consumer spending « TILE Financial

Posts Tagged ‘consumer spending’

Friday, May 15th, 2009

The recession is truly changing the playing field. Even events that consistently boost sales for companies are failing to beat the recession.

Big sportswear companies typically see an increase in sales when huge events like the World Cup come along, but this year Adidas (ADDDF) is struggling more than usual.
Even after a rough first quarter, the company is optimistic about the boost they’ll receive from the 2010 World Cup in addition to a recent management overhaul and widespread layoffs.
However, excessive supply of product along with rising unemployment and the continuing recession throughout Europe may negate any earnings increases the World Cup brings.

Adidas (a German company) reported a 52% sales increase in the wake of the 2006 World Cup.
In the first quarter of 2009, Adidas’ reported income dropped a staggering 97.2%.
European retail markets account for approximately half of Adidas’ total sales.

“In Western and Central Europe we will continue to face some tough times.” – Ingbert Faust, Analyst for Equinet

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Friday, May 1st, 2009

Looks like some aren’t buying into doom and gloom predictions for the future of our economy…

Analysts at JPMorgan Chase and Barclays are optimistic about the U.S. economy rebounding in late 2009.
Causes for optimism include increased consumer confidence, an improved credit environment, and government stimulus funding – all of which should increase spending and bolster the housing market.
Others aren’t so sure – Deutsche Bank predicts the economy will continue to get worse through the end of 2009. And according to Credit Suisse, rising unemployment and lower salaries will mean that any short-term improvements will soon give way to another contraction in consumer spending.

The U.S. economy shrank at a rate of 6.1% in the beginning of 2009 – the worst contraction since the recession of 1957-58.
Consumer spending represents 70% of the U.S. economy.
JP Morgan and Barclays predictions for the rest of 2009: Continued contraction of 2% in the 2nd quarter, growth at 1% rate in 3rd quarter, and an increase to 2% growth rate in 4th quarter.

“We’re probably hitting the bottom around now.” – Larry Kantor, Head of Research at Barclays

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