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Posts Tagged ‘recession’

Majority of Americans Pessimistic About Economic Recovery

In Uncategorized on December 23, 2009 at 10:35 pm

As 2009 comes to a close and Obama’s popularity dwindles, the majority of Americans are filled with significant uncertainty and anxiety about the state of the US economy – and its prospects for a quick recovery in the New Year.

Of the 1,000 Americans surveyed by telephone over the weekend by polling firm StrategyOne, nearly 9 in 10 Americans (87%) believe the US is still in a recession and 3 in 4 (78%) disagree with economic experts that the US is no longer in a recession.

Despite increasingly optimisic talk from experts about the health of economy, just 1 in 4 (26%) believe the economy will recover fully by the end of 2010. Instead, the majority of Americans – 51% – believe the economy won’t fully recover and be back on track until sometime until the end of 2011 – or even 2012. A frighteningly high 15% believe the economy will never fully recover.

“Consumers appear more likely to believe the economy has stabilized compared to the summer, but see a pretty long road to full economic recovery,” said Bradley Honan, Senior Vice President of StrategyOne, who authored the survey. “15% of US consumers believing a full recovery won’t ever take place speaks to how deeply scarred America has been left by the recession – and how the hangover is likely to last well beyond the ‘official’ end of the recession.”

The StrategyOne survey also found that slightly more people believe that the economy is on the wrong track (48%) than on the right track (44%), and most Americans believe the economy has either “not yet bottomed out and will get worse” (34%) or that “it’s at the bottom and not getting better or worse” (19%).

That’s not to say that opinions are not shifting more positively though, indeed they are. For example, Americans are not nearly as negative about the state of the economy as they were in July.

Today 42% say the economy has “bottomed out and is getting better” compared with just 30% who felt that way in July of this year. The current StrategyOne survey found that the youngest consumers polled, those 18-34 years of age, were most likely (50%) to believe the economy has already “bottomed out and is getting better” compared with just 38% of those 55 years and older, who feel the same way. There is clearly a significant generational gap about perceptions of the economy today.

“It’s clear some of the positive discussion about the economic recovery has broken through – but there is still much, much more consumers need to hear to regain their confidence in the direction of our economy,” said Bradley Honan of StrategyOne.

Survey Methodology:

StrategyOne conducted 1,000 telephone interviews among a representative sampling of Americans between December 16 and 20, 2009. The overall margin of sampling error at the 95% level of confidence is = +/- 3.1% overall and larger for subgroups. Statistical weights were designed from the United States Census Bureau statistics.

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November Jobs Report Stirs Optimism But Economy Still Weak

In Uncategorized on December 4, 2009 at 6:30 pm

Unemployment data released today by the U.S. Department of Labor indicates that although job losses have slowed significantly, the economy continues to face challenges.

According to the report the U.S. economy shed 11,000 jobs in November, the smallest decline since the recession began in December 2007. The unemployment rate edged down to 10.0 percent. Retail job losses slowed to 14,500, compared to the more than 44,000 jobs lost in October.

“Today’s unemployment report gives hope to consumers and retailers that a recovery may not be far off. However, it is also a reminder that employers seeking to grow their workforces continue to face challenges,” said RILA President Sandy Kennedy. “Policymakers intent on stimulating job growth and the economy must focus on reducing the challenges employers face rather than erecting new barriers to job creation – which elements of the health care legislation under consideration threaten to do.”

The average of 87,000 jobs lost per month in the overall economy over the past three months is down considerably from the 700,000 per month pace of job loss at the depth of the recession.

The retail industry shed 14,500 jobs last month, an improvement over the more than 44,000 retail jobs lost in October and considerably better than the 90,800 jobs lost in November 2008. The retail industry averaged 33,000 job losses over the past three months, compared to an average of 70,000 over the same period last year.

