Follow The Recession

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2009-03-31T22:12:00.004+12:00

This blog is now at followtherecession.com
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Trend: people aren't eating out anymore

2009-02-02T20:18:00.005+12:00

The very crowded can't- get - a seat cafe I go to was empty at lunchtime today.

People have decided to bring their lunch to work to save money.

The good news is that cafes are having to get real about the crazy prices they like to charge.

Take this story of dining in Oklahoma - where like everywhere, the recession is "scorching the restaurant industry."

A cafe owner had to do something drastic or his restaurant would go under too.

So he started an all-you-can-eat sushi for $9.99.

And it brought the business back.

The recession will end in... how about 2012?

2009-02-02T20:13:00.002+12:00

About time someone started getting real about how long and how deep this downturn / recession/ depression is really going to be.

Hail courageous Mr Husing.

In California Riverside County has sunk into a deep recession — potentially the most prolonged since the Great Depression — and might not recover until 2012, economist John Husing says in a report to the Riverside County Board of Supervisors.

Months ago, Husing said he saw recovery in 2010. He now predicts the rebound won't arrive until 2011 or 2012.

Going for broke - courts can't keep up with company failures

2009-02-02T20:05:00.003+12:00

The law can't cope with the number of companies going broke.

It's becoming a world wide picture.

NBR reports Auckland’s High Court has had to schedule extra sessions to cope with the increasing number of companies going under.

The number of businesses being placed into liquidation is rising dramatically as the recession bites: last week in Auckland alone, more than 100 companies were called in court proceedings to be closed or placed into liquidation.

In the UK, a company which broadcasts English Premier League football under the name GTV to tens of thousands of subscribers across Africa has gone into liquidation.

In Minnesota today, the newspaper, the Star Tribune's move to file for Chapter 11 bankruptcy puts 1,400 local workers' jobs in limbo.

A bombshell of a week

2009-01-31T19:28:00.005+12:00

What a bombshell of a week.

Carved out from the landscape are many thousands of jobs and businesses collapsed or on the verge of it.

Quote of the week: "Everybody is trying to figure out how to survive"

It's from Brian Bethune, economist at IHS Global Insight and makes it sound as if a Hiroshima-type bomb has devastated the land.

But he's right as it's the way many people are feeling.

People have stopped spending. Warehouses are full of goods no-one at home or abroad want or can afford or use. Manufacturing has stopped.

And the layoffs this week? Who can keep up. Ford, NEC, Cessna, Kodak, Black & Decker, Boeing Co., Pfizer, Caterpillar, Home Depot, Target Corp, Starbucks, Saks, Warner Bros, Intel. Here's a list of the 100,000 or more in the US alone.

The records keep falling. Worst January ever for the Dow, the US economy's last quarter shrunk by more than since 1982 - meaning the USeconomy shrank at the fastest pace in 26 years.

And US unemployment lines have stretched to the longest on record, a sign that the U.S. labor market continues to worsen.

(Bomb photo credit: US National Archives)

Online shopping mall takes a hit

2009-01-12T13:53:00.002+12:00

Telecom has had a reality check.

It has decided to close its online shopping mall Ferrit.

“Ferrit has continued to grow during the past three years but the current retail environment has meant the break-even point has shifted out a number of years. The decision has now been made to refocus and resources will be directed to other areas,”

Cafes next to fall?

2009-01-12T13:42:00.003+12:00

People with designer dogs and flash clothes don't have to worry - yet.

But others are reaching for their basics brand instant coffee instead of their usual $4+ coffee fix.

Independent research house IbisWorld says coffee, small clothing stores and car dealerships face the biggest threat of going under as a deteriorating economy leads to more job losses.

