the September 2008 Issue in PDF Format - Trade Show Executive

T r e n d i n g & S p e n d i n g
The Big 3 American auto makers are
retooling their factories from trucks and
SUVs to smaller and more fuel-efficient
cars and hybrids. GM and Ford have lost
billions in the past year and both face
possible bankruptcy if they can’t finance
the cash needed to shift operations, Chow
noted. Chrysler has completely eliminated
its popular leasing programs due to falling
vehicle prices. The Big 3 have eliminated
more than 100,000 manufacturing jobs in
the U.S. since 2006 and are in the process
of cutting another 10,000 salaried workers
this year.
Energy-Dependent Industries
Undergoing a Metamorphosis
Coupled with the rising chorus for
more investment in wind and solar
power, liquefied natural gas (LGN)
cars, electric vehicles and drilling, the
energy-dependent industries in the
U.S. are undergoing a metamorphosis
that may determine their very survival.
As the IEA pointed out, the fastergrowing
developing countries will have
more influence on oil prices than the
industrialized nations in future years.
“This means that in the long-term –after
the energy market rids itself of enough
speculation – oil prices will once again
climb and U.S. firms must prepare now to
meet this challenge,” Chow warned.
Dismal Statistics
Economic reports from government
agencies are bleak:
• Jobs cuts are still increasing. The total
decline is 463,000 jobs so far this year
and the unemployment rate jumped to
5.7% in July.
• Retail sales are barely keeping pace
with inflation over the past few
months. The value of stimulus checks
have been offset to some extent by
higher energy costs. Their impact on
consumer spending is now waning.
• The International Monetary Fund
estimated bank losses at $510 billion
thus far, but believes total losses will
reach over $1 trillion. New York
University Economist Nouriel Roubini
estimates losses may reach $2 trillion.
• Fannie Mae and Freddie Mac, the two
largest providers of mortgage capital,
continue to have problems despite a
huge government bailout plan.
• Some 38% of small businesses
surveyed by the National Federation of
Independent Business said they plan to
raise their prices in the coming months.
• U.S. consumer prices shot up a higherthan-expected
5.6% in July, fueling the
biggest year-over-year jump in more
than 17 years.
• After adjusting for inflation, the
average weekly paycheck dropped by
0.8% from June to July, extending an
ongoing slide in real income. That left
real earnings 3.1% lower in July than
they were a year ago.
• National gains in worker productivity
are diminishing. The amount a U.S.
employee produces for every hour
grew 0.55% in Q2 of 2008.
• Central banks around the world are
raising interest rates to fight inflation.
However, recent economic indicators
in Europe have been pointing to a
slowdown there as well.
• Existing U.S. home sales fell to a 10-
year low in Q2 and the median price
for a single-family house dropped 7.6%
as the real estate recession deepened.
• Foreclosures are now a third of all
sales. Bank seizures of properties in
default rose 184% to 77,295 in July,
according to RealtyTrac. That was the
steepest increase since the company
began reporting data in January 2005.
The Herd Mentality
The economy took three steps forward
last month and a few backward, but those
forward steps are the ones that impact our
industry the most: lower energy prices,
lower food prices and the expectation
of a moderation in inflation. But show
managers have to be ever-vigilant to
stay ahead of the game. Retailing and
apparel shows are suffering the most in
this economic downturn, contributing
to a major drop in forecasted attendance
(see Figure III). And the herd mentality
is an ever-present danger – when a few
bellwethers pull out in a very public way,
others may follow suit. See how Hanley
Wood successfully overcame that scenario
on p. 28.
Trade Show Executive’s
Trending & Spending Forecast
Fig. V: Sector Performance
Best Performing Sectors
• Automotive • Manufacturing
• Business Services • Medical
• Communications • Hospitality
• Entertainment • Technology
• Government • Transportation
Mixed Performance
• Construction • Sporting Goods
worst Performing Sectors
• Apparel
• Retailing
• Food
Fig. VI: 10 Economic Indicators
Consumer Confidence: The Consumer Confidence Index
improved in July and made further gains in August, reaching 56.9
(1985=100), up from 51.9 in July and 50.4 in June.
GDP Growth: After adjusting for inflation, the economy grew
3.3% in the Second Quarter, defying the accepted definition of a
recession, which is two successful quarters of negative GDP.
Housing Starts: Construction on new homes fell 11% from
June levels and 30% from July 2007. This is the slowest pace in
more than 17 years.
Industrial Production: Industrial production increased only
0.2% in July after advancing 0.4% in June.
Inflation: Core inflation, which excludes volatile food and energy
costs, rose dramatically by 2.4% in July. Overall inflation reached
an annual rate of 5.6%.
Interest Rate: The Fed held its key federal funds rates steady
at 2%.
Job Growth: U.S. employers cut 51,000 jobs from their
payrolls in July, a net loss for the seventh straight month. This
brings the number of lost jobs this year to 463,000.
Leading Indicators:The leading index decreased sharply in
July by 0.7% as a result of plummeting building permits and
falling stock prices.
Manufacturing: Manufacturing activity was essentially flat in
July with the ISM Index at 50.2.
Retail Sales: July retail sales dropped 0.1%, led by weak auto
sales and a slump at restaurants and sporting goods stores.
Unemployment Rate: The unemployment rate edged up
slightly from 5.5% to 5.7%.
Sources: U.S. Department of Labor, Bureau of Labor Statistics;
The Conference Board; The Institute for Supply Management
(ISM); U.S. Commerce Department
www.TradeShowExecutive.com Trade Show Executive September 2008 13