the September 2008 Issue in PDF Format - Trade Show Executive
the September 2008 Issue in PDF Format - Trade Show Executive
the September 2008 Issue in PDF Format - Trade Show Executive
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T r e n d i n g & S p e n d i n g<br />
The Big 3 American auto makers are<br />
retool<strong>in</strong>g <strong>the</strong>ir factories from trucks and<br />
SUVs to smaller and more fuel-efficient<br />
cars and hybrids. GM and Ford have lost<br />
billions <strong>in</strong> <strong>the</strong> past year and both face<br />
possible bankruptcy if <strong>the</strong>y can’t f<strong>in</strong>ance<br />
<strong>the</strong> cash needed to shift operations, Chow<br />
noted. Chrysler has completely elim<strong>in</strong>ated<br />
its popular leas<strong>in</strong>g programs due to fall<strong>in</strong>g<br />
vehicle prices. The Big 3 have elim<strong>in</strong>ated<br />
more than 100,000 manufactur<strong>in</strong>g jobs <strong>in</strong><br />
<strong>the</strong> U.S. s<strong>in</strong>ce 2006 and are <strong>in</strong> <strong>the</strong> process<br />
of cutt<strong>in</strong>g ano<strong>the</strong>r 10,000 salaried workers<br />
this year.<br />
Energy-Dependent Industries<br />
Undergo<strong>in</strong>g a Metamorphosis<br />
Coupled with <strong>the</strong> ris<strong>in</strong>g chorus for<br />
more <strong>in</strong>vestment <strong>in</strong> w<strong>in</strong>d and solar<br />
power, liquefied natural gas (LGN)<br />
cars, electric vehicles and drill<strong>in</strong>g, <strong>the</strong><br />
energy-dependent <strong>in</strong>dustries <strong>in</strong> <strong>the</strong><br />
U.S. are undergo<strong>in</strong>g a metamorphosis<br />
that may determ<strong>in</strong>e <strong>the</strong>ir very survival.<br />
As <strong>the</strong> IEA po<strong>in</strong>ted out, <strong>the</strong> fastergrow<strong>in</strong>g<br />
develop<strong>in</strong>g countries will have<br />
more <strong>in</strong>fluence on oil prices than <strong>the</strong><br />
<strong>in</strong>dustrialized nations <strong>in</strong> future years.<br />
“This means that <strong>in</strong> <strong>the</strong> long-term –after<br />
<strong>the</strong> energy market rids itself of enough<br />
speculation – oil prices will once aga<strong>in</strong><br />
climb and U.S. firms must prepare now to<br />
meet this challenge,” Chow warned.<br />
Dismal Statistics<br />
Economic reports from government<br />
agencies are bleak:<br />
• Jobs cuts are still <strong>in</strong>creas<strong>in</strong>g. The total<br />
decl<strong>in</strong>e is 463,000 jobs so far this year<br />
and <strong>the</strong> unemployment rate jumped to<br />
5.7% <strong>in</strong> July.<br />
• Retail sales are barely keep<strong>in</strong>g pace<br />
with <strong>in</strong>flation over <strong>the</strong> past few<br />
months. The value of stimulus checks<br />
have been offset to some extent by<br />
higher energy costs. Their impact on<br />
consumer spend<strong>in</strong>g is now wan<strong>in</strong>g.<br />
• The International Monetary Fund<br />
estimated bank losses at $510 billion<br />
thus far, but believes total losses will<br />
reach over $1 trillion. New York<br />
University Economist Nouriel Roub<strong>in</strong>i<br />
estimates losses may reach $2 trillion.<br />
• Fannie Mae and Freddie Mac, <strong>the</strong> two<br />
largest providers of mortgage capital,<br />
cont<strong>in</strong>ue to have problems despite a<br />
huge government bailout plan.<br />
• Some 38% of small bus<strong>in</strong>esses<br />
surveyed by <strong>the</strong> National Federation of<br />
Independent Bus<strong>in</strong>ess said <strong>the</strong>y plan to<br />
raise <strong>the</strong>ir prices <strong>in</strong> <strong>the</strong> com<strong>in</strong>g months.<br />
• U.S. consumer prices shot up a higherthan-expected<br />
5.6% <strong>in</strong> July, fuel<strong>in</strong>g <strong>the</strong><br />
biggest year-over-year jump <strong>in</strong> more<br />
than 17 years.<br />
• After adjust<strong>in</strong>g for <strong>in</strong>flation, <strong>the</strong><br />
average weekly paycheck dropped by<br />
0.8% from June to July, extend<strong>in</strong>g an<br />
ongo<strong>in</strong>g slide <strong>in</strong> real <strong>in</strong>come. That left<br />
real earn<strong>in</strong>gs 3.1% lower <strong>in</strong> July than<br />
<strong>the</strong>y were a year ago.<br />
• National ga<strong>in</strong>s <strong>in</strong> worker productivity<br />
are dim<strong>in</strong>ish<strong>in</strong>g. The amount a U.S.<br />
employee produces for every hour<br />
grew 0.55% <strong>in</strong> Q2 of <strong>2008</strong>.<br />
• Central banks around <strong>the</strong> world are<br />
rais<strong>in</strong>g <strong>in</strong>terest rates to fight <strong>in</strong>flation.<br />
However, recent economic <strong>in</strong>dicators<br />
<strong>in</strong> Europe have been po<strong>in</strong>t<strong>in</strong>g to a<br />
