Thursday, November 17, 2016

Price of .22 Ammunition to Drop

In the run up to the 2016 election, the price of .22 ammunition has been fluctuating up and down around 6 cents a cartridge for baseline bulk ammunition.  The reasons are clear.  Production of .22 ammunition is up by about two billion rounds a year, responding to over the top demand for the last four years.

Part of the demand is structural.  Many new gun owners and shooters have been created.  Many of the younger members were raised on first person shooter games like Doom, Golden Eye, Battlefield, and Call of Duty.

People in the industry have reported that the new generation of shooters is more likely to go through 500 rounds of .22 in a shooting session, instead of 50.  Moreover, decent .22 rifles and pistols have become relatively cheap.  A Marlin model 60 today can be had, brand new, for $150.   A Savage model 64 can be had for $116, and the Mossberg semi-auto for $109.

The Model 60 cost about $40 in 1960.  A constant dollar calculator shows that would be $322 in 2016.  So the price has dropped in half in constant dollars. Another way to look at this is the minimum wage in 1960 was a dollar an hour.  It would take a full week of 40 hours to buy the rifle.

Today, the minimum wage (federal) is $7.25.  It would take a person about half a week (21 hours) to buy a model 60 today.  That correlates pretty well with the constant dollar calculator.

There are a 100 million or more .22 rifles and pistols in the United States.  They are incredibly popular, and with very little care they last for many decades.

Some of the increased 2 billion rounds a year will go to feeding the increased structural demand.

But a considerable amount of the demand has been a bubble created by concern over gun control.  It is one of the few areas where President Barack Obama was stymied by the American people and Congress.  Hillary Clinton fed the fear with her campaign rhetoric and potential Supreme Court justices.

With the election of Donald Trump, that fear will be subsiding.  Many .22 owners have built up a stockpile of a few thousand rounds of ammunition.  That ammunition has not been shot, and it will be around for a while.

I expect the demand for .22 ammunition to drop when the reality of a Trump administration hits home.  The current protests and riots are not helping.  Nor are the conspiracy theories about a Trump assassination.

After President Trump is safely inaugurated, and starts to move his legislative agenda, demand will drop and prices will fall.

I expect bulk .22 ammunition to be available for 4 cents a round by October of 2017.

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