Section I: United States (continued) - Trade Show Executive

TRENDING & SPENDING
A Month of Wild Market Gyrations
BY DARLENE GUDEA, president
Darlene Gudea,
PRESIDENT
Frank Chow,
CHIEF ECONOMIST
Trade Show Executive’s
Trending & Spending Forecast
Fig. I: TSE Forecast of Net
Square Feet of Exhibit Space
3.5% NOVEMBER
3.5%
4th Quarter
3.2%
2011
Fig. II: TSE Forecast of Number
of Exhibiting Organizations
2.6% NOVEMBER
1.8%
4th Quarter
3.2%
2011
Fig. III: TSE Forecast of
Professional Attendance
1.8% NOVEMBER
2.4%
4th Quarter
3.2%
2011
Fig. IV: TSE Annual Forecast
of Revenue
5.6%
Year Ending December 2011
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.
Oceanside, CA - If this past month is any
indication of future events, get ready for
one colossal roller coaster ride, warns
Frank Chow, chief economist for Trade
Show Executive Media Group. While
the Congress and Administration were
locked in a nerve-wracking battle on how
to handle the government’s debt ceiling
impasse, the Dow Jones plunged over
500 points one day, and then shot up 400
points the next day, and plunged another
600 points the following day. Standard
& Poor’s downgraded the country’s
AAA credit rating anyway — the first
occurrence in our nation’s history. Since
then, it’s not uncommon for the stock
market to jump up and down by 2% or
more in one day.
Media pundits are blaming the debt
ceiling deal for the wild market gyrations,
citing the public’s displeasure with
government’s inability to significantly
reduce the country’s rising debt. The deal
reached by both political parties called
for an initial $917 billion in spending cuts
over 10 years and then another $1.5 trillion
of deficit reduction to be determined
by a congressional “super” committee
in November. However, this amounts to
hardly a dent in the current $14 trillion
of debt, which is estimated to reach as
high as $25 trillion in 10 years, said Chow.
Analysis shows the agreement will not
actually cut the debt, but only slow down
the increase over the 10 years.
Meanwhile, the debt contagion in
Europe has spread from Greece and
Ireland to Italy, Spain and Portugal, and
now the health of France’s banks are
being questioned. Markets worldwide
plummeted as investors question whether
the U.S. and Europe will be able to solve
their growing debt problem. Then we
learned that Germany’s GDP barely grew
0.1% in the Second Quarter. Germany,
Europe’s largest economy, has powered
much of Europe’s growth, Chow noted.
Likewise, growth in the 17 nation Euroregion
limped along at 0.2% in Q2.
Yet, despite all the alarming news,
sprouts of recovery are still evident:
• U.S. retail sales in July posted the biggest
gain since March, tempering fears
that the world's largest economy may be
slipping back into recession, since consumer
spending accounts for two thirds
of U.S. economic activity.
• Industrial production grew 0.9% in
July – the fastest this year, greatly surpassing
the 0.5% analysts expected. Growth
increased for all major market groups,
especially automotive products.
• Industrial capacity utilization grew
from 76.7% to 77.5% in July.
• A new Federal Reserve report on U.S.
credit conditions shows that the pace of
deleveraging has rapidly slowed in the
First Quarter, ending a string of nine
declining quarters.
• The latest Fed Senior Loan Officers
Survey shows loosening credit standards
across the board including commercial
and industrial loans.
• Corporate profits continue to exceed
expectations.
Economists seem split on their economic
outlook for the rest of the year.
Most believe the U.S is headed for a double-dip
recession. Others are forecasting a
return of modest growth. "When you look
at the overall data that's been coming out,
it's really a mixed bag, and this shows that
the economy is not falling off its wheels,"
said Rudy Narvas, senior economist at
Societe Generale in New York.
“While I agree with Fed Chairman
Bernanke that the U.S. will probably avoid
another recession this year, the risks do appear
much higher,” said Chow. He noted
that the negative impacts from the Japan
tsunami and the Middle East uprisings are
starting to dissipate. However, the Fed’s
manufacturing surveys for New York and
Philadelphia were dismal for July. Chow
is unconvinced that Europe will be able
to keep all its members from bankruptcy
20 September 2011 | Trade Show Executive