The Economy Has Turned the Corner, Mostly
By Al McClain
According to Ken Kremar,
Sara Johnson, and Laura Hodges on an IHS Global Insight webinar yesterday,
the U.S. economy has turned the corner and prospects for the mid-term look
pretty good, albeit with a number of caveats. The presenters said they see
a moderate U.S. recovery, with consumers cautiously increasing spending as
incomes rise, although they look for a bumpy housing market recovery and lingering
IHS Global Insight sees competing forces affecting consumer finances, with
income growth, low inflation, low interest rates and a stock market rally on
the positive side battling with high unemployment, reduced asset values, tight
credit, and high debt burdens on the negative side. Their forecast shows consumer
consumption advancing in the two to three percent annual range through 2012,
which, while a nice increase vs. 2008 and 2009, is still not what we were used
to seeing before that. At the same time, the savings rate should continue to
climb all the way through 2020, as households struggle to rebuild their net
Motor vehicles, consumer electronics, and healthcare are seen leading consumer
spending growth with the expansion gaining momentum as employment slowly recovers.
But consumers will continue to look for value and spend cautiously as the
recovery in real household net worth takes until 2015.
For retail (excluding auto), IHS Global Insight sees growth in the four to
five percent range from 2010 through 2015. Channels where the highest growth
is expected include online, warehouse clubs, superstores, consumer electronics/appliance
stores, food and dollar stores. Other channels that will start to do well again,
although not until 2011, include building materials and hardware, furniture
and restaurants. Department stores, apparel and sporting goods retailers will
show modest to moderate growth as well.
Discussion Questions: Do you believe that the recession is over and is
retail now in the midst of a recovery? Which channel will do best as
consumers start to spend again? How should retailers align themselves to
a slow recovery?
[Editor’s Note] In related retail industry news:
- Retail sales in March were up 1.6 percent, the biggest jump in four months,
according to the Commerce Department. Economists surveyed by MarketWatch
had forecast an increase of 1.3 percent.
- Gartner recently announced that worldwide shipments of personal computers
grew more than 27 percent in the first quarter.
- Greater numbers of consumers are going out to eat and fewer are looking
for deals to motivate them to visit restaurants, according to new research
from The NPD Group.
- Gartner Says Worldwide PC Shipments Grew 27 Percent in First Quarter
of 2010 – Gartner
sales rise 1.6% in March to $363.5 billion – MarketWatch
- Report: Consumers ready to dine out again – Nation’s Restaurant