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Consumer Spending Decline Makes A Recession More Likely

“How are you feeling?”  That’s often the way we greet people these days.  As the Omicron variant becomes widespread, negatively impacting most Americans’ lives.  Add worries about inflation to the mix. Finally, some schools are going back to…



“How are you feeling?”  That’s often the way we greet people these days.  As the Omicron variant becomes widespread, negatively impacting most Americans’ lives.  Add worries about inflation to the mix. Finally, some schools are going back to online learning, forcing parents to work from home with kids at home. Consumers are stressed, anxious, and uncertain about the future. If the drop in consumer sentiment continues, retail sales will fall. 

Consumer spending is 70% of GDP.  Thus, if consumer spending continues to decline, a recession becomes more likely.  The Federal Reserve plan to speed up monetary tapering and start interest rate increases will add momentum to a decline in economic activity. Rising costs of credit cards, mortgages, and personal loans will trigger a drop in consumers applying for new loans.  As credit tightens, consumers will pull back on spending. Let’s look at trends in consumer sentiment, spending, and inflation to see why economic headwinds are building.

Consumer Sentiment Falls Along with Retail Sales

A significant drop in consumer sentiment reflects the consumer’s plight.  The University of Michigan January consumer sentiment indicator printed 68.8%. The drop is the second-largest drop in ten years. The survey found the number one consumer issue was surging inflation.  A third of consumers felt they were financially worse off than a year ago, near the same level as April 2020.

Sources: University of Michigan, Bloomberg – 1/15/22

Consumers’ unease with their financial condition was recently expressed in a substantial decline in retail sales for December of 1.9%.  Buyers before the Omicron variant started buying from pent-up demand for goods in particular.  That pent-up demand buying seems to be waning.

retail sales

Sources: Commerce Department, New York Times – 1/15/22

Twenty-five percent of respondents said their reduction in spending was due to inflation.

Also, retail sales fell fast due to buyer concerns about leaving home.   Consumer mobility indicated by Google mobility indicators shows a drop off in outside of the home trips.  Plus, the Langer Buying Climate index declined as consumers continued to see the present buying environment worsen due to both Omicron infection risk and inflation. A double whammy for retail sales. While spring may bring a decline in Omicron virus infections, inflation is likely to persist.

retail sales buying climate

The Langer Index posted its most significant one-week drop in 36 years!  The critical component causing the considerable drop was consumer concerns about this being a ‘good time to buy things,’ showing a 6.9% decline. The component drop was the largest since 1985. 

Will Inflation Persist Driving Consumer Sentiment Lower?

Yes. This is the short answer from a macro perspective. The Federal Reserve has increased the money supply significantly above the pre-pandemic trajectory as the following chart shows a surge in the M2 money supply.  The second chart shows a lag of 2 to 3 years in inflation after shifts in the money supply.  So, on a macro basis, inflation is likely to be a continuing issue.

inflation sentiment

Sources: St. Louis Federal Reserve, The Daily Shot – 1/12/22

money supply inflation

Sources: Labor Department, Haver Analytics, The Daily Shot – 1/7/22

Several components are likely to keep inflation high even as waning demand in other sectors may decrease inflation.  A significant persistent inflation sector is housing.

Housing Costs Fuel Inflation

Housing is the most expensive cost for most families.  An increase in shelter costs hits family budgets hard. As millions of workers were forced to work from home during the pandemic, the demand for housing outside major core cities soared.  Owner equivalent rent (OER) is how the Bureau of Labor Statistics computes home costs to compare to rent.  Note the surge in OER and rent for 2021 and the Nomura forecast for 2022.

nomura housing

Source: Apartment List, Bureau of Labor Statistics, Nomura, The Daily Shot – 1/14/22

Along with housing inflation, price increases are becoming embedded in the broad-based economy.

