31 Dec Financial uncertainty freezes holiday customers
Watching the “experts” on CNBC and other business shows gives you the solid irrefutable confidence that even the experts don’t have a clue. What about the holiday sales rush that never happened? All the financial experts seem to have cloudy crystal balls because no one can predict the future.
“Now is the time to spend money”
Some of the financial pros were crowing this earlier in the year: “Consumers will help us out of this recession.” NOT!
Few consumers had money – as well as confidence in holding onto their job – to spend a lot on Christmas and holiday sales. Was this something that could have been foreseen? Yes.
This was a common response I got eight months ago from an article I wrote about people losing IT jobs:
I know from my own experience that many people can no longer afford new cars, bigger homes or nice vacations. I sure can’t. I lost my network engineer’s job in 2002, in the teeth of the I.T. recession. It took until 2005 for me to find a permanent job again, and one where I made almost $20K less than my previous job. I will be paying off my credit card debts for years. There is no way I can afford a new car, and I haven’t been able to take my family on a real vacation in I don’t know how long.With both my wife and I working we are still living from paycheck-to-paycheck. This with three college degrees (including the much-vaunted MBA), an MCSE, and almost 20 years’ experience.
If we get a tax rebate from that economic stimulus package the politicians are fussing over it will go straight to my credit card balance. Not much economic stimulus to be had there.
Even though this has been pointed out in my articles for over a year, some of the experts seemed to think sending $1,200 to everyone was going to make the economy skyrocket.
Here were the results of the slow spending for the season according to CNBC:
Total holiday sales excluding auto purchases were down negative 5.5 to 8 percent. Including gas and autos, purchases were down negative 2 to 4 percent. The results are well below the plus 2.2 percent forecast made by the National Retail Federation in September.
Big ticket electronics purchases also tumbled this Christmas versus last. Sales there down minus 26.7 percent.
You just saw the slow spending on the Christmas holiday. How many “Door Buster Sales” did you run to? How many did you just say “Why bother? I’ll wait `til next year.” Big discounts did not bring out big crowds.
What about big ticket item sales which were down significantly? I watched a Bears game over the weekend and they had a glitzy GM commercial on to buy a new Cadillac Escalade. You would get $15,000 off the sticker price of $69,995. Big deal. Everyone laughed as one viewer at the bar said, “I’ll wait `til they knock off another $15,000 that’s about what they are really worth.”
So much for the auto bailout. No one is looking at spending on big ticket items.
Bailouts do not create customers. They guarantee status quo to those that should be making drastic changes. They also seem to guarantee unearned bonuses to those that should get nothing for their lack of performance.
If money grows on trees, where are the forests?
Don’t you just love bad economic times? That’s when you constantly hear from those who mismanaged your stocks and financial planning all along with their latest “winning strategy” for whatever you have left. Of course there is a fee attached.
Is “financial planning” another oxymoron? What about the reasons why your 401K Plan lost 60 percent of its value?
- You are not diversified enough.
- You have too much in domestic stocks.
- You have too much in international stocks.
- You should have left more money in cash.
- You should have had your cash in gold.
- You should have gotten into this real estate mutual fund.
- You should have gotten out of that real estate mutual fund.
The midnight experts are also just as entertaining to watch. Put your money into real estate. Sell stuff on the internet and make thousands a day. Now is the time to buy foreclosures. Buy for no money down. (Yeah right. Go to the bank and say you want to buy for no money down. See how many deals you close.)
The economy is where it is today due to years of job loss in several industries and the resulting impact of declining buying power.
Disintermediation, which helped streamline business transactions through the use of the Internet, has also removed profit to a point where margins have become too thin to continue business for many companies.
Looking pragmatically into 2009: Anything short of creating real sustainable jobs for average skilled as well as highly skilled citizens to bolster the economy will only create a Chicago Cubs fan mentality clinging to the perennial fatal optimism of “Wait `til next year.” Unless real changes are made in leadership and corporate strategic direction, next year will just be a repeat.
Carlini-ism: Bailouts do not create customers. They guarantee status quo to those that shouldn’t survive.
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This article previously appeared in MidwestBusiness.com, and was reprinted with its permission.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.