This is a good lesson for those who think the state should have more influence over the economy, and how good intentions can have dire consequences. Economies are based upon value, and the creation thereof. Money is a medium for exchanging the value of labor, it has no intrinsic value of its own. The value of money is nominally tied to the amount of value in the economy. From 2020 western governments flooded their economies with money in the form of pandemic relief. In America, more than 40% was added to the money supply. While the state can regulate the amount of money in the system, and can regulate the dollar cost of labor, it cannot regulate value. The most obvious effect of adding 40% to the money supply without a corresponding increase in value, is that the value of wages and savings must fall by 40%, meaning prices must go up by 40%. Other policies were also inflationary. Eviction moratoriums increased risk to landlords, who increased rents to offset that risk. An epidemic of retail theft led to higher prices as retailers had to increase them to offset their losses. The tariffs enacted by the current administration were also highly inflationary.

The loss in value in our currencies has made things much more expensive than they formerly were. This has pushed down consumption, making it harder for the economy to generate value, which puts negative pressure on wages, meaning that things cost more, but people aren't earning more. You can argue that the state should force businesses to pay higher wages. But, once again, though the state can regulate the price of an hour of labor, it cannot regulate value, period, and such increases would only make inflation worse. Think of money being like a bucket in which you carry the value of your wages and savings. Mandating higher wages is like giving people larger buckets, the only problem is that the value contained inside remains the same. Raising the hourly rate from $20 per hour to $25 a hour means that something which formerly cost $20 will increase in price to $25. That is why a minimum-wage earner in 2026 earning a $20-an-hour minimum wage is no better off than a minimum-wage earner in 1982 who was earning $3.35 an hour.

In regard to bikes, these are things which are purchased with "disposable" income, that is, money left over after other living expenses are paid. Inflation had greatly reduced peoples' disposable incomes, and those industries which depend on that part of income will suffer. Things will not get better until the value in the system increases relative to the money supply. Japan endured such a situation in the early 70's, when inflation hit more than 20%. The problem was solved by freezing the money supply, allowing value to catch up. But his required that the state limit spending (that is, not increase it), because, as with all countries, part of state spending is paid for with newly-created money. So long as the money supply isn't increased beyond the value extant in the system, wages and savings don't lose value.

This is why inflation has remained lower in Japan relative to other countries. I frequently visit America and Europe, and am always shocked when I see the prices of things. For example, a bottle of cola at a grocery store here in Tokyo costs 107 yen, at the current exchange rage, that is around 70 cents. A bottle of cola at an American store costs about $2.49, or about 375 yen. Every week I have a meal with my daughter at a Tokyo McDonald's. The price, with tax, for my meal, is 890 yen, or around $6. The same meal at an American McDonald's is $9.99, or about 1500 yen. Japan, remembering the hyperinflation of the early 70's, avoided as much as possible printing, borrowing, and spending during the pandemic, and ended up spending about 1% what America did on pandemic relief. Japan has experienced some inflation. But this has been caused by the increased cost of dollar-priced commodities like oil, gas, steel, etc. And higher inflation in America has resulted in higher interest rates, which has pushed up the value of the dollar relative to the yen.

America's inflation problem is being caused by a weak dollar. This weak dollar has caused further weakening of other currencies. America must get its fiscal house in order. Currently, American public debt has surpassed WW2 levels, which is insanity. The problem with this spending is that it creates a negative return on value. For every dollar the state spends, you get less than a dollar's worth of education, infrastructure, healthcare, etc. One would think that record spending and record debt should result in better schools, better healthcare, better infrastructure, better law enforcement, and a better military. I doubt anyone thinks that any of these things have improved. It seems that the more money is spent on such things, the worse they get. What that means is that these programs are creating a loss in value. And so long as this loss continues, wages cannot catch up with inflation. We don't necessarily have to cut such spending, but we at least need to stop increasing it until the economy catches up.

Whenever you make a choice, or you hear a politician make a campaign promise, keep in mind the nature of unintended consequences.

^^I might have missed the word “Trek” in this tome.^^

Nope. The cost, and therefore the selling price of an item, is not determined only by the labor cost.

You can put in the names Trek, Specialized, Gian, Brompton, Shimano, Campagnolo, and so on, wherever you like. The problems these companies are facing have a common cause. Some of their suffering has been self-inflicted, but much is not.

No. Labor is the foundation. As I said, money is simply the medium was use for transferring (or storing) the value of labor. The value (and price) of products are tied to the work required to mine, to grow, to harvest, or otherwise obtain the raw materials. Some require more labor than others, which means some materials (like titanium) are more expensive than others (like wood). These materials must then be manufactured into finished products. The labor required varies depending on the product, things which are more labor-intensive cost more to produce than things which less labor intensive. The development of the product is also an act of labor, then there is the labor of transporters, merchandisers, advertisers, accountants, lawyers, and so on. The price of a finished product (or service) depends almost entirely on the amount of labor required to bring it to market. And how much we are willing to, or can afford to pay depends on the amount and quality of the labor we perform to earn the money. The selling price of a product is higher than the cost, the difference being the value obtained by the retailer of that product to offset his own labor costs. Even the taxes levied on the incomes of makers, sellers, etc goes to pay for the labor of those who work for the state, and to those who provide goods and services to the state.

