the November 2009 Issue in PDF Format - Trade Show Executive

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trending & spending Sponsored by PrivilegedAccess.tv Darlene Gudea, president Trade Show Executive’s Trending & Spending Forecast Fig. I: TSE Forecast of Net Square Feet of Exhibit Space (14.0)% January (14.5)% 1st Quarter Fig. II: TSE Forecast of Number of Exhibiting Organizations Fig. IlI: TSE Forecast of Professional Attendance (12.2)% 2010 (13.6)% January (13.0)% 1st Quarter (12.8)% 2010 (15.6)% January (15.5)% 1st Quarter (16.2)% 2010 Fig. lV: TSE Annual Forecast of Revenue (20.0)% Frank Chow, chief economist Year Ending December 2010 How Trade Show Executive magazine’s Trending & Spending was compiled Trade Show Executive Magazine’s Trending & Spending Forecast aggregates information from numerous sources: government and business reports; interviews with industry experts and economists; and the TSE monthly poll of its 20-member Economic Forecasting Board. Unbiased, reliable data—whether positive or negative—is the foundation of solid business planning. The Recession is Over – Now What? By Darlene Gudea, president Oceanside, CA – This Thanksgiving, Americans can be grateful that the worst recession since the Great Depression has ended – at least for now. Most economists believe GDP grew 2.9% to 3.5% for the Third Quarter of this year and the Fourth Quarter will rise about 2.5%, ending the string of three negative quarters, said Frank Chow, Trade Show Executive’s chief economist. One benefit of the recession has been falling consumer prices. With consumers motivated by the deep discounts, retail sales for the Christmas season are expected to bring slightly more holiday cheer than last year. “I say ‘slightly’ because as we stick a collective fork into the turkey the unemployment rate will be heading towards 10%, causing many people to give pause about the over 15.1 million Americans who are without a job,” Chow said. Most economists now agree the recovery has started. Results from the October forecast survey of the National Association for Business Economists (NABE) show that more than 80% of its economists believe the recession is over, but they generally agree the recovery will be slower than usual. NABE’s Q3 forecast for GDP growth is 2.9% while economists surveyed by Bloomberg News estimate a 3.2% rise. How the Economy Picked Up Steam Chow said the recovery was driven by these six trends, and continuation of these trends will be necessary for this recovery to extend past the First Quarter of 2010: • Stable and declining inflation: The Consumer Price Index has fallen (1.5)% over the last 12 months. In September, consumer prices edged up a modest 0.2%. Meanwhile, September wholesale prices fell (0.6)% on a drop in energy costs. Outside food and energy, core inflation fell (0.1)%. For the past 12 months, core wholesale prices rose a modest 1.8%. • Record low interest rates: The Federal Reserve has kept its discount and Fed Funds rates at near 0% in an attempt to encourage lending and maintain liquidity in the financial sector. In addition, the U.S. Treasury is purchasing mortgage and other asset-backed securities and taken over Fannie Mae and Freddie Mac to maintain low mortgage rates. • Huge government stimulus programs: TARP, TALF, the ARRA economic stimulus and various bailouts have already been well documented earlier this year, but the Obama Administration and Congress are continuing to propose more programs: • Extend the $8,000 tax credit for first-time home buyers. The tax credit may get expanded to include more buyers. • Extend unemployment benefits. • Expand the Home Affordable Modification Program (HAMP), designed to lower monthly mortgage payments for those who can’t afford them. • Expand the Home Affordable Refinance Program (HARP) for homeowners current on their payments but whose mortgages are underwater and can’t refinance. • Boost the maximum size of three types of Small Business Administration (SBA) loans to help struggling companies get more credit. 12 November 2009 Trade Show Executive www.TradeShowExecutive.com
Sponsored by PrivilegedAccess.tv Trade Show Executive’s Trending & Spending Forecast Fig. V: Sector Performance Best Performing sectors • Hospitality • Transportation • Medical mixed Performance • Business Services • Communications • Entertainment sectors under Pressure • Apparel • Automotive • Construction • Government • Sporting Goods • Technology • Food • Manufacturing • Retail Fig. VI: Economic Indicators Consumer Confidence fell in October, dropping to (47.7) from a revised September figure of 53.1. However, confidence was up considerably over last year’s figure of 38.8. Gross Domestic Product advance estimates from the Bureau of Economic Analysis showed an increase of 3.5% for the Third Quarter of 2009, reflecting positive contributions from exports, Federal government spending and personal