economy

Economy to Impact Two-Thirds of Families this Holiday Season

Retailers are about to embark on the holiday season of the serious bargain hunter. According to NRF’s 2009 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, U.S. consumers plan to spend an average of $682.74 on holiday-related shopping, a 3.2 percent drop from last year’s $705.01.

It comes as no surprise that the economy was an overriding theme throughout this year’s survey. Two-thirds of Americans (65.3%) say the economy will affect their holiday plans this year, with the majority of these consumers saying they’re adjusting by simply spending less (84.2%). People will also be shopping for sales more often (55.0%), using more coupons (41.7%) and putting up last year’s decorations (34.0%). Many Americans will also make changes in gift-giving, planning to buy more practical gifts (36.0%), buying a joint gift for kids or parents (17.3%), and making more gifts (16.7%). Additionally, more than one-fourth of Americans (28.6%) say the economy is forcing them to travel less or not at all for the holidays.

“While last holiday season was filled with chaotic confusion, adjusting to uncertainty has now become routine for many Americans,” said NRF President and CEO Tracy Mullin. “This holiday season will be a bit of a dance between retailers and shoppers, with each group feeling the other out to understand how things have changed and how they must adapt.”

Americans’ eagle-eye on bargain hunting is adjusting the priorities of many shoppers. According to the survey, more than half of holiday shoppers say that sales and price discounts (43.3%) or everyday low prices (12.7%) will be the most important factor when deciding where to shop. Factors like selection (21.0%), quality (11.8%), convenience (4.9%) and customer service (4.4%) declined from last year.

Not surprisingly, the majority of holiday shoppers (70.1%) will purchase from discounters this year, though more than half (55.8%) will also shop at department stores. Grocery stores (45.0%), the Internet (42.4%), clothing stores (33.8%) and electronics stores (31.8%) will also be popular destinations. In addition, one in ten holiday shoppers (11.4%) will buy gifts or other holiday-related merchandise at thrift stores or resale shops.

Retailers are compensating for soft sales this holiday season by cutting back on inventory. According to NRF’s Port Tracker report, released in September, traffic to the nation’s ports has scaled back to levels not seen since 2003.

“In anticipation of weak demand, many retailers scaled back on inventory levels to prevent unplanned markdowns at the end of the season,” said NRF President and CEO Tracy Mullin. “Once the most popular items are gone, retailers won’t have anywhere to get them, so if there was ever a holiday season to buy early, this is it.”

Whether they’re shopping to get the best selection or trying to stretch out spending over a longer period of time, many holiday shoppers are starting early. According to the survey, 39 percent of Americans will begin their holiday shopping before Halloween, which is comparable to previous years.

As in previous years, three-fourths of Americans’ holiday budget will be spent on gifts. While spending on family members will decline by a slight two percent ($387.06 in ’09 vs. $395.15 in ’08), gifts for friends ($66.77 vs. $80.13) and co-workers ($19.26 vs. $22.63) will see double-digit drops. Americans also plan to spend about five percent less ($34.81 vs. $36.88) on “other” gifts for people like babysitters, teachers and clergy.

Candy and food spending may be one bright spot this year, with the average person planning to spend $10 more in that category than last year ($90.26 in 2009 vs. $80.28 in 2008). Spending on other non-gift categories like decorations ($40.75 in ’09 vs. $43.45 in ’08), greeting cards and postage ($26.77 vs. $27.39), and flowers ($17.05 vs. $19.10) is expected to drop.

“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, Strategic Initiatives, BIGresearch. “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.”

Though Americans were less inclined to purchase gift cards last season, the popular gifts retain their spot at the top of the list among gift recipients. According to the survey, 55.2 percent of adults would like to receive a gift card this holiday season, with clothing (48.8%), books and DVDs (48.6%) and electronics (33.2%) among other popular choices.

NRF continues to expect holiday sales to decline 1.0 percent to $437.6 billion.

economy

Thanksgiving Celebrations Shrinking in Response to Economy

Concerned about the current economic situation, many Americans are planning to extend their belt-tightening behaviors into Thanksgiving celebrations.

