Future May Hold Pleasant Surprises for Retailers - Feb.2001
According to some retailers, the press has almost been trying to talk the
economy into stalling. While sales figures were down for the holidays compared
to last year, it seems the future may not be as bleak as otherwise reported.
The year started out with gloominess for many, as expectations dropped and
confidence was seen slipping. Early reports from January, however, showed
that Americans are spending more than predicted. Analysts, meanwhile,
continue to hold steadfast the belief that the economy will rebound by the next
As the jewelry industry approaches the first shows of the year with
caution-jewelers at the show in Vicenza, Italy, for example, were buying
cautiously-other industries are showing strong and unexpected results. One
automotive company, for example, cancelled plans to shut down two plants after
consumer demand came roaring back in 2001.
Retail sales at major department stores, meanwhile, are up by about 4% for
The New York Times reports that corporate profits and investment
spending may fall, but cites tight labor markets and interest rate cuts as
keeping the economy expanding.
A Reuters poll forecasts the economy will slow to 1.1% annualized growth pace in
the first quarter of 2001 (from around 2 percent at the end of 2000). The
forecast predicts, however, that growth will recover to 3.4 percent at the end
of the year.
The National Retail Federation’s Chief Economist agrees.
"Our forecast is that we will experience a slowdown that, with the Fed's
help, will not end in a hard landing," says Rosalind Wells. "With the
Fed easing monetary policy early in the year, we anticipate a re-acceleration of
growth later in the year."
The NRF says there is no hard evidence of an economic slowdown, citing U.S.
Commerce Department statistics that holiday sales in items like apparel and
accessories were 5.3% higher than 1999.
But the good news doesn’t seem to have reached American jewelers — according
to reports, sales last Christmas were flat, and in January they are doing best
with smaller diamonds and other lower-priced merchandise. Retailers in other
industries say that consumers are cautious, yet still buying luxury items like
automobiles, boats and yachts.v