Whether or not the U.S. is experiencing a recession is debatable depending on who you talk to. However, there is no denying that the mere possibility of a recession is negatively affecting industries along with its consumers—with many being related to adult entertainment.

Steve Orenstein, president and founder of Wicked, told Wired News that: "There was a line we used to use about this business being recession proof. When people talked about the economy, we'd say our business is fine. But look; now you'd have to be blind and deaf not to see that there are problems."

Some of those problems include the dwindling value of the American dollar and that the public has fewer of them to spend. Chartwell Advisor Carl Delfeld said in a 2007 Forbes report that a weak dollar translated into a cut in American consumers’ income. More importantly, the more the U.S. dollar’s value plummets, the more foreign products will cost. That cannot be good for fans of Japanese, adult film star Shoko Goto’s DVDs, unless she is giving them away as she gave away her panties in 2004.

In March, the Federal Reserve Bank of New York reported that the U.S. dollar had dropped 40 percent in value over the last six years. On August 25, 2008, one Euro was worth $1.48, while one U.S. dollar was worth only $.98 in Canadian dollars. The world’s exchange rates change every day because currencies are traded on an open market. Based on a March report by About.com, the following are the reasons for the declining value of the American dollar:

• Interest rates in the U.S. are declining faster than rates of other top, industrialized nations
• Investors are looking for foreign investments due to the threat of the recession
• Fewer countries are looking to trade with the U.S. in favor of European nations
• The world’s investors are reluctant to hold assets in American dollars until the U.S. dollar’s value become more stable
• Many investors believe that the large U.S. debt means the U.S. may let the dollar decline to decreases its debt load

Although unemployment rates were steady at 4.67 percent in 2006 and 2007, the U.S Bureau of Labor Statistics reported that its rates have soared to 5.15 percent—the highest point since 2005. An estimated 4,401 U.S citizens were stuck last year in part-time jobs out of people who were working. Furthermore, the lack of suitable income has some consumers thinking twice about driving to the video store to pick up the latest Cougar Club flick. 

Much to the chagrin of the adult industry, to the general public, buying X-rated DVDs at 40 bucks a pop has taken a backseat to car payments, housing bills and those monthly trips to Wal-Mart. Although watching pornography could be synonymous with male existence since 95 percent of males in the U.S. are active masturbators, eating comes before jacking the rod.

The Bureau reported that Americans spent $15,167 on housing and $5,931 on food in 2005. Although it reported that 24 percent of Americans did not indulge in any physical activities in 2002, many of those cases were the result of people choosing to spend their time working or looking for work. Besides, who could enjoy a “good-ol’ porno” with that grumpy landlord banging down the door?

Last year, USA Today reported that the adult entertainment industry suffered a 15 percent (30 percent including 2006) drop off in their annual DVD sales and rentals. Specifically, Vivid Entertainment Group’s annual revenue from its DVDs is down to 40 percent from an estimated 80 percent in 2004. There are a number of reasons for the latest decline in purchases of these spinning love discs.

Some have sourced the drop in DVD sales to the lack of a supply and demand since the industry releases over 15,000 new titles each year. The Motion Picture Association of America, on the other hand, reported that only 590 independent and major studio films are annually released. At that rate for the industry, combined with the present-day economy, consumers cannot get to stores quick enough to clear those adult store shelves.

Gerry Kaufhold, an analyst with market research firm InStat, told Wired News the price is going up for raw material used to make plastic discs and plastic jewel cases, which are oil-based products. The industry will not raise the prices for their DVDs or magazines yet but the soaring oil prices nevertheless impacts the consumer.

Kaufhold believes the high cost of gas is also a contributing factor for falling DVD sales. The Bureau reported that American car owners spent $8,344 on transportation in 2005—a number that has likely increased due to higher gas prices. On August 25, 2008, New York Gas Prices, an online gas station index, estimated that the average cost of regular gas was $3.90 in New York City and $3.69 nationwide. Some gas prices have soared to a whopping $4.34 per gallon—commuters have a CITGO gas station in Bronx to thank for that.

When a customer decides to rent a movie, they immediately commit his or herself to taking two trips to the store. Eventually, those quick runs to the local adult video store will take its toll on the gas tank and the wallet.

Past consumers have shown that they may be tired of reaching for the wallet, especially with the rise of user-generated sites.YouPorn.com and PornoTube.com have been capitalizing on the public’s high demand for free, adult content on the Internet. Furthermore, Alexa Internet, the Web information company, reported in November that YouPorn.com was the 35th most visited website.

Web surfers have been taking full advantage of these free buffets of pornography. In conjunction with the trends, the Pew Internet American Life Project reported this year that 73 percent of 18-29-year-old Web surfers watched online video links and only 7 percent of them actually paid for the videos. When thinking about buffets, how could one not dig in? There are loads of free porn everywhere, so why would Web surfers pass up on the vast opportunities?

Many Internet users have used peer-to-peer file sharing (p2p) to pass along the goods. The PIALP reported that 67 percent of Internet users sent video links to other users, while 75 percent received video files. As a result, Various, Inc, the parent company of the adult networking site Adult FriendFinder, has fallen prey to the deceasing number in sales. In December, Penthouse Media Group, Inc. purchased Various, Inc. for $500 million in cash and securities. Although Penthouse played the hero in saving Various, Inc, it is no stranger to financial problems, considering in 2004 it filed for bankruptcy. Fans of Jessica Jaymes, August 2008 Penthouse Pet of the Month, now have nothing to worry about considering Penthouse is “the largest adult entertainment company in the world," according to a 2007 press release from the company.

Although arguments against the existence of the U.S. recession have surfaced, there is no doubt that the economy’s latest trends negatively impact the adult industry and its consumers. The nation’s increasing gas prices and unemployment rates are only a few of the effects that the American people have to experience. In the bigger picture, both sides fall victim to a struggling economy.