Inflation Becoming Embedded into the Economy

The headline Consumer Price Index (CPI) posted a 7.0% increase for December 2021. A 20 year high.  Consumers feel the price pinch in the cost of gas, food, new and used vehicles, and furniture.  The following heat map shows how inflation is increasing across multiple sectors of the economy.

consumer inflation

Sources: Bureau of Labor Statistics, The Daily Shot – 1/13/22

The components of most concern to consumers: housing, food, and energy, are excluded or minimized in key indicators that the Federal Reserve uses to measure inflation like the Core CPI or Trimmed CPI.  This lack of focus on what is essential to consumers and affecting their buying habits is a significant policy-making blind spot. As such the focus on lower inflation figures caused the Fed to underestimate inflation related to buying power. As a result, the Fed must slam on interest rate brakes to grab executive and consumer attention that they are serious about controlling inflation.

Consumer buying power is declining as well due to negative real wage growth.

Real Wage Growth is Negative

Consumers are rightly worried about their financial future.  Worker real wage growth is negative. Real wage growth accounting for inflation was – 1.5% for December. The following chart from BOC Research shows using Federal Reserve data that inflation is ‘eating into’ wages in the U.S.


Sources: BOC Research, Federal Reserve of Atlanta, The Daily Shot – 1/7/22

Consumers see high prices and look at their paychecks, concluding they are not keeping up with costs.  They are right.  Consumer perception of inflation limiting their buying power drives reluctance to spend. Buyer frustration with high prices is a critical factor in the December 24.6% drop in vehicle sales. Also, rent prices are beginning to decline in many major U.S. markets, as renters decide to stay in their present apartment. 

Will Inflation Go Back to Pre-Pandemic Levels?

Not likely.  A new trend is emerging globally, affecting inflation that may persist for many years – green inflation.  The ability of the energy sector to create new renewable sources of power while continuing to supply the needs of world energy users is tight.  Not enough investment in green technologies is happening, according to Isabel Schnabel, executive board member at the European Central Bank.  In a recent Bloomberg interview, she further stated that fossil fuel prices might stay elevated to make green investments possible.  Plus, higher fossil fuel prices will force corporations and consumers to shift to renewable sources quicker.

As fuel costs feed into the cost of transporting goods, inflation may stay elevated for some time.  Further, other transportation issues cause concern about inflation. Shipping unloading bottlenecks continue at West Coast ports, causing a container’s cost to rise incredibly from $1,400 in February 2020 from Shanghai to Los Angeles to $10,200 in December. As demand falls, the number of containers to be unloaded will fall, but it takes a long time to solve the bottleneck problem as trucking companies can’t hire enough drivers.

Fed Liquidity Tightening, Consumer Spending Decline Increases Chances of Recession

The latest Fed Funds futures report shows growing investor sentiment that rate increases could begin as soon as March of this year. The recent Federal Reserve FOMC meeting minutes spooked the markets when it became apparent that the Fed was turning more serious about persistent inflation.  Forecasters expect at least three rate increases this year, maybe four.  So, a liquidity crunch will start sooner and faster than investors had expected just two months ago.

The decline in consumer sentiment, we have noted in this post, will drive a drop in consumer spending.  The combination of liquidity tightening with a fall in consumer spending will create downward momentum in economic activity.  As a result, a decline in economic activity will result in a recession.

Mitigating the possibility of a recession is the surge in hiring and construction from the $1.8B infrastructure spending bill approved by Congress.  Another factor is the waning of Omicron in the spring, so mobility and retail sales move up. 

But the Fed is in a difficult position as the economy seems to be slowing due to inflation, the Omicron virus continuing to spread, and supply bottlenecks.   Mohamed El-Erian, Chief Economist at Allianz, offers this observation on the impact of inflation on consumers and their sense of financial insecurity in a January 12th tweet:

“Inflation isn’t just a number to be managed by the Fed that few Americans know well. It also influences economic, social, and political outcomes.  When its high, as it is today, it fuels financial insecurity among the most vulnerable, both immediately and over time.”

The post Consumer Spending Decline Makes A Recession More Likely appeared first on RIA.

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China’s Birth Rate Plummets 10% To Lowest On Record

China’s Birth Rate Plummets 10% To Lowest On Record

China’s birthrate fell 10% last year to its lowest level on record, a significant drop…



China's Birth Rate Plummets 10% To Lowest On Record

China's birthrate fell 10% last year to its lowest level on record, a significant drop in spite of extensive efforts by the CCP to encourage people to get busy.