Other economic data likewise show that the economy has begun to recover. Initial claims for unemployment insurance have fallen back to the level of last September before the worst part of the financial crisis, while increases in personal income and spending in October suggest improved prospects for families. The housing market remains weak but has stabilized, with home prices up over the past two quarters, and rising home sales whittling down the elevated inventory of homes for sale. Forward-looking surveys of purchasing managers suggest that the manufacturing sector has begun to expand, while orders for services firms are improving as well. Overall, GDP grew by nearly 3 percent in the third quarter of this year, and many forecasters believe it is on track for a similar increase in the fourth quarter. In sum, the economy remains weak, but a broad view of the data suggests that spending and incomes are on the rebound and that the job market is slowly turning upward as well.

“Today’s data confirm that the labor market is beginning to heal,” said Donald B. Marron, visiting professor at the Georgetown Public Policy Institute and RILA outside economist. “Layoffs have slowed dramatically in recent months, but new hiring remains restrained. Employers are adding hours but not yet jobs, though employment has increased in a few sectors, including temporary help services and department stores. We have a long way to go to get back to the strong economic performance that Americans have come to expect, but the economy and the job market are turning up.”

Health Care Reform and Jobs

Costly burdens, such as those imposed by the health care reform legislation passed in the U.S. House of Representatives, and the legislation currently under consideration in the U.S. Senate, could undermine economic recovery and cost more jobs for the retail industry, while also pushing insured retail employees from the health care plans they currently have and like.

“Congress simply should not pursue major initiatives that could add significantly to the cost and regulatory burdens faced by the retail industry, thus providing a disincentive to the hiring and business investment critical to ongoing economic recovery efforts,” said RILA president Sandy Kennedy.

Of specific concern are provisions within the Senate bill that would shift costs on to employers to pay for a public plan, reduce benefit-design flexibility and innovation, or not take into account the unique needs of the retail workforce such as separate treatment of part-time and holiday hires.

Entrepreneurs Thrive During Recession

In Uncategorized on November 20, 2009 at 8:44 pm

In light of poor economic conditions, entrepreneurial activity is showsing some positive signs, according to the Global Entrepreneurship Monitor (GEM) and its 2008 report, the “National Entrepreneurial Assessment for the U.S.” 

The global economic crisis that started in 2007 presents a different set of economic conditions than in the prior periods of GEM examination. As such, the 2008 report reflects the entrepreneurial behavior in times of economic distress. While traditionally GEM has examined entrepreneurial behavior for those in the 18-64 age group, this year’s report examines entrepreneurial activity for those in the 18-99 age group.  Given growing evidence of entrepreneurial behavior past the age of 64, and the likelihood that all GEM countries will move to this new convention, the GEM U.S. team decided to make this change immediately in order to have a fuller picture of entrepreneurship in the United States. When appropriate, comparing the United States to other GEM countries, this report uses data from the 18-64 age group.

One of the great advantages of a research program such as GEM is that it systematically examines entrepreneurship issues through annual surveys, allowing for examination of the characteristics of entrepreneurship, actions and qualities of individual entrepreneurs and factors in the environment impacting entrepreneurship in diverse economic conditions.

Report findings

-Total entrepreneurial activity (TEA) increased to 10.8% in 2008 from 9.6% in 2007.

-Opportunity continues to be the main driver for entrepreneurs in the United States – 87% started their businesses because of a business opportunity while only 13% started their businesses out of necessity.

-The United States continues to be at or near the top of the world’s innovation-driven economies in terms of early-stage entrepreneurial activities.

-Perceived opportunity is substantial despite a greater fear of failure. This fear of failure has increased appreciably in the U.S. and in the other GEM countries. Perceived opportunity has declined in the U.S. and in the other innovation-driven countries. It is important to note, however, that the decrease in perceived opportunity is only off its high levels of 2007. Thus, perceived opportunity is still substantial despite a greater fear of failure. This contrasts with the marked decrease across the board in GEM countries for individuals who expect to start a business in the next three years.

