Secrets of the Catalog Master
Vol. MMVI No. 1 February 2006
(Continued--page 2)
The First Quarter 2006 Regional Economic Outlook
With Alan Greenspan gone only a few days, the economy suddenly appears a bit vulnerable. Perhaps it is just the vacuum effect left from the departure of the real Chief Executive of the United States. The revision of the fourth quarter 2005 GDP downward is an indication of some softening, as is the drop in productivity and the heralding of a potential inflationary spike in early February. The economy is in reasonably good shape given that we are massively in debt and a bloated net importer and we have consumed our own savings in the mad festival of home equity refinancing over the past eight years or so. Yet, business-to-business hiring is up and capital and market spending is increasing.
As the year kicked off, the economy chugged ahead with manufacturing, employment and retail sales moving up and the housing market cooling. The one piece of news that most people missed came from billionaire investor Warren Buffett who focused on the U.S. trade deficit as “a bigger threat to the domestic economy than either the federal budget deficit or consumer debt.” Buffet warned this could lead to “political turmoil.” His cryptic remarks were pointed, “Right now, the rest of the world owns $3 trillion more of us than we own of them. In my view, it will create political turmoil at some point . . .Pretty soon, I think there will be a big adjustment.” Buffet said he expects the 2006 trade deficit to exceed $700 billion. “That’s $2 billion a day. We are like a super-rich family that owns a farm the size of Texas. You sell off a little bit of the farm and you don’t see it.”
On the heels of the Buffet comments came a sharp increase in the price of oil, as well as $38 billion in earnings for Exxon-Mobil. Some think this is a rigged game. At the January 30-31 meeting of the MeritDirect CEO Forum in West Palm Beach, the CEOs were in agreement that oil price hikes or any interruption to the supply of oil would have serious effects on distribution and profits. Some expressed a belief that $100 a barrel oil is in the near future. Energy simply refuses to go away as a problem. And health care costs are right there fueling concern as well.
As of February 1, the economy appears to remain positive in the short, intermediate and long term views. However, there are problems that could escalate and contingency plans should be in place, especially for energy hikes, health care spikes, and a massively volatile Palestinian-Israeli situation.
Signs of Regional Stability or Status Quo
Region One (CT, ME, MA, NH, RI, VT)
Region Two (NY, NJ, CT, PR, VI)
Region Three (PA, NJ, DE)
Region Four (OH, KY, PA, WV)
Region Five (KY, MD, TN, VA, NC, SC)
Region Six (GA, AL, FL, LA, MS, TN)
Region Seven (IL, IN, MI, WI, IA)
Region Eight (MO, IL, IN, KY, TN, LA, AR)
Region Nine (MN, WI, ND, SD, MT, MI)
Region Ten (KS, CO, MO, NE, NM, OK, WY)
Region Eleven (TX, LA, NM)
Region Twelve (CA, UT, AZ, NM, OR, WA)
Slower (Individual states)
Louisiana
Mississippi
The First Quarter 2006 Circulation and Prospecting Outlook and Recommendations
and Recommendations
Synopsis
The short-term economic outlook for the catalog industry continues to be positive if not “irrationally exuberant,” to quote Mr. Greenspan. It appears the mild winter is fueling some activity and savings and the positive performance will last through the entire first quarter of 2006 and into the second quarter. There continue to be signs of sideways consolidation and ‘dithering’ in the leading indicators and, particularly, in historical consumer confidence charts. The recent interest rate Yield Curve inversion is troubling, indicating an approaching recession in almost every instance of its occurrence. The intermediate-term outlook remains positive for the first half of 2006, and the long-term outlook through 2007 remains positive. But, keep a wary eye on energy cost.
Continue Prospecting
Continue maintaining growth strategies for circulation and prospecting plans and do not allow new business momentum to falter or slacken without overwhelming evidence of a decided economic change. There is nothing in the economic outlook in the first quarter of 2006 to justify any cuts in prospecting or reductions in customer circulation. Keep mailing, emailing, telephoning and searching.
Nation At A Glance
There have been no significant changes to the state-by-state circulation strategies.