The September survey of the First Command Financial Behaviors Index reveals that 45 percent of middle-class families will reduce Thanksgiving spending as a result of the economy. Respondents in this group said they will make one or more of the following changes:

- Stay closer to home (reduce travel)				55 percent
- Dine with immediate family only				50 percent
- Spend less on food				36 percent
- Stick to a set budget				27 percent
- Go to someone else’s house for dinner				23 percent
- Serve a “pot-luck” dinner				20 percent
- Spend less on decorations				20 percent
- Go out to a restaurant for dinner				4 percent
- Cancel Thanksgiving dinner				3 percent

“Plans for a leaner Thanksgiving are yet another indicator that Americans are changing their financial behaviors for the better,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Roughly half of survey respondents say they have embraced frugality as a way of life. Many people will be cutting back on Thanksgiving spending by staying home and dining with immediate family members. The unexpected payoff may be a more intimate holiday focusing less on consumption and more on the historic traditions of expressing gratitude and giving thanks.”

economy

California Dreamin’

For those of us old enough to remember (I am almost not quite), one of the greatest rock songs ever, “California’ Dreamin,” was written by the Mamas and the Papas in 1963 and released in 1965 (well I was in kindergarten). The classic has been covered a million times by the Beach Boys and many others.

John and Michelle Phillips of the group were living in NY at the time and thinking about the sunshine here in LA, where I am now for business meetings the next few days.

Some things about California stay the same. It is still the source of many new trends, including my perennial favorite cobb salad. Little kids with their yoga instructors on Muscle Beach. Apparently it’s all the rage here to like some obscure band called the Beatles. A “doctor” has set up his “office” right on Venice Beach where you can get a card entitling you to medical marijuana for a year as long as you have (or claim you have) certain medical issues (anxiety will do it). Fires and small tremors seem to remain a sometimes frustrating way of life. And the sun still loves to shine.

But times are tough. And they seem tougher here than in most. Real estate has fallen apart (though some signs of life have commenced). There is a sense of everything toned down conspicuous consumption wise. The infrastructure, from my non-scientific observation, is in bad shape. The government is running on a shoe-string. There is talk of legalizing marijuana mainly to raise taxes.

Will they make it? Yes. While New York wakes up a little faster thanks to reinvigorated Wall Street firms, when will private equity, venture capital, and the entertainment businesses, all central to the Cah-lee-fawnia (as Gov. Schwarzenneger loves to call it) economy, wake up? It’s slow for all. The film business is not bad though. It seems like Haagen Dazs we have continued to allow ourselves small luxuries like going to the movies. Or maybe we just need the escape. Maybe both.

My next trip is back to China in November, where things will certainly be in contrast to here in CA. I have a number of clients and important contacts here, so I’m pulling for the left coast. And not too shabby Dodgers and Angels!

economy

Economy Continues to Strain Families, Affecting Both Children and Marriages

Seventy-eight percent of families report that they’ve been affected by the economic downturn according to a recent online survey from Disney. As economic uncertainty continues parents remain cautious, with forty-eight percent reporting they are concerned about job security and the current job market, up from thirty-six percent in 2008. As a result, fifty-three percent of parents have cut back on overall spending for their children.

Further survey findings include:

• 72% of respondents reported reducing or eliminating eating out altogether
• 78% of respondents report changing their grocery shopping habits by leveraging advertised sales, clipping coupons, and buying generic brands
• 74% of respondents said they are only purchasing essential items and will be making little to no impulse purchases this holiday season
• 59% have eliminated or changed vacation plans for a cheaper alternative

“A year into the recession, family finance remains a top concern among parents everywhere. Parents continue to be focused on stretching every dollar,” said Emily Smith, Vice President of the Disney Online Mom and Family Portfolio. “We are pleased to offer a range of content on Disney Family.com that will help parents keep their families on track for financial success.”

economy

Americans Get Cautiously Optimistic About Finances

One year after the U.S. banking crisis came to a head, a new survey finds that consumers and small business owners are finally seeing some positive light at the end of the economic tunnel.

Fifty-two percent of consumers believe their financial prospects will improve over the next 12 months, and 61 percent of small business owners are expressing similar optimism about their potential businesses growth. Those are among the major findings in a new survey from Digital Insight.

There is also good news for financial institutions. Nearly 70 percent of respondents expressed confidence in the stability of their bank or credit union, along with a desire to get more online financial management tools from them.