Children play outside a cafe in Beijing, China. (AFP)

The country had just 9.56 million births in 2022, the lowest figure since they began keeping records in 1949, according to a report by the National Health Commission.

The high costs of child care and education, growing unemployment and job insecurity as well as gender discrimination have all helped to deter many young couples from having more than one child or even having children at all. -NBC News

China's population also fell for the first time in six decades, dropping to 1.41 billion people - a demographic shift that's caused officials to worry that the country will 'get old before it gets rich' - with a slowing economy and declining tax receipts amid increases in government debt due to soaring health and welfare costs.

According to the report, the demographic downturn is largely thanks to China's one-child policy imposed between 1980 and 2015. Nearly 40% of Chinese babies last year were the second child of a married couple, while 15% were from families with three or more children.

The sharp decline in births comes despite Beijing's efforts to increase child care and provide other financial incentives. In May, President Xi Jinping presided over a panel to study the topic.

Not just China

As we noted in June, Japan's birth rate has also plummeted to a record low for the seventh straight year, with the number of babies born falling below 800,000 this year, health ministry data showed on June 2.

The number of newborns in Japan fell to 770,747 this year, down 40,875 from the previous year and the lowest since the country began record-keeping in 1899, Kyodo News reported, citing health ministry data.

Japan’s fertility rate—the average number of children born to a woman in her lifetime—fell from 1.30 in 2021 to 1.26 last year, equivalent to the previous low recorded in 2005. The number is far below the 2.07 rate necessary to sustain a stable population.

The decline in Japan’s birth rate is attributed to people delaying parenthood due to the economic impact brought on by the COVID-19 pandemic, as well as the prevailing trend among couples to delay marriage, according to the report.

The US birthrate has also been in decline, falling slightly in 2022 compared to 2021, with roughly 3.7 million babies born nationwide. It still hasn't recovered to pre-pandemic levels according to the CDC.

And as Mike Shedlock noted two years ago.

More via Mish Talk, worth a review:

The Pandemic Caused a Baby Bust, Not a Boom

Scientific American reports The Pandemic Caused a Baby Bust, Not a Boom

When the COVID pandemic led to widespread economic shutdowns and stay-at-home orders in the spring of 2020, many media outlets and pundits speculated this might lead to a baby boom. But it appears the opposite has happened: birth rates declined in many high-income countries amid the crisis, a new study shows.

Arnstein Aassve, a professor of social and political sciences at Bocconi University in Italy, and his colleagues looked at birth rates in 22 high-income countries, including the U.S., from 2016 through the beginning of 2021. They found that seven of these countries had statistically significant declines in birth rates in the final months of 2020 and first months of 2021, compared with the same period in previous years. Hungary, Italy, Spain and Portugal had some of the largest drops: reductions of 8.5, 9.1, 8.4 and 6.6 percent, respectively. The U.S. saw a decline of 3.8 percent, but this was not statistically significant—perhaps because the pandemic’s effects were more spread out in the country and because the study only had U.S. data through December 2020, Aassve says. The findings were published on Monday in the Proceedings of the National Academy of Sciences USA.

Birth rates fluctuate seasonally within a year, and many of the countries in the study had experienced falling rates for years before the pandemic. But the declines that began nine months after the World Health Organization declared a public health emergency on January 30, 2020, were even more stark. “We are very confident that the effect for those countries is real,” Aassve says. “Even though they might have had a bit of a mild downward trend [before], we’re pretty sure about the fact that there was an impact of the pandemic.”

Covid Accelerated the Existing Trend

Covid accelerated the already declining birth rates. 

Given the 16-year lag between births and the civilian noninstitutional population coupled with the aging of the workforce there will be fewer and fewer workers supporting retired workers on Social Security. 

Notice the relatively steep decline in the birth rate starting in 2008 and continuing through today. 

That impact will start showing up in 2024 and last a minimum of 12 years.

How long depends on whether the birth rate picks up after Covid. I highly doubt the birth rate will pick up.