Tyre manufacturing, car retailing, international airlines and real estate are among the jobsu most at risk..\

The US is "broke"

2009-01-10T20:42:00.005+12:00

It's not easy telling the grim truth.
There has been an outcry in some quarters over the suggestion that US is in such serious trouble, it itself is broke.
The doom message came from Peter Schiff who is president of Euro Pacific Capital and author of "The Little Book of Bull Moves in Bear Markets" in an op-ed in the Wall Street Journal.
"The bad news is that our economy is broken and there is nothing the government can do to fix it. However, the free market does have a cure: it's called a recession, and it's not fun, easy or quick. But if we put our faith in the power of government to make the pain go away, we will live with the consequences for generations."

Schiff is no fool. He had been preaching the decline in the housing market way ahead of when it happened and at a time others were predicting nothing but boomtimes ahead.

Now they are talking of the D word after job figures

2009-01-10T20:22:00.004+12:00

Figures out today in the US are causing the dreaded D word to be used.

In December 524,000 jobs were lost.

The New York Times reported it as "reflecting a pervasive fear among employers that if they fail to shed workers quickly their companies may go under in a recession poised to become the worst since the 1930s."

And unemployment hit a 16-year-high of 7.2 percent.

One way to drive people to drink

2009-01-10T16:53:00.001+12:00

Australia needs a lifesaver this year

2009-01-03T16:16:00.006+12:00

Melbourne's Age paper has a grim prediction for 2009 today from the country's top economists:

A quarter of a million Australians could lose their jobs and growth will slow to a crawl - unemployment will hit 6.4 per cent by the end of this year — more than a percentage point above the official Treasury forecast — and growth will slow to 0.7 per cent.

Call that conservative!
And in the US the jobless queues are growing fast: The number of laid-off

workers drawing unemployment benefits rose to 4.5 million in late December.

This article comparing today with the Great Depression notes that during that depression, unemployment didn´t start with 25 percent. In 1929, the unemployment rate was less than five percent and in 1930, unemployment was below 10 percent. It was not until 1933 that unemployment peaked at a staggering 25 percent. The obvious conclusion is that rising unemployment is a progressive consequence of continued economic deterioration.
(Photo credit: Tourism Australia)

What happened to US confidence?

2009-01-02T23:12:00.002+12:00

Andrew Leonard writing in today's Salon notes in taking a hard look at the 08 meltdown:
The self-satisfaction bequeathed to Americans by their victory in the Cold War and their unchallenged status as superpower has been irretrievably punctured and replaced by fear. The world seems far more fragile than it did a year ago. It baffles comprehension that so much could go so wrong so fast.

Recession causes a rush of divorces

2009-01-02T22:56:00.003+12:00

Economic stress is adding to the usual end of year rash of couple breakups.
Says a California lawyer about the strain financial struggles can add to already rocky relationships.: "It's like throwing gas on a fire."

Driving the demand in the UK, notes the Independent, are the wives of wealthy husbands who are no longer prepared to watch their claim on a fortune eaten away by the recession.

One US "marriage expert" says it's said a 10 percent drop in property prices leads to a 5 percent increase in the divorce rate. "But the economy is so bad now that it’s making it that much more difficult for people to afford a divorce. The division of property and assets is just a nightmare."

Hollywood Heads for the Ruins

2009-01-02T22:41:00.004+12:00

Hollywood and the entertainment industry are facing a horror movie of their own in 09.
- Studios are canning plans for big budget movies
- TV ad revenue is down
- DVD sales are down 5% in the US
- Blu-Ray sales have dropped about 5% and are not in mass market yet
- sources for film financing - like other loans- have dried up
- Movie attendances were down 5% last year

That Great Depression tale about how people went out for entertainment to escape their economic woes no longer holds true.
In this fascinating LA Times story on Hollywood's terrible plight, there is acknowledgment that as the recession drags on, it will affect moviegoing at a time when consumers are getting more of their entertainment at home with their big-screen TVs, video games and the Internet.

The Independent reports even fantasy movies are for the chop and notes as one example how -when the media was asleep- Disney quietly withdraw from producing The Voyage of the Dawn Treader, the next in the Chronicles of Narnia series of films based on the children's books by C S Lewis.