Digital Insight’s Second Annual Online Financial Management Survey also found that:

• Eighty-eight percent of consumers now pay bills and transfer funds online, but 62 percent would like a single place to manage their complete financial picture, no matter where the information originates.
• Nearly half of consumers would like online help with tracking expenses and budgeting.
• Approximately 80 percent of consumers and small businesses named their bank or credit union as their most trusted online destination to manage their finances − an increase from 68 percent of respondents last year.
• Seventeen percent of small business owners have increased their use of online financial management tools in the past year.
• The top five tasks small business owners would like to manage online are: processing credit card and automated clearinghouse payments; invoicing; making remote deposits; planning and filing taxes; and learning about new products and services.

economy

Markets Steam Ahead, Hiccup Notwithstanding

We just finished the best quarter in the market since 1998, and the best two quarters in a row since we came out of the 1987 market crash in a mere six months, according to The Wall Street Journal online. Granted there’s a lot to make up for – the market is still 31% off its October 2007 highs. But we’re up 48% from the March lows, 11% for the year, all in all beats the alternative. The last few days went down a bit, but every rally has its profit-taking moments. We had one in early July and then bounced right back. Let’s hope that’s all this is.

We are still going to have some bad economic news (like the unemployment data last week) and must accept that this recovery will be slowish. But in many ways, as I have said many times here, it’s up to us. Expectations drive a huge portion of the economy. If we get positive about the future, that will make the future more positive. Not to get all Tony Robbins on y’all, but it’s what they taught us in biz school. The next boost for confidence will probably be the arrival in the next few weeks of everyone’s quarterly 401(k) statements showing, hopefully, a solid increase in their retirement money. With the IPO market waking up, housing starts staying pretty strong, yes the stimulus money having some effect and the markets continuing their upward trend, I’m glad I renamed our site! Let’s just hope our government spending now gets into control so we don’t get hit in a year or two with…well, you know what…

economy

Consumers Have Permanently Changed Their Saving and Spending Habits

A new nationwide survey issued today by Citi revealed that consumers across all socioeconomic levels and ethnic groups have made permanent spending and savings adjustments to adapt to the current economic situation. According to the data, 63 percent of Americans surveyed said the way they spend and save has been forever changed as a result of the economic downturn. Only 29 percent said spending and saving would go back to the way it was before the recession.

Citi conducted this nationwide poll as part of its ongoing effort to better understand changes in the needs of the consumers and communities the company serves.

The survey also found that consumers across all income levels and ethnic groups said they plan to continue their adjusted spending and saving habits. More specifically:

• Fifty-nine percent will continue to cut back on everyday expenses.
• Sixty percent will continue to save and invest more.
• Sixty-one percent will continue to cut down on credit card purchases.
• Sixty-three percent will continue to reduce the amount of money they owe.

Eric Eve, Senior Vice President, Global Community Relations at Citi, said, “This new survey points to a profound shift in the way people think about their saving and spending. The current economic environment is altering, perhaps permanently, the way we think about spending money. As Citi changes the way it does business to reflect the new economic realities, it’s important we continue to understand how our customers also have been affected by the economic challenges and pressures they currently face.”

Adjustments Being Made Across All Income Levels

People across all income levels and ethnic groups in the survey said they have made adjustments to the way they spend and save because of the current economic situation.

According to the data, across all income levels:

• Seventy-five percent have cut back on everyday expenses.
• Sixty-two percent have cut down on credit card purchases.
• Fifty-seven percent have reduced the amount of money they owe.
• Fifty-three percent have postponed the purchase of a major item such as an automobile.
• Forty-two percent are taking money out of savings or investments to help pay expenses.
• Thirty-four percent are saving and investing more.

More specifically, those who earn less than $50,000 were most likely to cut back on everyday expenses (80 percent), followed by 76 percent for those who earn $50,000 – $75,000. But even at the top of the income scale, people are making adjustments and cutting back on everyday expenses – 70 percent for those who earn more than $150,000 and 68 percent for those who earn $75,000 – $150,000.

In addition, those in the highest income level were more likely (33 percent) than those in the lowest level (27 percent) to think about postponing retirement due to their economic situation.

