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Libey Incorporated
Economic Outlook
Secrets of the Catalog Master
Vol. MMV No. 5 August 2005
(Continued--page 3)
The Third-Fourth Quarter 2005 Regional Economic Outlook
Once again, the regions have performed consistently and continue to ride the economic boom of the housing market. Spending and manufacturing activity continues to improve and job generation appears to have some momentum. The nation, by and large, is doing reasonably well and better than predicted.
There are signs in the leading indicators that slowing is approaching. If these are accurate (and they usually are), we could see a downturn in economic strength in the late months of 2005 or early 2006. These signs have been consistent in the last three months and seem to be heralding some degree of economic change. However, the long term interest rates continue to act opposite conventional wisdom, especially with the ten increases to interest rates made by the Fed in 2005. This is unusual and seems to point to the strong housing market as its rationale. As always, oil prices are scary. At writing, the rate was around $64 a barrel. The oil situation could go totally out of control, but so far Americans are not reacting to the high prices. Behavior, in almost all economic areas, is opposite of what would normally be expected, and that is a warning sign.
However, we continue to strongly encourage multi-channel direct marketers in pursuing prospecting and customer contacts reasonably aggressively, through the fall months and into the coming holiday season. We remain positive for the third quarter 2005 outcome and the balance 2005. All regions continue to remain positive.
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)
Mixed to Slower
None
The Third-Fourth Quarter 2005 Circulation Outlook and
Recommendations
Synopsis
The short-term economic outlook for the catalog industry continues to be positive through the third and fourth quarters of 2005. There continue to be signs of slowing emerging in the leading indicators, which may indicate moderation in the late fourth quarter and early 2006. The intermediate-term outlook, however, remains positive for the balance of 2005 and into 2006, and the long-term outlook through 2007 remains positive.
Keep Prospecting
For the fifth time this year, I repeat my prospecting recommendation:
Once again, perspective is essential. If you will think back over the years and recognize how many companies have regretted their short-term decisions to pull back in either economic downturns or periods of uncertainty, you will reflect again on the reality that reducing prospecting and house mailings at any time is always a strategy for slowing the growth and profitability of the business longer-term. The savings of a few thousand dollars in times of uncertainty or cloudy economics can result in the loss of many more thousands of dollars in future profits and business valuations. Multi-channel marketers are having solid results through the end of July. They have invested in advanced online marketing and have wisely continued to support, grow and invest in their catalog businesses because they understand, know and believe that those catalogs are driving substantial number of online orders. Our strategy should be about focus and consistency. Those are the qualities that deliver increased corporate valuation. The point: Prospecting in all channels isn’t an optional strategy; it is a constant strategy that produces profits.
Nation At A Glance
The detailed economic conditions for each state have been integrated into the following recommendations. Changes to circulation recommendations through the Second Quarter 2005 are highlighted in bold italics. A number changes are recommended for the second quarter, all shifts from Normal to Increased mailing.
