Secrets of the Catalog Master
Vol. MMVII No. 2 March 2007
(Continued--page 2)
The Second Quarter 2007 Economic Outlook
The February stock market decline may be a signal of difficulty ahead; however, growth may slow further to 2.2% through the end of 2007 and a soft-landing may be the result, especially if the housing market has bottomed out. The slowdown will cause the unemployment rate to drift up, probably from 4.5% to 4.8%.
The Fed will likely try to keep things balanced by interest rates. Greenspan’s comments still move markets as we have seen, and he is clearly less optimistic. We sense a continuing period of pressure, but not an out and out recession—yet. It is very true, however, that the long bull market has to come to an end at some point, and the jitters are palpable. The repeated offsetting outlook remains that slower growth would cause core inflation, which excludes energy and food, to moderate. Fed policy easing will perhaps restore a flatter yield curve, offsetting a bit the lengthy inverted yield curve we have had for some time now, which is almost always a precursor to economic slowdowns. Profits will stabilize at a slower single-digit pace. The overheated private equity investment pace may cool, and that might not be a bad thing. Overall, this is a cautious outlook and, increasingly, it can be influenced by the increased saber-rattling over Iran and the complex problems in almost all of the Middle-east.
I continue to see a strong economy, albeit one that is slowing. The manufacturing outlook is mixed, but defense spending keeps it stable. The real power right now is the investment being made in business consolidation by massive private equity binging; everything from power plants to dairies is being consolidated, kick-started for growth, and flipped for return to investors. At some point, that has to stop, but for now it is driving a reasonable economic outlook.
Signs of Regional Stability or Status Quo
Region One (CT, ME, MA, NH, RI, VT)
Region Two (NY, NJ, CT, PR, VI)
Region Four (OH, KY, PA, WV)
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)
Region Three (PA, NJ, DE)
Region Five (KY, MD, TN, VA, NC, SC)
Louisiana
Mississippi
The Second Quarter 2007
Circulation and Prospecting Outlook and Recommendations
Synopsis
The short-term economic outlook for the catalog industry remains positive. The intermediate-term outlook remains positive for the second quarter of 2007 and the long-term outlook through 2007 remains positive.
Prospect as an Investment
For the first half planning in 2007, even with the apparent slowdowns in the markets and in overall business, continue with normal to slightly increased strategies for circulation and investment prospecting plans. It would require caution to increase prospecting presently by more than 10 to 15 percent. There are early signs that may signal economic reasons for reductions in either prospecting or customer circulation, or both, in the last half of the year, but this is not the time to pull back in my estimation. We would be comfortable with modest increases in prospecting levels.
Nation At A Glance
We have revised mailing recommendations in several states for the second quarter planning in 2007. In all areas in bold, we have shifted to normal mailings from increased mailings.