Deflationary and Inflationary Impacts

  1. Inflationary: Shortage of workers increases wage pressures
  2. Deflationary: Fewer workers support an increasing number of retirees
  3. Deflationary: Older workers need more assistance, buy fewer things, travel less. 
  4. Deflationary: More government debt and deficits. Government spending has a negative impact on real GDP.

*  *  *

Time for another sexual revolution?

Tyler Durden Fri, 10/13/2023 - 22:40

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TDR’s Top 7 Cannabis Developments For The Week Of October 9

Welcome to TDR’s review of the Top 7 Cannabis Developments for the week of October 9. Aside from presenting a synopsis of news events, interviews and…



Welcome to TDR’s review of the Top 7 Cannabis Developments for the week of October 9. Aside from presenting a synopsis of news events, interviews and closing market prices for publicly-listed companies.

7. Trulieve Announces Filing of Amended Federal Tax Returns Claiming $143 Million Refund

Trulieve Cannabis announced the filing of amended federal tax returns with refund claims for several of the company’s business entities for the years 2019, 2020, and 2021. In total, the company is claiming a refund of $143 million from taxes paid which the company believes it does not owe, although there is no guarantee of receipt.

Trulieve believes its determination is supported by legal interpretations that challenge the company’s tax liability under Section 280E of the Internal Revenue Code.

6. The Cannabist Company Pays Down $25 Million of Debt

The Cannabist Company Holdings has delivered a notice of partial redemption to the holders of the company’s outstanding 13% senior secured notes due May 14, 2024. The Notice provides that the company will, on October 23, 2023, redeem US$25 million of the total US$38.2 million principal amount of the Notes currently outstanding.

On the Redemption Date, Holders of Notes will have a portion of their 13% Notes, in denominations of $1,000, redeemed effective as of the Redemption Date on a pro rata basis in accordance with the terms of the trust indenture between the company and Odyssey Trust Company dated May 14, 2020, as amended and supplemented.

5. Marijuana Consumers Who Caught COVID Had ‘Better Outcomes And Mortality’ Than Nonusers, Study Finds

Cannabis consumers who caught COVID-19 had significantly lower rates of intubation, respiratory failure and death than people who do not use marijuana, according a new study based on hospital data that was presented this week at the annual conference of The American College of Chest Physicians (CHEST) in Honolulu.

Authors analyzed records from 322,214 patients from the National Inpatient Sample, a government database that tracks hospital utilization and outcomes. Of those patients, 2,603—less than 1 percent—said they consumed cannabis.


Chart Of The Week—Select MSOs Net Cash Flows After Interest Expense, CAPEX, Taxes And Debt Maturities

Interview Of The Week: Jason Wild Speaks On The Eve Of TerrAscend’s Investor Day

TerrAscend (TSX: TSND) Chairman Jason Wild is here to share the latest developments in the industry, the recent news surrounding the house speaker in Washington, the upcoming ballot news in Florida and more.

Georgia To Become First State Selling Medical Marijuana In Pharmacies

Widely Held MSOs & LP Weekly Performance

CompanySymbolPrevious Week CloseEnd Of Week Close% Change On Week
AdvisorShares Pure Cannabis ETFMSOS7.087.04-0.56
Aurora CannabisACB0.56720.5039-11.16
Ayr WellnessAYRWF1.821.70-6.59
Canopy GrowthCGC0.70480.70-0.68
Cresco LabsCRLBF1.661.670.60
Curaleaf HoldingsCURLF4.224.06-3.79
Green Thumb IndustriesGTBIF10.129.75-3.65
High Tide Inc.HITI1.651.54-6.66
Marimed Inc.MRMD0.39040.382-2.15
TerrAscend Corp.TSNDF1.841.903.26
Tilray BrandsTLRY2.062.01-2.42
Trulieve CannabisTCNNF5.155.04-2.13
Verano HoldingsVRNOF4.084.315.63


4. States Made More Than $5.7 Billion In Marijuana Tax Revenue Over 18-Month Period, New Federal Census Bureau Report Shows

The U.S. Census Bureau has released its first report on state-level marijuana tax revenue data following what the agency calls “a complete canvass of all state agencies” going back to July 2021. In the 18-month period between then and the end of 2022, the data show, states collected more than $5.7 billion from licensed cannabis sales.