consumption expenditures, among others. Housing Starts for privately-owned homes rose 0.5% in September from August, marking a seasonally-adjusted gain of 590,000. Single family construction rose 3.9%. Industrial Production rose in September by 0.7%, after a revised gain of 1.2% in August. Core Inflation, excluding food and energy costs, fell in September by (0.1)%, reversing an increase in August. Interest Rates (short term) remained near 0% in October. The Federal Funds rate was sustained at a range between 0% and 0.25%. Job Losses continued in September, with a total loss of (263,000). The Index of Leading Economic Indicators increased 1.0% in September, following an adjusted 0.4% gain in August. It was the sixth consecutive month for growth. Manufacturing expanded for the third consecutive month in October, with the PMI reaching 55.7%. The rate of growth is the highest since April 2006, when the PMI stood at 56%. Retail Sales fell by (1.5)% in September from the previous month after increasing by 2.2% in August. Unemployment continued to increase again in September, reaching 9.8%, a 28-year high. Sources: U.S. Department of Labor, Bureau of Labor Statistics; The Conference Board; The Institute for Supply Management (ISM); U.S. Commerce Department • Develop plans to reduce costs for community banks to lend to small businesses. The initiative comes as experts now predict that as many as 1,000 small banks may fail before the economy fully recovers. • Purchase securities from Fannie Mae and Freddie Mac to support new mortgage lending by Housing Finance Agencies, which are state and local agencies assisting low and middle income families to purchase low interest loans or attain affordable rental housing. • Single family housing is stabilizing: Housing starts have been flat for four straight months after a big rebound earlier in the year from historic lows. Since the bottom in January, housing starts have risen 21%, chiefly due to construction of single family homes. Although multi-family units slumped (15)%, single family construction rose 3.9% in September and it accounts for 85% of the housing industry. After 14 straight quarters of declines, many economists expect that residential investment will finally add to GDP growth in the Third and Fourth Quarters of this year. • Strong corporate profits: Corporate profits reported for the Second and Third quarters have been stronger than expected. Though profits have been mainly due to steep costcutting, the Third Quarter has seen revenue growth in many companies, Chow pointed out. This has led to a big rebound in the stock market, regaining some of the consumer wealth lost in the recession. • Higher exports: The falling dollar has made U.S. goods and services cheaper, leading to a net increase in exports which helps U.S. GDP growth, said Chow. Happy Holidays? Given these trends, many different surveys and forecasts have pointed to an improved holiday season, but how the cautious shopper will act remains an open question, said Chow. ShopperTrak, a retail research firm that tracks customer traffic at more than 45,000 stores, estimates that total holiday sales will rise 1.6% from a year ago. The 2008 holiday season saw the biggest sales decline in several decades. Bill Martin, co-founder of ShopperTrak, believes the expected increase in sales will reflect pent-up consumer demand. However, the research firm also expects a (4.2)% decline in foot traffic on top of last year’s whopping (15)% drop, Chow noted. With the nation’s unemployment rate nearing 10%, the economy remains the biggest concern for most consumers. The National Retail Federation (NRF), usually bullish about holiday sales, predicts a (1)% decline in total sales to $437.6 billion for November and December combined. According to a NRF survey, consumers’ holiday budget is expected to decline (3.2)% to $682.74. Nearly 70% of shoppers plan to buy at discount stores, and big discounters such as Wal-Mart and Target will benefit. The percentage of shoppers planning to buy at department stores, clothing shops, electronic chains and even online all are on the decline. “While the economic climate has shown some improvement from last holiday season, retailers are not out of the woods yet,” said Phil Rist, executive vice president of strategic initiatives at BIGresearch, which helped conduct the survey. “With a variety of factors still up in the air, including uncertainty over job security, many Americans just aren’t buying into the talk of recovery.” How Bad is the Job Market? The U.S. unemployment rate hit a 28-year high of 9.8% in September, according to the Labor Department. But that number expands to 16.8% when you add those who have stopped looking for a job and those who are underemployed, said Chow. “When Continued on page 14 www.TradeShowExecutive.com Trade Show Executive November 2009 13
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