African Americans, Hispanics Have Made Greater Adjustments; 40 Percent Working Longer Hours to Make Ends Meet

Despite the spending and savings adjustments being made across all income levels, according to the survey, more African Americans and Hispanics than the national sample have cut back on credit card purchases and have taken money out of savings to pay for expenses. In addition, these ethnic groups said they have been working longer hours to make ends meet and have sought additional education to increase their employment opportunities.

• Sixty-eight percent of African Americans and 66 percent of Hispanics have cut down on credit card purchases (compared to 62 percent of the national sample).
• Forty-seven percent of African Americans and 45 percent of Hispanics have taken money out of savings or investments to help pay expenses (compared to 42 percent of the national sample).
• Forty percent of both African Americans and Hispanics are working longer hours to make ends meet (compared to 32 percent of the national sample).
• Eighty-two percent of African Americans have cut back on everyday expenses (compared to 76 percent of Hispanics and 75 percent of the national sample).
• Thirty-six percent of both African Americans and Hispanics have sought additional education to increase opportunities (compared to 21 percent of the national sample).

Eve added, “Keeping our finger on the pulse of how the economy is affecting our customers and the communities in which they live and work is especially important now, when people are changing the way they spend and save.”

economy

Survey Says One-Story Homes in the Suburbs Will Be the Most Popular During Rebound

A survey released today reveals that 55+ Americans would prefer suburban living in single-story homes with amenities, particularly high-speed Internet access, for their later years, and they don’t consider “universal” design a priority. These are some of the findings from 55+ Housing: Builders, Buyers, and Beyond, a survey conducted by the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute, which asked owners and renters about their current homes and the types of homes, communities and features they prefer as they age.

The survey also questioned builders about specific features provided in new homes and how much customers are willing to pay for them, which revealed interesting contrasts. While builders seem to be providing more universal design features (lever-handle/door knobs, wider doors and hallways, a full bath at the entry level), consumer preferences don’t reflect an equal appreciation of such items. Consumers indicate they want amenities such as non-slip floors, larger medicine cabinets, lower kitchen cabinets and emergency call buttons, but those features are not as widely included in new homes.

On other issues, builders and consumers are closer to agreement. Consumers clearly want to be close to community resources like shopping and medical services; builders and developers have responded by placing communities accordingly. Builders are providing more energy-efficient and environmentally sensitive features. While many consumers note that they are conceptually supportive of these efforts, fewer indicate a willingness to pay significantly more for “green” homes.

“The data suggests that builders will have to be more tuned in to consumer needs, but potential buyers may be somewhat shortsighted as well,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. “The homes consumers say they want may present difficulties for the long term as they age in place. They prefer the suburbs and the country, but these areas generally lack public transportation. Universal design is not a strong preference, but they’ll need greater accessibility later on. Aside from recognizing that one-story homes will be best for their later years, customers may be somewhat unrealistic.”

NAHB Chief Economist David Crowe pointed out that as the housing market returns to health, builders will need to be increasingly responsive to changes in the market for 55+ housing.

“These surveys were conducted as consumers were watching their savings shrink and as builders were seeing sales grind to a halt,” said Crowe. “So this study reflects the very latest in the changing perceptions of what is most important in housing for this age cohort.”

Other survey findings included the following:

• One-third of consumer respondents would choose a close-in suburb and nearly another third prefer an outlying suburb. About one-quarter would choose a rural community and 9% prefer a center-city setting. Single-story homes are a clear first choice among respondents (79%) over two-story (15%) or split-levels (6%).
• While conventional wisdom dictates that older buyers would be looking to downsize, most consumers say they’d like their next home to be the same size as their current one.
• The five features rated most important by consumers were: in-home washers and dryers, storage space, windows that open easily, main level master bedrooms and easy-to-use climate controls.
• Eighty-three percent of consumer respondents rated high-speed Internet as somewhat to very important.
• While consumers expressed a preference for maintenance-free lifestyles, with services such as interior and exterior home repair, transportation, housecleaning, etc., few builders offer such services, which depart from their primary business of construction.
• Twenty-seven percent of potential buyers say they are not concerned about the impact of home building on the environment. Another 23% are concerned, but say that will not be a consideration when they make a purchase, and 37% of consumers responded that want an “environment-friendly” home, but would not pay extra for it. Only 12% said they would be willing to pay more.
• Ninety-four percent of builders report that their buyers want more energy-efficient new homes; 55% said buyers specifically want EnergyStar®-rated homes. Twenty-five percent of builders said buyers want homes with more recycled materials and less materials overall. Most builders (69%) indicated that some of their buyers are willing to pay extra for green amenities; 9% indicated that most were. The remaining 22% said none of their buyers were willing to pay extra for green amenities.

