By Rich Duprey Published December 11, 2016 Markets Fool.com Opens a New Window.
Next Image source: Getty Images.
The uptick in violent crime last year doesn't really explain the huge surge in gun sales we've experienced. You can't pin it on any gun control efforts, either, because although there were several high-profile mass shootings in 2015, there was no serious legislation introduced to weaken gun ownership. Even President Barack Obama's executive orders kicking off 2016 were largely ineffectual. So, with crime rates remaining low and no one really trying to take away guns, why is everyone buying one?
Lions lying down with lambs
According to the FBI, there were nearly 1.2 million violent crimes committed last year, 3.4% more than in 2014. Despite the increase, violent crime remains historically low. The 2015 figures are 0.7% below those reported in 2011, but 16.5% lower than a decade ago.
The Bureau of Justice Statistics, which uses a slightly different definition of violent crime (it doesn't collect murder statistics, but does include simple assault), says violent crime has plummeted 77% since 1993 with just 18.6 victimizations per 1,000 persons age 12 or older, compared with 79.8 victimizations 23 years ago. It's clear we're living in a much safer world today than just a few years ago, let alone decades before:
Image source: Bureau of Justice Statistics, October 2016.
Yet at the same time, more Americans than ever own a gun. While the percentage of U.S. households with a gun in them has remained fairly constant since the 1990s at around 45%, the actual number of households has dramatically increased over time. For example, there were 99 million households in 1995 but over 124 million in 2015, meaning there would have been around 44 million households with guns in them 20 years ago, but 55 million households today.
Therefore, it's hard not to make the argument it's been the proliferation of guns that has made society safer, not more dangerous.
Fear hasn't subsided
But if last year's anomaly in violent crime is just that, an aberration, and we continue to see significant reductions in crime over time, what will that mean for gun sales in the future? When you look at the types of guns being sold today, they are undoubtedly products born of fear for personal safety. Concealed-carry weapons are the best-selling guns on the market, indicating that people remain concerned about the safety and welfare of themselves and their families.
Leading handgun manufacturer Smith & Wesson Holding (NASDAQ: SWHC) reported this month it shipped over 1.1 million firearms during the first six months of its fiscal year, 56% more than it did last year. Over the first nine months of its fiscal year, Sturm, Ruger (NYSE: RGR) reported shipping more than 1.5 million firearms, up 20% from the same period in 2015.
Image source: Pixabay.
That's, of course, borne out by FBI criminal background-check data; through November, the agency has already surpassed the record number of investigations it performed on gun buyers in all of last year. The law enforcement agency has performed record numbers of monthly background checks for 19 straight months and has conducted two and a half times as many investigations as it did a decade ago.
Perception is reality
So while crime may not be appreciably higher than it was, and is actually much lower than it's been in the past, there's likely a perception there's more crime today, or at least the risk of it. Whether it's media needing to fill a news cycle, or the advent of social media (which provides an immediacy to incidents that occur), or the actual occurrence of civil unrest and domestic terrorism, it seems probable individuals feel a greater need to protect themselves today than they did in the past.
That indicates that although analysts believe gun manufacturers will soon be entering a lull in demand -- even though the gunmakers themselves have said they see no letup in the near future -- the boom may just continue longer than expected. If perception is reality, then we are seemingly living in dangerous times, and have more need to arm ourselves than before.
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