years.

And why has there been an increase in FFL dealers after the drop in license-holders after 1994?  Remember this guy named Obama and a doubling in gun sales beginning in 2008? Remember an even greater sales increase after the 2012 tragedy at Sandy Hook and an abortive attempt to widen NICS-FBI background checks to cover secondary sales?  Between 2007 and 2016 the number of gun dealers increased in 38 of the 50 states.  North Carolina dropped from 6,486 dealers in 1994 to 1,327 in 2007, but FFLs in the Tar Heel State are back up to 1,921, an increase of 45%!  In South Carolina the numbers went from 2,332 in 1994 down to 529 in 2007 and now back up to 886, not a bad jump in just nine years.

The real reason that FFLs dropped so steeply after 1994 (mentioned in the VPC report) was the cost of the license went up from $30 to $200, which meant that many of the pre-94 dealers were not really in business so a 700% increase for the license fee was just too steep. But it’s not as if the Treasury Department lost any money when all those guys buying guns for themselves at wholesale prices gave up the ghost. The license fees under the pre-94 regime would have generated around 7 million bucks.  When the fee went to $200 the revenue from the 56,000 current dealers amounted to 11 million and change.

The fact that there are roughly one-quarter the number of FFL-holders today as compared to 1994 says absolutely nothing about the relationship between the number of dealers who actually sell guns to consumers as opposed to selling guns to themselves or to a few friends.  Even with the ATF’s backslapping about their vaunted programs to keep dealers in line, probably no more than 5,000 dealers are actually bringing new inventory to the civilian market and thus might be contributing to the spread of crime guns.

Where do I get that number?  It’s simple – just go to the website of Smith & Wesson or Glock or one of the other gun manufacturers and do a search for their stocking dealers in any particular state.  Gun makers go out of their way to promote product sales by listing every dealer who stocks and sells their wares.  Glock lists 272 dealers in North Carolina and the ATF says there are 1,921 FFL-holders in the state.  Smith & Wesson has about 50 dealers in its home state of Massachusetts and there are 386 active FFLs in the Bay State.

If you want to write about regulating any industry you need to know how to figure out how to understand the industry itself.  And you’re not going to get a complete view by using information created outside the industry by regulators like the ATF. Remember, in the Age of Trump it doesn’t matter whether anything is based on facts or not. All the more reason why folks who don’t share his love of the gun industry need to know how that industry really works.

 

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