The launch of the report, which the agency plans to update on a quarterly basis going forward, signals that at least some parts of the federal government are now beginning to treat the cannabis industry as a legitimate sector of the economy. The Census Bureau first announced in January 2021 that it would begin collecting marijuana tax figures for its quarterly summary of state and local government tax revenue. It also said it wants states to submit cannabis revenue data as part of annual reports as well.

In the news…

4Front Ventures has agreed to issue 1,283,425 subordinate voting share purchase warrants pursuant to an amendment to a previously entered promissory note purchase agreement. Pursuant to the Agreement, the lender has agreed to extend the maturity date of its loan, which has a principal amount of US$2,000,000, with a payment of an extension fee of C$65,000, which is payable in Warrants.

Aleafia Health announced that Red White & Bloom Brands Inc. has been selected as the successful bidder pursuant to the court-approved sale and investment solicitation process in connection with the previously announced proceedings of Aleafia and certain of its subsidiaries under the companies’ Creditors Arrangement Act.

BioHarvest Sciences announced that VINIA, its flagship nutraceutical product derived from red grape cells, has received its Canadian product license from Health Canada’s Natural and Non-Prescription Health Products Directorate.

California Governor vetoes cannabis cafe and marijuana labeling bills…

Canopy Growth has received EU GMP certification from RP Tuebingen, Regional Health Inspectorate of Baden-Wuerttemberg for the company’s cannabis cultivation facility in Kincardine, Ontario.

Cardiol Therapeutics announced positive study results from one of its international collaborating research centers demonstrating that subcutaneously administered cannabidiol, the active pharmaceutical ingredient in Cardiol’s novel CRD-38 subcutaneous formulation prevented increases in key cardiac inflammatory and remodelling markers in a model of heart failure.

Charlotte’s Web Holdings announced the appointment of Angela McElwee to its Board of Directors.

CLS Holdings USA announced its financial results for the fiscal quarter ended August 31, 2023.

Colorado cannabis sales surpassed the $15 billion mark in August – a milestone since legal adult-use sales launched in the state in 2014.

Connecticut cannabis sales hit $25.2M in September 2023…

Cresco Labs announced the launch of its Good News brand in the Commonwealth of Pennsylvania.

Curaleaf Holdings will report its financial and operating results for the third quarter ended September 30, 2023 after market close on November 9, 2023.

Curaleaf Holdings has filed its application to list the Company’s subordinate voting shares on the Toronto Stock Exchange.

Eurofins CDMO Alphora Inc. announced that it has received its Health Canada Cannabis Drug License issued within the Cannabis Act and Cannabis Regulations for its Oakville, Ontario operations in September 2023. 

Goodness Growth Holdings and Grown Rogue International, Inc. have completed the issuance of warrants to purchase listed shares as previously announced on May 25, 2023.

Heritage Cannabis Holdings announced the procurement of an EU GMP certified extraction machine to be added to the existing fleet of extractors which will double the company’s hydrocarbon processing capacity.

iAnthus Capital Holdings announces that Robert Galvin will transition out of his role as Interim Chief Operating Officer of the Company, effective immediately. 

IM Cannabis, a medical cannabis company with operations in Israel and Germany, releases message from the CEO about the Israel-Hamas War and announces the company, through its wholly-owned subsidiaries, IMC Holdings Ltd. and Rosen High Way Ltd., has secured C$1,390,000 in short-term debt.

IM Cannabis announced that Uri Birenberg will join the company’s leadership team as Chief Financial Officer effective October 10, 2023. 

Lead GOP Senate cosponsor of a bipartisan marijuana banking bill says a planned floor vote is on pause until he can ensure the legislation will later pass the Republican-controlled House, according to a cannabis financing executive who spoke with the senator this week.

Legislative Review of the Cannabis Act: What We Heard Report

Letter to Attorney General Garland and DEA Administrator Milgram urging halt to rescheduling process.

MariMed, Inc announced “Small Batch Exclusives,” a unique, limited-time program that gives customers the opportunity to purchase legendary flower strains.