The Changing Entrepreneur

The Aging Entrepreneur: For the total entrepreneurship and the established firms measures, the results indicate a marked reduction (around 8% to 9%) in entrepreneurial activity for individuals in the 18-44 age group and an increase of a similar amount in the 45-98 age group. While previous reports pointed toward this trend, this year’s data indicate the need to follow this trend closely because of possible implications for U.S. entrepreneurial behavior.

The Shrinking Entrepreneur: Size of the ventures entrepreneurs are thinking about is changing. From 2007 to 2008, the number of jobs entrepreneurs expected to create from their startups decreased in all categories – no jobs, 1-5 jobs, 6-19 jobs – except in the category of 20+ jobs.

* The Service Economy: GEM indicates a continuation of the trend toward a business service- and away from a manufacturing-economy. Looking at particular sectors of entrepreneurial activity, U.S. activity is more concentrated in the business services sector and less concentrated in the transforming sector than the activities of other countries in the innovation-economy group, for both early-stage and established firms.

Battle Of The Sexes

Women Rising: The TEA for women shows a marked increase (6.1% to 7.5%) while the TEA for men shows a slight decrease (10.7% to 9.8%).

Cash Crunch: Women start ventures with eight-times less funding than their male counterparts.

Different Visions: Men and women differ on the businesses they start. Men are more likely to start business-service businesses than consumer-oriented businesses (47% vs. 24%), while women are more likely to start a consumer-oriented rather than a service-oriented business (52% vs. 26%). However, for established businesses, roughly one third of businesses started by men and women are consumer-oriented and service businesses.

Opportunity Vs. Necessity: Men are substantially more motivated than women by opportunity (93% vs. 68%) as opposed to necessity (5% vs. 21%).

Failure And Status: In the realm of established business, women entrepreneurs have reported greater fear of failure and lower perceptions that business success leads to higher status than male entrepreneurs.

Ethnicity And Immigration

African Americans Are Starters: African Americans have higher levels of start-up activities than whites (13.9% vs. 8.4%) while having significantly lower rates of established ventures (8.1% vs. 1.8%)

Non-Mexican Hispanics Vs. Whites: Activities of non-Mexican Hispanics are near those of whites for start-ups (8.6% vs. 8.4%), but for established firms are lower (5.5% vs. 8.1%).

The Immigrant Experience: With few exceptions, the entrepreneurial pattern continues when breaking the data down by immigration status.

Funding

Individuals Invest, Governments Don’t: In terms of financing, the number of adults reporting that they had invested in someone else’s business increased (to 5%), as did the amount they financed ($17,500); yet those numbers are countered by the precipitous decline in SBA lending.

Geek Economy: In terms of technology, the 2008 survey data indicate that while early-stage entrepreneurs continue to be cautious when it comes to developing technology products, the number of entrepreneurs involved in the technology sector–either by starting an Internet business and/or using web marketing or being willing to spend more than $1,000 on new technology–all increased in 2008.

Where’s The Cash?: There is a decline in both the perception of good opportunities and in the availability of funding for entrepreneurs.

Shift In Social Entrepreneurship: GEM concludes that more new and established ventures are seeing the necessity and opportunity of serving a broader social mission while also managing and growing the bottom line.

Top Green Jobs During the Recession

In Uncategorized on October 13, 2009 at 11:01 pm

Green Dream Jobs and green workforce development consultant Jim Cassio released data that shows the top green job titles posted by employers and in which cities over the past year – during the recession.greenjobs

Although a plethora of studies show the potential for green jobs going forward, many note the dearth of data on current green jobs in the U.S. economy. Green Dream Jobs, online since 1996, collects concrete historical and current data on the job titles employers are actually looking to fill.

