Friday, August 14, 2009
Meet your Daddy's Normal
(Porn, beer, cigarettes, state lotteries, are all being traded down and Wal-Mart and Kohl's are calling for a new reality. Anecdotally Google news archives shows 'green shoots' hits decreasing while 'new normal' hits increasing.
I suppose one can be forgiving given the context of us all living through a quarter century of rabid bullishtness, towards the prognostications that we'll be flashin' the V sign in the second half:
“Whenever we have plunged off a cliff and fallen into a deep hole in the past, for a while the economy has a tendency to bounce back very quickly,” said James Glassman, a senior economist at JPMorgan in New York. “The thing I object to most about the New Normal idea is that we are stuck and have to accept higher unemployment --if you look at the Fed, they are doing everything they can to fight it,” said Glassman, who formerly worked as a Fed economist in Washington.
Housing and automobile sales are at “very depressed levels” and are likely to contribute to growth even if they don’t reach prior peaks, said Stephan Stanley, chief economist at RBS Securities in Greenwich, Connecticut, who used to work at the Richmond Fed.
“Consumers are holding off on practically all of their discretionary purchases,” said Stanley, who sees the expansion picking up from 2.9 percent next year to 4.4 percent in 2011 and “about” 3.5 percent in 2012. “There is a lot of pent-up demand.”
Enquiring minds would like to know what the Masters of Retail think about this 'pent-up demand' concept: -AM)
17 hours ago
By ANNE D'INNOCENZIO
AP Retail Writer
Cutting their inventory helped both Wal-Mart Stores Inc. and Kohl's Inc. earn more in the second quarter than Wall Street expected, but neither retailer sees consumer spending rebounding in the crucial coming months.
They said as they reported their earnings Thursday that they're preparing for American consumers' newly adopted frugality to be the new reality _ a reality that could hurt them less than many retailers but may not be comfortable for any prolonged period.
Wal-Mart saw an unexpected drop in same-store sales at its U.S. stores for the quarter. Same-store sales is a key industry metric comparing sales with the same period a year earlier at stores open more than a year.
"Our customers are more disciplined in their spending," Mike Duke, Wal-Mart's president and chief executive, told investors during a prerecorded call Thursday. "There is a new normal now where people are saving more, consuming less and being more frugal and thoughtful in their purchases."
Wal-Mart, the world's largest retailer, noted that its financially strained shoppers keep buying less-expensive store products and smaller sizes. Customers also are paying for more of their purchases in cash or with debit cards than with credit cards, said Tom Schoewe, Wal-Mart's CFO.
Kevin Mansell, president and Chief Executive of Kohl's, told The Associated Press that retailers should lower their expectations for holiday shopping.
"Last holiday was horrible, but our attitude is that last holiday is the new reality," said Mansell. If things go better this year, Kohl's can quickly adjust to increasing demand, he added.