MariMed Inc. retail footprint has once again expanded, as the company officially unveiled an adult-use Thrive dispensary in Casey, Illinois. This marks the fifth dispensary in operation within the state of Illinois and the 12th dispensary in MariMed’s expanding portfolio across five states.

Organigram Holdings has obtained a receipt for a final short form base shelf prospectus filed with the securities commissions in each of the provinces and territories of Canada. A corresponding shelf registration statement on Form F-10 has been filed with the United States Securities and Exchange Commission (SEC File No. 333-274686) but is not yet effective.

RISE Dispensaries owned by Green Thumb Industries Inc. announced that RISE Dispensary Brandon, the Company’s 9th retail location in Florida, will open on October 14th.

SAFE Banking now with 84 co-sponsors…

SunStream Bancorp announced a receivership court order granting the sale of certain assets of Greenpeak Industries Inc. and certain affiliated entities d.b.a. Skymint to Skymint Acquisition Co., a newly formed designee entity of Tropics LP.  Tropics is a limited partnership fully owned by an affiliate of Sunstream, a joint venture sponsored by SNDL Inc.

Texas activists say they have secured enough signatures to put a local marijuana decriminalization initiative on the ballot in the city of Lubbock if lawmakers there do not enact the reform legislatively.

The Cannabist Company Holdings will report its financial results for the third quarter ended September 30, 2023 before U.S. financial markets open on Tuesday, November 14, 2023. 

The Cannabist Company to report third quarter 2023 results on November 14, 2023 before U.S. financial markets open.

Trulieve Cannabis announced the relocation of a medical cannabis dispensary in Melbourne, Florida.

Trulieve Cannabis has added $500,000 to a ballot initiative aimed at legalizing the recreational use of marijuana, bringing its total contributions to $39.55 million, according to a newly filed finance report.

Verano Holdings announced the opening of Zen Leaf Newington, the company’s second social equity joint venture location in Connecticut and fourth cannabis dispensary statewide, on October 13, following a ceremonial ribbon cutting at 9 a.m. local time.

Vext Science has completed the previously announced non-brokered private placement of $11.5 million through the issuance of 67,647,058 common shares at a price of $0.17 per Common Share, including the full exercise of a $1.5 million over-allotment option.

3. TerrAscend Corp. Raises Full Year 2023 Guidance Prior To Investor Day Presentations At The TSX

Tier-1 cannabis multistate operator TerrAscend Corp. has made a notable splash in advance of Investor Day presentations at the Toronto Stock Exchange. The company has elevated forward-looking forecasts for net revenue and Adjusted EBITDA from ongoing operations for the entirety of 2023, signaling that business operations are exceeding previously-stated expectations.

For its full fiscal 2023, TerrAscend now expects net revenue and Adjusted EBITDA to register a minimum of $317 million and $63 million, respectively, versus previous a previous forecast of $305 million and $58 million. This represents year-over-year growth of 28% in net revenue and 62% in Adjusted EBITDA from continuing operations—both well above Tier-1 industry averages.

Furthermore, TerrAscend anticipates that its gross margin will surpass the 50% mark, and generate positive free cash flow from ongoing operations during the latter half of the year.

2. Cannabis Adversary Steve Scalise Drops Out Of Speaker Race

The House GOP’s pick for speaker, Steve Scalise, announced Thursday he will no longer seek the gavel as he confronted a likely insurmountable vote shortage. While Scalise had won a majority of votes in an internal GOP ballot a day earlier, he faced an ever-growing list of Republicans who vowed to support only his opponent, Rep. Jim Jordan, on the floor. The Ohio Republican is now expected to make another run for the position.

Scalise announced his decision on Thursday evening, following a conference meeting in which it became clear that he had no path to winning the 217 votes needed to ascend to the speakership.

1. Jim Jordan Wins Nomination In GOP’s Chaotic House Speaker Battle

House Republicans voted Friday to nominate conservative firebrand Jim Jordan for speaker of the House — the latest twist in a chaotic battle for speakership. Jordan, the chairman of the Judiciary Committee, received 124 votes — still more than 90 votes shy of the 217 he will need to grab the gavel in a vote on the House floor, according to members and aides who were the room. That floor vote has not yet been scheduled.