slowdown <strong>the</strong>re as well.<br />
• Exist<strong>in</strong>g U.S. home sales fell to a 10-<br />
year low <strong>in</strong> Q2 and <strong>the</strong> median price<br />
for a s<strong>in</strong>gle-family house dropped 7.6%<br />
as <strong>the</strong> real estate recession deepened.<br />
• Foreclosures are now a third of all<br />
sales. Bank seizures of properties <strong>in</strong><br />
default rose 184% to 77,295 <strong>in</strong> July,<br />
accord<strong>in</strong>g to RealtyTrac. That was <strong>the</strong><br />
steepest <strong>in</strong>crease s<strong>in</strong>ce <strong>the</strong> company<br />
began report<strong>in</strong>g data <strong>in</strong> January 2005.<br />
The Herd Mentality<br />
The economy took three steps forward<br />
last month and a few backward, but those<br />
forward steps are <strong>the</strong> ones that impact our<br />
<strong>in</strong>dustry <strong>the</strong> most: lower energy prices,<br />
lower food prices and <strong>the</strong> expectation<br />
of a moderation <strong>in</strong> <strong>in</strong>flation. But show<br />
managers have to be ever-vigilant to<br />
stay ahead of <strong>the</strong> game. Retail<strong>in</strong>g and<br />
apparel shows are suffer<strong>in</strong>g <strong>the</strong> most <strong>in</strong><br />
this economic downturn, contribut<strong>in</strong>g<br />
to a major drop <strong>in</strong> forecasted attendance<br />
(see Figure III). And <strong>the</strong> herd mentality<br />
is an ever-present danger – when a few<br />
bellwe<strong>the</strong>rs pull out <strong>in</strong> a very public way,<br />
o<strong>the</strong>rs may follow suit. See how Hanley<br />
Wood successfully overcame that scenario<br />
on p. 28.<br />
<strong>Trade</strong> <strong>Show</strong> <strong>Executive</strong>’s<br />
Trend<strong>in</strong>g & Spend<strong>in</strong>g Forecast<br />
Fig. V: Sector Performance<br />
Best Perform<strong>in</strong>g Sectors<br />
• Automotive • Manufactur<strong>in</strong>g<br />
• Bus<strong>in</strong>ess Services • Medical<br />
• Communications • Hospitality<br />
• Enterta<strong>in</strong>ment • Technology<br />
• Government • Transportation<br />
Mixed Performance<br />
• Construction • Sport<strong>in</strong>g Goods<br />
worst Perform<strong>in</strong>g Sectors<br />
• Apparel<br />
• Retail<strong>in</strong>g<br />
• Food<br />
Fig. VI: 10 Economic Indicators<br />
Consumer Confidence: The Consumer Confidence Index<br />
improved <strong>in</strong> July and made fur<strong>the</strong>r ga<strong>in</strong>s <strong>in</strong> August, reach<strong>in</strong>g 56.9<br />
(1985=100), up from 51.9 <strong>in</strong> July and 50.4 <strong>in</strong> June.<br />
GDP Growth: After adjust<strong>in</strong>g for <strong>in</strong>flation, <strong>the</strong> economy grew<br />
3.3% <strong>in</strong> <strong>the</strong> Second Quarter, defy<strong>in</strong>g <strong>the</strong> accepted def<strong>in</strong>ition of a<br />
recession, which is two successful quarters of negative GDP.<br />
Hous<strong>in</strong>g Starts: Construction on new homes fell 11% from<br />
June levels and 30% from July 2007. This is <strong>the</strong> slowest pace <strong>in</strong><br />
more than 17 years.<br />
Industrial Production: Industrial production <strong>in</strong>creased only<br />
0.2% <strong>in</strong> July after advanc<strong>in</strong>g 0.4% <strong>in</strong> June.<br />
Inflation: Core <strong>in</strong>flation, which excludes volatile food and energy<br />
costs, rose dramatically by 2.4% <strong>in</strong> July. Overall <strong>in</strong>flation reached<br />
an annual rate of 5.6%.<br />
Interest Rate: The Fed held its key federal funds rates steady<br />
at 2%.<br />
Job Growth: U.S. employers cut 51,000 jobs from <strong>the</strong>ir<br />
payrolls <strong>in</strong> July, a net loss for <strong>the</strong> seventh straight month. This<br />
br<strong>in</strong>gs <strong>the</strong> number of lost jobs this year to 463,000.<br />
Lead<strong>in</strong>g Indicators:The lead<strong>in</strong>g <strong>in</strong>dex decreased sharply <strong>in</strong><br />
July by 0.7% as a result of plummet<strong>in</strong>g build<strong>in</strong>g permits and<br />
fall<strong>in</strong>g stock prices.<br />
Manufactur<strong>in</strong>g: Manufactur<strong>in</strong>g activity was essentially flat <strong>in</strong><br />
July with <strong>the</strong> ISM Index at 50.2.<br />
Retail Sales: July retail sales dropped 0.1%, led by weak auto<br />
sales and a slump at restaurants and sport<strong>in</strong>g goods stores.<br />
Unemployment Rate: The unemployment rate edged up<br />
slightly from 5.5% to 5.7%.<br />
Sources: U.S. Department of Labor, Bureau of Labor Statistics;<br />
The Conference Board; The Institute for Supply Management<br />
(ISM); U.S. Commerce Department<br />
www.<strong>Trade</strong><strong>Show</strong><strong>Executive</strong>.com <strong>Trade</strong> <strong>Show</strong> <strong>Executive</strong> <strong>September</strong> <strong>2008</strong> 13