Archive for the ‘economy’ Category

2011 Doesn’t Look Much Better than 2010

October 18, 2010

The U.S. Economy Is In a Flatline Mode.
Consider the Situation When You Vote Next Month

Last January, I attended a dealer 20-Group meeting and offered my outlook for the year. In a nutshell, I told the dealers not to expect a flood of excited customers in the spring; it just wasn’t in the cards. And, in my view, they would be better off planning for a slow season rather than hoping for a heavy increase in floor traffic. I was roundly criticized by one successful dealer for being too negative.

Unfortunately, traffic did not pick up in the second and third quarters and this quarter doesn’t look too hot, either. Now, looking ahead, I don’t think there is much hope for a big improvement in 2011. I’m basing my initial forecast in part on what I’m hearing from a number of sources, and in part on an excellent analysis that appeared Oct. 12, 2010, in the  New York Times. The lengthy report carries the gloomy headline, “Across the U.S., Long Recovery Looks Like Recession.” I suppose I could stop right here; you get the point.

The bottom line is that it’s going to take years to recover from this recession, the downturn that’s been the worst for this country since the Great Depression. Consider the situation as you build your 2011 business plan and as you stand in the voting booth next month.

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Two More Pieces of Positive News

May 3, 2010

Signs of an Improving Job Picture

Two bits of news today suggest that the job picture may be improving, a situation that could lead to increased consumer spending on discretionary products this year, possibly even for powersports equipment.

A report in today’s Wall Street Journal indicates that corporations are spending more on raises and bonuses than they have in the recent past as a means to keep their key employees at home. “They are feeling more confident about how 2010 will shake out,” David Smith, an executive with Accenture, told the newspaper. The moves, he said, are an effort to ward off employee poaching by competitors.

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Consumers Starting To Spend Again

April 29, 2010

We’ve talked in this space recently about indications that consumers might be getting tired of their frugal ways and could be itching to spend some of that money they’ve been saving. There are more indications in the news that could be happening.

First quarter profits for several retail companies— from Polaris Industries to Target and Royal Caribbean Cruises— have been encouraging.

Even though unemployment still nearly 10% nationally and the housing market is mixed, at best, consumers seem ready to spend on discretionary items.

“They’ve saved some money, they’ve paid down debt, and at a certain point you just get bored eating frozen pizza and watching cable TV on Saturday night,” Barry Ritholtz, head of the financial research firm FusionIQ told the Associated Press.

Consumer spending has increased for the last five months and retail sales have climbed for the last four months, according to AP research.

But don’t get me wrong. I don’t think we’re out of the woods yet, not by a wide margin. Dealers are still going to have to work hard to build traffic and they’re going to have to work even harder to convert that traffic into sales. But there does seem to be more reason for optimism today than there was six months ago. JD

Contact me with news tips and story ideas
at 952/893-6876 or joe@dealernews.com

Consumers Loosening Purse Strings

March 30, 2010

Some Reasons for Optimism this Selling Season

Good news for retailers in today’s Wall Street Journal: personal spending in February rose 0.3% from the month before, the fifth consecutive month it has climbed. That’s pretty interesting for three reasons:

  1. February had plenty of really bad weather in many major markets across the East and South, enough to keep many shoppers at home;
  2. Personal income was flat from the previous month so consumers didn’t have any extra money to use for shopping, and
  3. Consumers have reduced the amount they are stuffing into savings accounts, perhaps giving them more money to use for discretionary spending.

Consumers were spending at an annual rate of 3.1% in 1Q, according to the WSJ, the strongest pace since 1Q of 2007. The report says consumers are spending money on big ticket items, such as furniture.

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Bank Lending Will Improve— Slowly

February 22, 2010

Says Chamber of Commerce Economist at Dealer Expo

INDIANAPOLIS — If you’re looking for working capital for your small business, don’t count on getting it from your local banker any time soon, says a leading economist. Martin Regalia, chief economist for the U.S. Chamber of Commerce, told a gathering of business executives at the Dealer Expo here it will take about six months for banks to return to “normal lending practices.”

Martin Regalia

Speaking at the annual meeting of the Motorcycle Industry Council (MIC), Regalia said that it will take time for banks to define the risks— financial and regulatory— before they feel comfortable lending again.

“The biggest factor in getting banks lending again is time,” said Regalia. “Banks are in it to make money like everybody else, and contrary to what the president says, you cannot run a free enterprise system without risk.

“Risk is what we all take. It’s what we all manage, and it’s why we make the money we do. Without risk, there is no return—nobody pays you for certainty. So, banks are in it to manage risk. As time goes on a little bit, they will get a better feel for that risk, and they will begin to lend, and they will probably, at some point down the road, overshoot again and under price and over lend to the risk. But that takes time.”

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U.S. Economic Outlook Turns MIC Breakfast Sour

February 22, 2010

Very Slow Growth Expected In Foreseeable Future

INDIANAPOLIS, In.  (Feb.22)—  Looking for the Good, the Bad, and the Ugly of the U.S. economy this year? Well, we heard all about it during the Motorcycle Industry Council’s annual meeting at the Dealer Expo here.

Martin Regalia

The U.S. Chamber of Commerce’s chief economist, Martin Regalia, plopped the unpleasant news right in the middle our breakfast coffee and donuts in a most unappealing fashion. Unfortunately, the bad and the ugly outweighed the good by a wide margin.

Regalia saved his heaviest punches for President Obama’s new budget. But more about that later.

Here’s Regalia’s outlook, in a nutshell:

The Good: We’re coming out of the recession, although very slowly.

The Bad: We’re not growing fast enough to replace all the jobs we lost, among other things

The Ugly: We’re staggering under so much federal spending that we may never get the budget (more…)