I always love on the launches on Winnebago here. Someone pulling up in a $80K truck pulling a $70K boat with $5K in electronics complaining about the $7 launch fee.

Best one was once in the channels a fancy boat next to us wasn't catching anything and asked what we were using. My buddy replied, $200 boat (his then 1958 Sea King). They left.

Most of it has been discussed but the big one I see is the three big companies are price gouging there customers.

if you combine that with Covid and the emergence and timing of companies like Elite, 9velo, Winsoace, wheeltop, ltwo… They have shown the consumer the massive markup the three major companies have. That with providing a compatible product at half or one third the major companies prices has slowed any recovery the big three may have seen post Covid.

Not just the big three. The boutique bike makers have absolutely lost their minds with their prices as well. Like Moots. They are a complete joke. Do they product a fantastic product? Yes. Is is on the level of cheaper builders like Sturdy? Not even close.

How is it "price gouging" if, as you claim, everyone is free to buy any number of better bikes for far less money?

You are correct. Not the right words selection. More like they all price match each other to keep prices high hoping no one moves in with good prices and shows the profit margins they have enjoyed. Now we know and some will avoid there products in future in favor of cheaper more innovative products.

I perfer the Arizona iced tea model not the one where they charge as much as the customer will pay. When a company does this I look for other companies with better ethics.

Those markets were impacted by the Great Recession and high gas prices -- not by the products' own prices.

Define "price gouging."

Now explain how the "big three" bike makers can be gouging everyone when -- by your own claim -- there are plenty of lower-priced alternatives.

You're essentially arguing that product costs, and therefore product prices, depends only on labor cost. This is a simplistic idea that doesn't hold water.

To be fair, there is an entire economic paradigm built upon this concept -- Marx's Labor Theory of Value. However, even Marx was unable to explain how the amounts of labor going into goods would explain their market prices. He tackled this (called the "Transformation Problem") in the three-volume Das Kapital, which -- in the edition on my bookshelf -- runs to over 2,000 pages.

I think there is a slowdown in the entire industry affecting all bicycle manufacturing. It’s a matter of supply and demand being out of whack. There was too much demand relative to supply during COVID, but now there is way less demand relative to supply. It’s not only fewer bicycles being sold, but far less parts, accessories, and also less demand for repairs and service. It’s seems to be affecting all bicycle related business and I expect a new wave of bicycle store closures.

Add increasing facility rent cost based on COVID pricing to the mix and that will force even more store closures.

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That argument comes up on musician's forums, too.

What it boils down to:

Expert marketing has made me crave a product, even though there are plenty of suitable and affordable alternatives.

I can't or don't want to pay what it costs to buy the product.

Neither of those facts can be my fault.

Therefore, the product's manufacturer is evil.

As for the Arizona pricing model: selling flavored water in cans and bottles has been staggeringly profitable since at least the 1800's. Far beyond the profitability that any bike manufacturer could hope to achieve. Good for Arizona for figuring out how to look like the good guys while raking it in.

Amusingly, by the way, sellers of bottled and canned water, flavored or unflavored, are held to lower quality control standards than municipalities are for the water that comes out of our taps. And bottled and canned water sellers are not required to report their test results to the public, unlike towns and cities.

You guys are so eager to talk about economics writ large. Ummm, you know, P&R could use some new blood (or in the case of a few of you, a return of old blood).

Just spreading a little sunshine.

Speaking of Winspace, I am probably going to pull the trigger on this bike which all the reviews state is half the price of high end name brands but has the same quality and characteristics.. Since I am on a fixed income, buying a Pinarello or Cervelo is out of the question, but this bike is less than half the price. It’s not cheap, but it also isn’t 5 figures. The big companies (TREK) cannot compete with this kind of pricing. It also comes with a warranty and support.

That, and Arizona ice tea is one of the most disgusting insipid things one can drink....

And then for publicly traded companies….

To some, “price gouging” means “I would but it costs more than I can/want to pay”.

In an economic system based on voluntary exchange, there’s not really any such thing as “price gouging.“ No one is forcing anyone to buy anything. (If you choose to buy something, it’s kind of hard to then turn around and argue that you’ve been “gouged.“)

There is such a thing as collusion and/or monopoly control of prices, both of which are measurable and occasionally provable in court. (Neither is likely occurring in the bicycle industry.) But as you imply, the term “gouging” has no operational meaning. This is why the term is often used by politicians and almost never used by economists.

No. It is that simple. Labor means work. We work to produce things, and we work to pay for them. How much something costs depends on how much work it takes to produce it, and how much we are paid depends on the amount of our labor. That varies depending on how much labor we performed to learn whatever skills necessary for our job, trade, or profession, and the demand for our particular line of work. Some things are too simple to easily comprehend.

What profit margins? To have a profit margin, you have to first earn a profit. Which of the "big three companies" has earned a profit? In retail there is always a huge markup, often around 400% over cost. But from that 400% comes the rent, the utilities, the wages, the maintenance, the insurance, and, lastly, the taxes paid on whatever is left over. In the end, your typical retail business has a profit margin of 1% to 3%.

Completely false.

Labor time is one factor in determining market value, but there are many other others. Countless examples disprove your claim. As I noted above, Karl Marx – and many other smart people – tried to prove your assertion and failed.

Then why does a neurosurgeon earn so much more money for his workday than, say, a welder?

Sorry, but your theories are about 250 years out of date.