Proceed With Caution
Jun 03, 2010
According to numbers released by the Commerce Department, sales continued to rise at retail stores in April at a rate higher than expected by industry experts. Combined with other recently released data on industrial production, manufacturing and consumer confidence, these figures seem to indicate that we’re well on our way to economic recovery.
However, upon further inspection, recent numbers might not be as encouraging as they originally seemed. Decreases were actually reported in several categories of retail stores, including sporting goods, electronics, hobbies, music stores, home furnishings, grocery and department stores.
So what does all this mean? Are we on the road to economic recovery or not??
Much of the current excitement is probably the result of President Obama’s government stimulus plans, coupled with continued low interest rates. When you factor in overleveraged households and a nagging unemployment rate, the recent increase in retail spending may be nothing more than a passing blip on the radar.
The bottom line is that no one really knows for sure what’s going to happen moving forward. So while it does look like Americans are slowly resuming discretionary spending, we need to proceed with EXTREME CAUTION. Have we learned nothing from the situation we’re in right now? We’re currently in the midst of the worst recession since the Great Depression because people everywhere took out loans they couldn’t afford, mortgages they shouldn’t have qualified for, and credit cards they can’t pay off. We became accustomed to living way outside of our means. A great deal of the responsibility lies with banks who gave people loans they couldn’t pay back, mortgages they weren’t qualified for, and credit they didn’t deserve. And the government sat back and allowed them to do it!!
In The Life of Reason, Spanish-American philosopher George Santayana said, “Those who cannot remember the past are condemned to repeat it.” All of us – consumers and retailers alike, and especially the government – need to move forward responsibly and cautiously. Otherwise we’ll end up right back in the same spot we are now…maybe even worse. And if that happens, no one can claim they didn’t see it coming.
LINKS
New York Times – U.S. Retail Sales in April Beat Expectations
I’ve heard that if Europe goes under we could too? I also think Greece will drop out of the Euro because they only way they can dig out of that hole is to print more money. They cannot print money if they belong to the euro.
Certainly agree with much of what you say here. I think when it comes down to it greed was at the center of much that happened. The banks sold people inflated mortgages to get more going in, and then make money when people failed on them. Credit card company’s fees are increased when people get deep in debt. Again greed. Ship jobs to a cheap labor country for more profit. Greed. Suddenly we turn around and there are no workers with money to buy those cheap products, or anything else because they have no job and therefore no money.
Some of the slow sales activity may be caused in part by a change of mindset and the lack of a feeling of security about their employment. A lack of trust so to speak. Many people I have talked to have money, just not the desire to spend it. Their feelings about what they really need have changed. Some are tired of inferior products not worth even the cheap price they are offered at.
Although it is a combination of things, at the root of it all is trust. Win back peoples trust and that confidence may bring sales along with it.
Yup, it’s perfectly fine when they get rich running the show as long as they don’t sink the ship. These bobos are incompetent or nuts.