Best Sales Sign so far this recession

2009-01-01T20:19:00.004+12:00

Media, entertainment stocks fall off the cliff

2009-01-01T12:36:00.004+12:00

Entertainment and media stocks have done so badly this year, one longtime industry watcher says "it largely debunks the theory that these industries do well in a recession."

So let's hear no more of the argument that in a recession we're staying inside reading newspapers and watching re-runs on free to air TV.

The stock falls are bigger than most sectors as this list shows:
GateHouse, down 99.55% in this calendar year McClatchy, down 93.6% Lee Enterprises, down 97.3% Journal Register Co., down 99.58% Media General, down 92.47%

Desperate retailers try the bundle trick

2009-01-01T11:41:00.004+12:00

The malls are back to being dead. Retailers are trying the
bundle trick - "hey buy this or that or anything and we will throw in something else for half price, quarter price.. OK still not happy? we will make the second item free - does that suit?"

Understatement of the year (and its only Jan 1) goes to The NZ Retailers Assn which says this year's challenges "are here for a little longer yet", (yeah like a couple of years of blood on the retail floor) and stating the obvious- that the fate of retailers in 2009 likely tied to the state of the global economy.

This in a country where the NZX 50 index closed an abysmal 2008 with a record 33 per cent fall for the year

Leading US right winger Fox news host Bill O'Reilly has written a column for New Years describing the economic chaos hitting many Americans "like a back alley mugger, " and adding: " What a disgrace. Wall Street hustlers gamed the system by trafficking in bad loans while Congress and the Securities and Exchange Commission looked the other way. Awful. "So, I learned a painful lesson from all that: Big Brother is not watching out for us. Orwell had it wrong. We are pretty much on our own, as the federal government simply cannot or will not protect the folks from danger. Never again will I assume the feds are looking out for me."

Sony struggles in the recession

2008-12-31T22:35:00.004+12:00

Sony - which laid off 8 thousand or 4% of its global work force - is now struggling with an overpriced gaming console it has yet to make money from - the PS3 (right).
Now comes new US sales figures for November from NPD showing PS3 sales dramatically falling while its rivals increase. Sales of the PS3 fell 19% last month from a year earlier, while sales doubled for the Wii console and rose 8% for the Xbox 360.
The WSJ speculates this morning that Sony's strategy of selling a pricey game machine with advanced features and cutting-edge components appears to be backfiring as a deepening recession has U.S. consumers more price sensitive than ever.
It points out that if Sony doesn't close the gap with its rivals, it could risk making the PS3 an afterthought to game publishers, who focus most of their resources on the machines with the most users. that it's possible to buy a Blu-ray player and an Xbox 360 for less than a PS3 and that Sony gambled and lost in its stupid policy of not cutting PS3 prices to boost sales before the holidays because of Sony Chief Executive Howard Stringer's commitment to making the games division profitable after heavy investment in the PS3 machine.
Businessweek gives some suggestions on what's needed if PS3 is to be saved.
Information Week notes it's cheaper now to make a PS3 after Sony cut costs but this may still be too late.

Consumers lost -confidence plunges

2008-12-31T12:54:00.003+12:00

US consumer confidence plunged to a historic low in December amid the rapidly deepening recession and the outlook for the next six months is "quite dismal," according to a private research firm, which has been measuring consumer confidence since 1967.

Consumers' outlook for the first half of 2009 remains "quite dismal," and they see "only a modest recovery" in the second half of the year.

Australian stocks are among many to end 2008 with their worst annual fall on record after a year scarred by the global financial crisis.

Big UK retailers go bust

2008-12-30T22:48:00.000+12:00

The Independent reports two more big UK retailers have collapsed into administration, becoming the latest victims of the Christmas retail crisis and sparking fears over hundreds of jobs.

USC, the 58-store branded fashion chain backed by the business tycoon Sir Tom Hunter, appointed the accountancy firm PKF as administrator and Passion for Perfume, a 45-store fragrance chain, has also called in the administrators.

