Financial Forecast from Rebecca’s Office:
Tomorrow is back to work day. I’m ready and am really exited. But I want to exercise a word of caution!
Ready to put 2009 behind us but also ready to understand how 2009 (and 2008) will make 2010 very difficult. We all want things to change and come back to life but we can’t rush it. I saw so much optimism the last month of the year reflective of a recovery but if you look at the 500 point improvement in the Dow Jones, you will see that they were in the industrials.
What I like to cover is the consumer and retail brands. Why? because they tell me what people are thinking. Consumer beliefs are the most important to me and are going to be the true indicator of economic recovery. It will be key to read the reports on how the Christmas season did when the 4th quarter reports come out. What I do want to caution is what the numbers will mean. I hope people won’t overreact when people say sales were up 12% over last year. Why? Because sales in 2008 were down already. So a moderate recovery over 2008 might mean nothing espcially given the huge discounting we had this past holiday season.
Credit card companies have already sent out notices to people at the beginning of the year to notify them that they are resducing credit lines. So watch out! This will continue to curb spending again. Jobs are still down significantly from 2008 and just because someone says unemployment claims are down doesn’t mean there is a recovery. The average person taking a new job is taking it at a salary on average 8.3% lower than what they used to make. Now of course many large ticket items such as homes and automobiles now cost on average 11%-15% less across the country.
So it is all based on moderation. Just keep your expectations on an even keel. Don’t expand too fast without a plan and a clear vision. The 2010 Consumer Electronics Show starts next week in Vegas. Usually this is a showcase of the biggest items. I expect this year to be pretty quiet. Mostly the Android operating system by Google will be the focus is my guess. There will be new mobile phone models as well as Mp3 players but I don’t expect that there should be anything. Usually analysts receive notices about parties and announcements for the show but I haven’t seen a thing.
If you don’t see good consumer reports by the end of Q1 I would just hold the status quo. No panic, but wait for the consumer confidence to come back naturally.