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Dry Cleaners: The New Economic Measuring Stick?

Out in La-La Land, when the going gets tough, the tough quit dry cleaning. I've created the CNBC Dry Cleaner Economic Index. After all, what's the first thing you stop spending money on when you need to cut back on expenses? And in Southern California, a lot of people are having to cut back.

First, there's the writers' strike, going into its seventh week. Michael Shader, who runs Milt & Edie's Dry Cleaner in Burbank, says not only have writers stopped coming in, but also some actors. During our interview, he realized, "As we're talking, I'm starting to think, 'Hmmmm, I haven't seen him, I haven't seen her.'" (On the upside, the strike may be good for doctors and chiropractors, as I hear writers are complaining of a new writer's cramp--sore wrists from holding picket signs.)

The situation is much more dire up in Thousand Oaks, where Mark Adler runs North Ranch Cleaners. He says business is off as much as 12 percent due to layoffs at Amgen, Countrywide, and all the realtors who've gone under. "The only thing I've got left in full force is police, fire, and military," says Adler, who's concerned that clientele might disappear as well, if governments cut back due to lower tax receipts.

BUT HERE'S THE KICKER
Business is dropping as costs are rising for things like plastic (Adler gets his petroleum-based plastic covers from Korea and says they're costing 4 percent more this year), and hangers. Yes, hangers! Turns out there is no longer any domestic hanger production! Most hangers now come from China, and Adler says the U.S. is slapping on a 13 percent tariff on Chinese hangers. Dry cleaning held hostage by a hanger trade war! WHO KNEW?

I'd say rising costs plus falling business put the "dry" in dry cleaner.

"I know business is down when competitors start walking by to see what we're doing, see how much clothes are on the rack and everything else," says Adler. I asked him if that is starting to happen. "Oh yeah."

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  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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