If you’re looking forward to the Fourth of July when you’re shooting bottle rockets and Roman candles, I have good news and bad news.
The bad news is that fireworks prices are going up this year along with everything else. The good news, though, is that at least you don’t have to worry about shortages – there should be plenty of rockets, fountains, and sparklers.
I am an economist who has been following the fireworks industry for many years. Despite the skyrocketing wholesale prices, I believe the latest data suggests that you can beat inflation and get a few fireworks deals – if you’re patient.
Record import of fireworks
The first fireworks were invented in China over 2000 years ago. Today, it is from there that most of the world’s fireworks are still produced.
Since 2010, China has accounted for 87% of global fireworks exports. Most of them are inexpensive mass-market items such as fireworks and Roman candles, which you can find at your local fireworks store.
In the US, ordinary people – unlike professional pyrotechnicians – usually set off the most fireworks around the Fourth of July period, so businesses import large quantities well in advance of the holiday to ensure large supplies.
The US imported 185 million pounds of fireworks, mostly from China, in the first four months of 2022, according to the latest available data. This is already 27% more than last year’s record pace. And that doesn’t even include data for May and June, the two months that typically account for the largest volume in a typical year.
The figures include about 5.5 million pounds of fireworks for professional displays, meaning that all but about 3% of these imports are for personal consumption. The £179 million earmarked for consumers is already the equivalent of more than half a pound of fireworks for every man, woman and child living in the US. For all of 2021, the US imported a record 1.25 pounds of fireworks per person.
The more expensive fireworks for the big public performances usually put on by cities come from countries such as the Netherlands, Germany, Spain, Poland and the United States.
American manufacturers, who produce about 6.7 million pounds of fireworks a year, are focusing on developing more complex rockets for large public displays and often help organize them.
Consumer demand may fall
But there is reason to believe that consumer demand may be lower than usual this year.
In 2020, most public events have been canceled to avoid creating large crowds that could spread the coronavirus. As a result, Americans set off many more fireworks in backyards and city streets than usual, often illegally.
Public screenings have begun to make a comeback in 2021, with more expected in 2022. This results in a sharp increase in imports of professional fireworks, although they still remain well below pre-pandemic levels.
But the return of large displays is likely to dampen demand from more casual users, as it’s hard to go to a professional show and set off a lot of small fireworks at the same time. And a severe drought across large swaths of the US should further dampen consumer demand as officials urge cities to limit fireworks use to avoid wildfires.
So prices must… rise?
The fundamentals of economics tell us that when supply is high and demand is low, prices should go down. Available data suggests otherwise, thanks to the fastest rate of inflation in more than 40 years.
Importers paid an average of $1.30 a pound for fireworks in the first four months of the year, up 15% from 2021, or nearly double the headline inflation rate.
Unfortunately, the CPI does not provide detailed data on the value people actually pay for retail fireworks. But there is evidence of the price manufacturers pay for explosives, fuels and explosive devices, including fireworks. The latest data for May 2022 shows that prices have increased by 11% compared to last year.
And there is reason to believe that the amount that retailers end up charging for fireworks will rise even more given the soaring cost of transporting goods, higher insurance premiums and rising labor costs.
Be patient and stay safe
It seems likely that retailers, besieged by pandemic-related supply chain issues with everything from coins and toilet paper to baby food and even Grape-Nuts cereal, were simply placing large orders for fireworks as early as possible.
But I think it’s likely that this will lead to a glut of supply, and fireworks dealers will be saddled with too many rockets for too little demand, and may have to end up lowering the price to lure inflation-weary consumers.
So if you’re planning on setting off fireworks for the Fourth of July celebration, there’s probably no need to hoard them the way many people stock up on toilet paper or baby food. In fact, you may be better off waiting and taking advantage of better deals closer to July 4th.
One word of caution: use common sense when lighting rockets and candles, especially if children are around. Every year, thousands of people in the US are injured by fireworks, and some even die. The number of injuries per capita soared during the pandemic after decades of decline.
It’s also wise to pay attention to how fireworks affect nearby pets and take some precautions to protect them.
Whether you’re lighting fireworks, watching them light up the night sky, or just hiding from the noise, I wish you all a happy Independence Day.