Secrets of the Catalog Master
Vol. MMVI No. 2 April 2006
(Continued--page 2)
The Second Quarter 2006 Regional Economic Outlook
The second quarter of 2006 is shaping up to be a dichotomy. Technically, the economic outlook appears excellent with the major indices positive and economic activity robust almost everywhere. The stock market is at all-time highs. Factory orders are strong. Inflation is relatively tame. Interest rates are approaching a leveling off point. Fundamentally, there has not been a time in recent years with so much going so well and with confidence in the country’s various directions and leadership so low. The nation’s finances are in receivership. Greed and excessive energy profits are being roundly criticized by equally flagrant members of congress. Health care costs are escalating far beyond any conceivable basis. Manufacturing and Big Auto are crumbling. Airlines are in even deeper trouble, as if that were possible. And for the first time in over fifty years, the savings rate of American families turned negative. Yet, the vast engine of consumption continues to work overtime, spewing out homes, SUVs, luxury goods, capital goods, new business expansion, and new coffee shop after new coffee shop. It’s almost Dickensian. One could say with equal justification, “It may be the best of times, or it may be the worst of times.”
Within multichannel direct marketing, things are good. Quite good, in fact. Most business-to-business companies are reporting strong results for the first quarter and are maintaining or increasing their second quarter plans and projections. Prospecting appears to be measurably increased. Consumer performance—particularly online—is also strong. There is a lot of money being spent on enhancing online systems, talent, and analytics. The rate of multiple channel morphing has increased. Never have the slow to change companies been so far behind the curve as they are in the spring of 2006 when compared to the ‘fast players.’
On the investment side, private equity groups are awash in money, multiples paid for businesses are as healthy as they have been in years, and legions of analysts are scouring the world for the next acquisition. European companies are intensifying their investment efforts, and the three great globalizing trading blocks of North America, Asia and Europe are developing faster than projected and all have their sights on the U.S. market.
May through July, often the doldrums for catalog and direct marketers, could be a bit more rewarding this year than in recent years. Consumers and businesses have more money to spend due to the mild winter and absent any sustained series of natural disasters should continue to spend through the summer, apparently even with gasoline prices remaining high.
All regions, excepting parts of the Gulf Coast, continue stable or improved. Economic activity in all of the Federal Reserve Districts is reported as positive and expanding.
The late March 2006 Federal Reserve District reports all contained optimistic outlooks for the regional economies and reported near-universal improvement in performance across most sectors. We must give the economy good marks and encourage reasonable expansion nationally.
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 Second Quarter 2006 Circulation and Prospecting Outlook and Recommendations
and Recommendations
Synopsis
The short-term economic outlook for the catalog industry continues to be quite positive. The intermediate-term outlook remains positive for the second half of 2006, and the long-term outlook through 2007 remains positive. Our earlier concern over the yield curve inversion and its historical presaging of recession does not appear to have gained ground. Still, there are enough fundamental signs of caution to keep an eye on the health of the economy for the balance of the year, especially the dip in Leading Indicators.
Continue Prospecting
Continue ratcheting up your growth strategies for circulation and prospecting plans and do not allow new business momentum to slow. There continues to be little in the economic outlook for the second 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 only a few minor changes to the state-by-state circulation strategies.
