The Great Recession and the State of the Auction Market
Among other economic indicators one can look to in order to take the temperature of the economy is the art market. For years prior to the talk of government bailouts, collateralized debt obligations, and Cash for Clunkers, the art market continued to raise eyebrows with tales of art work being sold at record prices. Anyone remember in 2006 when Jackson Pollocks’s No. 5, 1948, was sold for about $140 million? Ah, the good old days.
Now that the Obama administration and the heads of the Federal Reserve are beginning to paint a more rosy picture of the overall economy, let’s take a look at the art auction markets to see whether things may be turning around there as well.
Daily Finance reports here, that, after shrinking for the past five quarters, the Art Price Global Index, increased 4.97 percent in the second quarter of 2009.
The article also reports that auction houses like Sotheby's (BID) and Christie's (CTG) experimented with “selling lower-quality as well as offering fewer lots and eschewing price guarantees.” Since then, Sotheby's CFO has said the market has bottomed out and ArtPrice is reporting increases in sale prices and confidence.
When the unemployment rate is particularly high, the price of art may seem to some to be a less than important economic indicator. Yet, it is, like many other indicators, telling. When times are rough for the general population, the market for art suffers. And now as the economy (hopefully) turns for the better, so do signs of life begin to appear (hopefully) in the sale of fine art. However, lest anyone get excited about a rebound in the art market, see the other blog entry entitled The Great Recession and Art Investment Funds.