They follow the appointment of administrators by Whittard of Chelsea, the coffee and tea specialist, The Officers Club, the menswear chain, and Zavvi, the entertainment retailer.

Good on you, President!

2008-12-30T18:15:00.003+12:00

"The market is in the process of correcting itself." -- President George W. Bush, in a Mar. 14, 2008 speech.

Check out the other bad predictions of the year compiled by AP.

Empty space as retail chains trim their store numbers

2008-12-30T16:50:00.002+12:00

The amount of abandoned and empty office, warehouse and business space continues to grow.Watch for two other retail trends in the next few months.

Stores will close - and chains will reduce their number of stores.

Bloomberg reports a prediction from the International Council of Shopping Centers that US retailers may close 73,000 stores in the first half of 2009.

Talbots Inc. and Sears Holdings Corp. are among chains already closing underperforming locations.

It's like the old Soviet Union

2008-12-30T16:45:00.004+12:00

A Toronto Sun columnist, Eric Margolis, likens the US car industry to the old Soviet Union:

Economically declining, bereft of new ideas, producing unwanted products, run by dimwitted careerist bureaucrats.

America produces the wrong cars, and far too many. The bloated auto industry must downsize. It has been selling cars only thanks to the steroid of cheap, easy credit — in effect, almost giving them away. Now that the drug is largely cut off, sales have nosedived.”

He makes the excellent suggestion that Americans (and us all) must

relearn the old verity that one must save for purchases and rainy days; that gambling with your home is idiotic; that there is no substitute for hard work or manufacturing; and that it’s always very risky to trust politicians or financial “professionals” with your money.

WSJ today quotes analysts estimating that from about

10% to 26% of all US retailers are in financial distress and in danger of filing for Chapter 11.

Retailers will trim inventory and reduce the number of suppliers. That, in turn, will cause a ripple effect, prompting a number of weaker manufacturers, small brands and underfunded fashion labels to fail. New retail formats and concepts stores are likely to be curtailed in the coming year. And luxury-goods makers already are working to cut the long lead times between orders and store delivery as a way to reduce risk.

“We will have a lot fewer stores by the middle of 2009,” says Nancy Koehn, professor of business administration at Harvard Business School. “It’s happening very, very quickly because of the financial crisis and the recession.”

Gloom heading online?

2008-12-30T16:41:00.002+12:00

In what may be an early indicator of broader Web advertising trends, the New York Times announced today that it saw total Internet advertising revenues decline 3.8 percent.

The online falloff contributed to a 20.9% drop in overall ad revenues and a 13.9% decline in the company’s total revenues last month. It also signals a further chilling of the online ad market for newspapers and other Web publishers. The company is counting on rising digital revenues to offset the long-term decline in print advertising and circulation battering the entire newspaper industry.

BNET notes an even bigger online issue:

An entire wave of Web 2.0 players – YouTube, MySpace, Facebook, Digg, Twitter, Flickr, etc. – have started losing their luster as it became clear they had not developed a sustainable business model. Although venture capital continued to fuel a vibrant sector of startups, the major question looming over these emerging companies was how they would attain the necessary scale to become profitable.

Cheap prices give Amazon a boost

2008-12-30T16:39:00.002+12:00

Amazon.com is calling this holiday season its “best ever,” saying it saw a 17% increase in orders on its busiest day — a rare piece of good news in a season that has been far from merry for most retailers, including online businesses.

Amazon customers ordered more than 6.3 million items on Dec. 15, compared with roughly 5.4 million on its peak day last year, the company said. It shipped more than 5.6 million products on its best day, a 44% surge over 2007, when it shipped about 3.9 million on its busiest day.

Amazon’s best-sellers included the Nintendo Wii game console, Samsung’s 52-inch LCD HDTV and Apple Inc.’s iPod touch.
Forrester Research analyst Sucharita Mulpuru said Amazon’s experience shows the current economy is favoring discount retailers, both online and offline.