The year 2008 is over half way through. This year's first quarter consumer price index has increased 3.5%, followed by an additional 4.2% increase in the second quarter, and in an increase to 4.7% in the third quarter. The consumer price index in apparel/ accessory specific was 128.9 in January, and 130.3 in September.
This current 2008 data shows consumers are paying higher prices for the same items. This price increase (inflation) has occurred within a matter of months, or one quarter. The inflation also encompasses the apparel industry.
Consumer Spending
Currently, 2008's personal income has increased by .5%, or 61.5 billion dollars, as of August. However, disposable consumer income has declined by .9%, or 93 billion dollars. Personal consumption expenditures has also dropped .1%, or 3.9 billion dollars.
According to the current data, consumers in the US are begining to feel constrained by the current inflation or in the bigger picture, the failing economy. This can be seen by their income increasing but their spending abilities decreasing.
Unemployment/Employment
The begining of September 2008 saw a 100,000 job lose, which was followed by a 159,000 job lose at the end of September. This was a steep drop from the begining of August, of a 84,000 job lose. As of August of 2008 the unemployment rate is 6.1%. Male's unemployment rate is currently 6.7% and a female rate of 5.5%. These are also relatively high, considering in January the male rate was 5.1% and the female rate was 4.7% (data from August/September 2008). The most recent data shows women's unemployment rising to 5.8% and men's shooting to 7.2%. The national unemployment has reached 7% in November. Furthermore, in November alone, there has been 500, 000+ job layoffs across the country, bringing 2008's total to more then 2,000,0000+ job loss.
From this data we can see the job loss in the US is growing very rapidly. This will tighten up consumer spending, because they no longer have the necessary disposable income. In the long run companies that are more high end (expensive/non-necessity) will pay the consequences when their sales fall because of the growing unemployment rate.
Outsourcing
The US is notorious of outsourcing cheap labor from other countries. However, the trend has decreased in the current year. Imports in services and goods are down by 59%. Exports are seeing 12.3% in the second quarter, and they rose again by 3.4% in the third quarter.
Imports to the US has dropped by 7.3% in the second quarter followed by a 3.2% drop in the third quarter.
The drop of imports into the US is directly correlated to the lack of consumer/global confidence in the US economy. Global markets are uneasy in investment within the US economy because of its steady spiral downward. So the current trend is to bring some revenue into the country through exports, which is seeing a huge growth compared to past trends.
Sales and Data
In the first quarter of 2008 corporate profits saw a decrease in sales by 17 billion dollars. In the second quarter, sales fell by 60.2 billion dollars. The third quarter saw a decrease, by 14.6 billion dollars. Directly correlated to these sales, is the fall of the real GDP. In the second quarter, real GDP was at 2.8 (unhealthy but better then expected) but this number dropped to -0.5 in the third quarter. Furthermore, we see an extreme drop in sales for durable and nondurable goods in 2008. The second quarter saw a drop in durables of -.21% followed by a drop to -1.19% in the third quarter. Nondurable goods dropped in the second quarter to 0.80% which was followed by -1.51% in the third quarter.
The numbers show that retail sales for apparel (non durables) has drastically dropped. Which shows consumers buying less and buying less often. The drop in GDP shows the overall condition of the US market. The negative percentage shows we are not producing enough to meet our needs, or we consumers aren't buying in proportion to current inventories. Corporate profits are also seeing a heavy decrease, which may lead to a number of bankruptcies in the fourth quarter or in 2009. Overall we see the economy struggling and the consumer struggling. So to survive this market you need to keep that in mind when planning prices and choosing merchandise.
Look at 2009:
Data shows that 2009 will bring a deeper recession then the current one. Halting all consumer spending, bringing unemployment to double digits, bankrupt auto industries and many retailers, and we may see an adjustment in the US currency. GDP is suppose to hit 1.5% in 2008; however considering its already at -0.5% we can expect an even larger decrease. Unemployment has also reached the 2009 projecting and will grow with the loss of US auto industry. We do have hope, past trends show that a new president acts as an economic stimulus. Furthermore, the incoming president has planned a trillion dollar stimulus package including: rebuilding inf structure, increasing employment, and giving the middle lower class more disposable income. This plan in itself should turn around the economy by 2010, if implemented correctly. Which in turn will save retailers and increase consumer spending across the country.
Resources:Data shows that 2009 will bring a deeper recession then the current one. Halting all consumer spending, bringing unemployment to double digits, bankrupt auto industries and many retailers, and we may see an adjustment in the US currency. GDP is suppose to hit 1.5% in 2008; however considering its already at -0.5% we can expect an even larger decrease. Unemployment has also reached the 2009 projecting and will grow with the loss of US auto industry. We do have hope, past trends show that a new president acts as an economic stimulus. Furthermore, the incoming president has planned a trillion dollar stimulus package including: rebuilding inf structure, increasing employment, and giving the middle lower class more disposable income. This plan in itself should turn around the economy by 2010, if implemented correctly. Which in turn will save retailers and increase consumer spending across the country.
gov.first.com. Retrieved on October 25, 2008.
BEA.gov. Retrieved through October and November, 2008.
economagic. com. Retrieved October through November, 2008.
newyorktimes.com. Retrieved October 25, 2008.