economy

It’s Over, But…

Yesterday Fed chair Ben Bernancke said the recession is “very likely over.” Unfortunately, we usually don’t know the start or end dates of a recession until months after it actually occurs. But he warned that we will not feel like we are in recovery for awhile and that the rebound likely will be very slow.

Now some questions for the President: do we still need the rest of the stimulus? Might it be worth considering scaling back the stuff that doesn’t start until next year? Are we still worried about a “double dip” in which another mini-recession comes now before the real recovery? What about the government being in the car and bank business? Maybe Obama should set an outside date by which he intends to exit the government’s ownership, either with new funds raised to buy out the government or transitioning some of the invested money into loans vs. equity investments. How can the government regulate these huge industries and companies when it also owns them? This is going to become a difficult conflict at some point. And the TARP money loaned to so many companies? We should push harder to get more of that repaid, no?

While Washington and the news are busily distracted by Pres. Jimmy Carter suggesting that much of the opposition to Pres. Obama is racially driven, and by the Congress rebuking Rep. Joe Wilson’s inappropriately blurting out “you lie” to the President during his speech to Congress (even though the President had accused his critics, sitting before him, of lying multiple times during his speech), the deficit is ballooning out of control. We should have that discussion about race, but let’s also focus on where we want to be a year or two from now.

economy

New Poll Finds 20% Spike in Parents’ Plans to Volunteer in Classrooms This Year Amid Recession Concerns

As families prepare to go back to school amid economic woes, a groundbreaking new study finds that parents, worried about the economy and education cutbacks, are planning to pitch in with greater volunteerism and shop smarter for school supplies. Many are also reconsidering what type of school their kids should attend.

Issued by GreatSchools, a national independent education nonprofit, and Harris Interactive, “The Economy’s Impact on Back to School” report finds that nearly two in three parents (64%) believe that, because of the recession, it’s more important for them to volunteer in the classroom than before. Many parents are taking the need to volunteer to heart. A majority of parents (53%) plan to volunteer at their child’s school this year versus 44% last year – an increase of 20%. This trend is most pronounced among African American parents, 60% of whom plan to volunteer (up from 23% who say they volunteered last year).

Despite their strong interest in volunteering, however, parents may still remain an untapped resource. According to the report, nearly half of parents (49%) list the lack of opportunities offered by teacher or schools among the main challenges they face to being more involved in ensuring their child receive a quality education.

“As American families prepare for back-to-school season in this economic climate — when family, school and state budgets are tighter than ever — there is a silver lining: parents,” said Bill Jackson, founder and president of GreatSchools. “With their profound ability to influence their children’s academic success and contribute to their children’s schools, this report shows that parents hold the potential to be the new economic stimulus package for education in America. This report is a wake-up call to parents and teachers alike to clearly communicate on ways they can work together.”

The study also highlights several key findings about the level of parent confidence in education and how parents are navigating back to school in a struggling economy. The findings include:

• Parents are concerned about school cutbacks and some are rethinking school choices — More than three in five parents (61%) believe the quality of education will suffer because of school cutbacks. Regardless of whether their children now attend public or private school, nearly one in four parents (24%) are rethinking the type of school their children should attend going forward. This trend is most prominent among lower-income urban and suburban parents.
• Parents may not be fully prepared for the start of school — While most parents (93%) plan to buy school supplies ahead of time, fewer than half focus on the content of their children’s education and reducing distractions prior to the start of school. Only 47% of parents find out which subjects their child will be learning, 39% have their kids start reading more often, and 33% cut down on TV and video games.
• Parents are addressing economic difficulties by shopping smarter for school supplies – With 74% of families expecting their economic situation to worsen or stay the same, a majority of parents (nearly 90%) plan to take cost-saving steps when shopping for school supplies. These steps include reusing old supplies (57%) and delaying purchases until after school starts so as to only buy what’s truly needed (26%).

Next Page »