Obama May Inadvertently Boost Gun Sales

US News

When President Barack Obama spoke to shell-shocked residents of Newtown, Conn., his words were meant to comfort.

"We can't tolerate this anymore," he said two days after a gunman murdered 20 children and six adults at Sandy Hook Elementary School. "These tragedies must end. And to end them, we must change."

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But the first change that could come from stepped-up efforts to prevent mass shooting is one the president doesn't intend: A surge in gun sales, and in profits for firearms manufacturers.

One irony of the gun-control movement is that gun sales usually rise whenever there's talk of new efforts to limit them. In fact, the firearms industry has enjoyed some of its best years ever since 2008, as if the grueling recession and weak recovery didn't even happen. The industry's economic impact rose from $6.8 billion in 2008 to $13.6 billion in 2011, according to the National Shooting Sports Foundation, a trade group. That's a 100 percent increase over a time when overall economic output grew by only 11 percent. The gun business employs nearly 100,000 people, up from 76,000 in 2008. "Our industry is proud to be one of the bright spots in this economy," the NSSF proclaims in promotional literature.

Gun sales haven't soared because of a burst of interest in hunting and shooting, however. They've gone up mainly because Obama took office in 2008 as a much stronger advocate of gun-control measures than his predecessor, George W. Bush. Lobbying groups such as the National Rifle Association warned Obama might curtail the rights of gun owners, tacitly suggesting that gun enthusiasts ought to stock up while they had the chance. As sales exploded following Obama's inauguration, some industry officials joked that Obama was "the best gun salesman of all time."

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The irony gets deeper, because sales boomed even though Obama has done virtually nothing to enhance gun-control laws during his first term. The stock price for Smith & Wesson is up 277 percent since the beginning of 2009. Sturm, Ruger & Co. is up more than 600 percent. The Freedom Group, which owns brands such as Bushmaster and Remington, is privately owned, but sales are up 23 percent in the most recent year from 2008 levels.

Investors who own shares in gun companies have been selling in the aftermath of the Newtown shootings, perhaps out of concern that the horrifying murders will finally generate enough outrage to reverse the loosening of gun laws that has occurred duringthe last decade. Smith & Wesson shares are down about 10 percent from their levels right before the shooting. Ruger shares are down about 5 percent.

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But that could be more of a buying opportunity for gutsy traders than a sign of trouble for gun makers. Obama said virtually nothing about gun control during his 2012 re-election campaign, and even now he's being cagey about whether he wants to see new restrictions on sales--which would stir up a huge fight with the NRA and the gun lobby--or attempt other types of reforms that might generate less political combat, such as better efforts to identify pathological people and keep guns out of their hands.

Meanwhile, some Democrats in Congress are promising to introduce a new ban on assault weapons and other gun-control measures in 2013. But other recent massacres, such as those in Aurora, Colorado and Tucson, Arizona generated no change whatsoever in gun laws--despite similar determination at the time to find new ways to prevent mass violence. Gun manufacturers, for better or worse, look like a strong buy.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.



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