Metrics of zeal or woe

tornado.jpg August jitters yield to back-to-school confidence—at least for now. After a rash of premature obituaries, the art market is humming briskly again and news of epic sales fills the air. Even Damien Hirst’s diamond skull has found buyers (including, so it is rumored, the artist). Its fate as the shimmering emblem of early 21st-century excess is now sealed.The question now is whether the art market is headed even deeper into record-breaking territory as the last refuge of investors and speculators, á la 1989, or whether it is already on a sliding path toward a landing—soft, hard, or otherwise? It is a delicious moment, pregnant with wildly opposing possibilities.

Reading the posts of the last few weeks, one longs for clearer metrics. Are there more reliable early indicators of yet another exuberant season of sales? Or conversely, are some “canary-in-the-mineshaft” indices registering advance tremors of a downturn?

Our debate on guarantees offered few clues. Reluctance to offer guarantees would parallel the lending caution that engulfed the financial markets in late summer, but our panel found no proof of such reluctance (auction guarantees this season are, in fact, expected to run into the billions). Daily reports of new gallery openings and museum ventures similarly belie prognostications of impending doom.

The problem is that some indicators of change can be interpreted as harbingers of squarely opposing trends. What exact conclusion would be drawn from evidence that dealers are getting more calls about placing works quietly, or taking pictures back on consignment? If a spate of exceptionally high-quality pictures were to come to market, would that be seen as a sign that sellers are trying to slip through a closing window of opportunity? Or would it be seen as evidence of the health of a market that is coaxing even the most beloved masterpieces off people’s walls? What is the exact interpretation of trimmed museum acquisition budgets? What can we read into shorter or longer waiting lists? Are dipping or spiking art school applications advance indicators of growth or decline?

As we begin a season of many likely surprises, can this panel suggest clear signs of what’s ahead?

2 thoughts on “Metrics of zeal or woe”

  1. By way of not really answering any of Andras’ questions (which certainly merit answers; I’m just not feeling qualified at the moment to offer them), I’m curious as to whether all of the ink/talk about the inevitable demise of the art market is not in fact the best metric at one’s disposal. Call it an ‘art consumer confidence’ index.

    I believe there’s one such research/analysis service–arttactic.com–which does conduct this sort of ‘consumer’ survey. Now, whether that survey is comprehensive or engineered enough to serve as a real barometer I don’t know. The best pollsters in the business know that you can’t ask the obvious questions, and I don’t know if the folks at arttactic understand this or not. I’m certainly not willing to pay the exorbitant subscription fees to find out.

    But as for all of the talk about market corrections, a chronologically oriented keyword search in daily periodicals and online, one which takes into account relative rates of change, may turn up interesting results, especially if compared to earlier “bubble” periods–e.g. that of housing and dot-com. If perception is paramount, then our collective anxieties about too high prices and too rich people and (apparently) too easy profits, all of which make it into print (both real and digital) may offer just the kinds of predictive tools we need.

    Failing that, perhaps someone should phone up Steven Levitt (of ‘Freakonomics’ fame) or James Surowiecki (of ‘Wisdom of Crowds’ fame) to take a stab at the issue.

  2. Perhaps we can restate “zeal and woe” as “greed and fear”, which are the usual motivating engines for investors in financial markets. The recent extreme volatility in the Dow, up or down two and three hundred points in a day, is admittedly a bit unnerving, although it can readily be viewed as a necessary correction. In other words, as part of the usual greed and fear operating in a bull market, and not a total unraveling of the economy, overburdened with bad credit and a housing standstill, spiraling inexorably towards the big R: recession. Despite recent volatility, the averages are still well up for the year. The Dow, in particular, crossed 13000 in early May and barely took a breath, climbing to 14000 by early July. So the recent shakedown, while dramatic, is certainly countered by strong gains earlier on.

    As I write this, the Dow is up over a hundred points in the expectation that Federal Reserve Chairman Ben Bernanke will indicate an interest rate cut. Admittedly, if faced with an announcement of unfavorable news or another depressing jobs report tomorrow, and a corresponding two hundred point drop, I might be a bit less Panglossian. The market is very emotional, rewriting its trading themes on a daily basis.

    That said, the art market has not yet shown much of the correction manifested in financial markets over the last two months. Coming off the Grand Tour and with the start of a new fall season, there seems to be guarded optimism and steady prices. If there is a correction, let’s hope it’s not in the emerging artist sector, the $15 – 20K painting – which would hurt the rank and file of smaller dealers and younger artists – but rather in the high end of speculation, of record prices paid for certain contemporary masters at auction. Because this is the hyper inflated arena where we could generally use some pruning, and where the protagonists are certainly better insulated to take the shock.

    It is probably this high end of the market that has alienated certain commentators and led them to gleefully predict and eagerly await a turnaround in the art market for years, well before the corrections and the more widespread fears of the last two months. Perhaps there is a certain puritanical state of mind at large in the art world, culturally conservative, hankering for the artist-in-a-garret, that is readily shocked by lavish overconsumption, that tends towards pessimism, and that cautions that “things just can’t continue in this manner”. In this world view, there must be a comeuppance. Just as it is folly to predict eternally rising prices and upward market mobility, it is also unreasonable to embrace a fashionable, retributive pessimism, just for the sake of a pose.

    So there you have it András. Some general observations and platitudes. Perhaps not the “metrics” you truly desired. And certainly not a crystal ball. Then again, if I did possess greater powers of divination, I probably would not have the time to comment on this blog. I’d be too busy spending my money.

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