Jordan had an opponent in the conference vote for speaker: Rep. Austin Scott, who filed to run for the top spot shortly before the vote went down. Scott received 81 votes in the candidate forum.

Jordan had earlier backed out of the speaker race, saying he would cast a vote for Rep. Steve Scalise after the majority leader earned the nomination is a similar closed-door session Wednesday. Scalise backed out Thursday night after he failed to secure the votes needed to become speaker.

The post TDR’s Top 7 Cannabis Developments For The Week Of October 9 appeared first on The Dales Report.

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Playgroups are struggling to survive – here’s why we need them

Playgroups are good for parents’ wellbeing – and are a place where they can take a first step into volunteering.

Playgroups can be a lifeline for new parents. Run by volunteers, they give young children a space to explore and interact with others, and parents a chance to have a cup of tea and a chat.

This was certainly the case for me. Having low moments following the birth of my children, as one in five women may do, these playgroups helped me make connections with other parents and carers. They led to new friends for my children and provided a safe space to go on difficult days.

I witnessed first-hand the value of these groups, and the integral role volunteers fill in communities. But, according to charity Early Years Scotland, community-based playgroups are “struggling to survive” due to a decrease in volunteers.

Now, I’m researching the value of playgroups for families and communities, understanding what role they play in the first years of parenthood, and how that can contribute to community wellbeing and resilience.

Building community

Playgroups have been a staple part of communities in the UK since the 1970s. They create a sense of belonging for the people who attend and help parents build their parenting skills as well as develop connections, which improve their mental wellbeing.

Playgroups are also a place where parents can take a first step into volunteering, learning skills that can allow them to go on to take further leadership roles in their wider community. And playgroups can have economic benefits, if volunteers gain knowledge and confidence that they can take into paid employment.

However, there has been an overall reduction in volunteering across the UK since the pandemic, despite the remarkable grassroots efforts witnessed during lockdowns.

Early Years Scotland has attributed the decrease in volunteers in part to an increase in working hours. Parents may have also been returning to work earlier after parental leave as a result of the cost of living crisis, leaving less time to get involved with playgroups.

During lockdown, inside group activities like playgroups were unavailable. But I saw volunteers innovating: moving outside and creating new spaces, such as the Scottish Buggy Club.

My own local playgroup moved to outdoor facilities at a local farm. Activity groups such as the charity group Fun First moved online for their classes.

Still, for many families, the pandemic was a very isolating experience. Research shows that parents of young children suffered – in particular women and lower-income parents.

Mothers with babies
Playgroups give parents a place to connect. Oksana Shufrych/Shutterstock

Now, the cost of living crisis is limiting opportunities for activities with children. As winter looms, more parents will be stuck inside with small children with nowhere to go. We know that single parents are particularly susceptible to social isolation.

We are at risk of losing community groups that create opportunities for their members to establish “thick networks”: collaborations between local people that create a welcoming and valuable local culture.

To help families, help volunteers

Recent policy initiatives from the Scottish and UK governments have focused on families. There is an effort in Scotland to focus on community-based responses to sustain community wellbeing.

But there have been complaints that resources are not being seen at a community level, where funding is decreasing and there is not enough support for volunteers.

In the short-term, solutions would include more resources to support volunteers – training, incentives and community funding, which will enhance their role and encourage volunteers to stay in their role for longer. But the decrease of volunteers is more fundamental that this.

Long-term strategies are needed if governments wish to rely on the services offered to local communities by the members of that community. These include encouraging businesses and industries to seriously consider the wealth of research that shows flexible working, job shares and four-day weeks are beneficial for the economy, productivity and wellbeing. With more time, more people could be able to help out in places like playgroups.

Finally, introducing a universal basic income, such as the participation income model – which requires that people contribute to their community in order to receive income – could help people to take on community and voluntary roles and instil a wider sense of wellbeing in the population.

Ruth Lightbody works for Glasgow Caledonian University. In 2023 she has been awarded funding from the British Academy/Leverhulme Small Research Grant to research playgroups and resilient and wellbeing communities.

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