“The leading job tiles show the breadth of green positions across the economy,” says Rona Fried, Ph.D., CEO of SustainableBusiness.com, which runs Green Dream Jobs. “Most people think of energy auditing and renewable energy as green jobs, but leading non-profit organizations are major employers, and people needed to run projects and analyze data are in demand, as well as those in sales and business development. Engineers are also in demand for renewable energy operations and even in this economy, we’re still seeing many job openings in green building.”

“The data also point to the variety of skill levels employers seek – from executive skills as Executive Director of green non-profits (NGOs), to mid-level skills associated with analysis, project development and managerial positions, to entry level skills for positions like Administrative Assistant,” notes Jim Cassio.

Interestingly, the most frequently keywords used by job seekers to find job openings on Green Dream Jobs match many of the available positions: sustainability; climate change; wind, solar, construction manager, architectural designer, executive director, naturalist.

The top city for green employment over the past year is Washington DC, reflecting the many executive director positions at green NGOs. Other top 10 cities are those with aggressive green business incentives and policies: the San Francisco Bay area, New York, Seattle, Boston, Chicago, Portland, Oregon and Burlington, Vermont. The top 20 cities include Houston, Madison, Wisconsin, San Jose, Los Angeles and San Diego in California, and Philadelphia.

Although there have been fewer green job openings over the past year, there are a wide variety of employment opportunities in many fields and for people of all skill levels. As the economy recovers, we expect a surge in openings in the various renewable energies, as we saw in previous years. Green Dream Jobs will soon launch the Green Jobs Educational Directory to help people locate the hundreds of green job training programs under development across the US.

 Top 20 Green Job Titles

    Executive Director, Nonprofit
    Project Leader/Manager
    Sustainability Program Director/Manager
    Sales/Business Development Associate or Manager
    Marketing Manager/Coordinator
    Community Crew Leaders/Supervisors, Conservation Associations
    Business/Data Analyst
    Research Analyst/Manager
    Environmental Educator/Naturalist
    Account Executive/Manager, Sales
    Professor (various academic fields)
    Sustainability Analyst/Consultant
    Operations Manager
    Wind Energy Engineer
    Administrative Assistant
    Trainer, Training Specialist or Training Coordinator
    Electrical/Design Engineer
    Green Architect
    Green Building Project Manager
    Solar Process Engineer/Process Integration Engineer

U.S. Regulators Slow To Adopt Global Accounting Standards

In Uncategorized on September 22, 2009 at 6:45 pm

According to a survey conducted by the American Accounting Association (AAA) and KPMG LLP, accounting faculty at universities throughout the United States believe their students and the U.S. economy will be at a disadvantage if U.S. regulators do not adopt a set of globally accepted accounting standards, and if universities do not take immediate steps to incorporate International Financial Reporting Standards (IFRS) into U.S. accounting curricula.

The second annual KPMG-AAA Faculty Survey, conducted during July and August 2009, showed that nearly half of the 500 professors who responded believe the United States should transition to IFRS to remain competitive, and three-quarters think IFRS needs to be immediately incorporated into their school’s curricula.

Half of the professors responding to the survey said they thought a low sense of urgency exists among U.S. regulators to adopt IFRS by a “date certain,” while only 16 percent thought regulators had a high sense of urgency.

Seventy-four percent of respondents said that U.S. adoption of IFRS will occur through convergence of U.S. GAAP (Generally Accepted Accounting Principles) with IFRS by 2015 or later. Meanwhile, 17 percent think U.S. public companies will be required to adopt IFRS outright by 2015 or earlier; while nine percent think IFRS will not be adopted by U.S. companies.

Most Significant Challenges

The KPMG-AAA Faculty Survey found that seven in ten professors said their most significant challenge to teaching IFRS is making room for it in the curriculum (This is in contrast to last year’s survey where respondents cited developing curriculum materials as the top challenge). Despite this challenge, 70 percent said they have taken significant steps to incorporate IFRS into the curriculum. Further, 83 percent believe IFRS needs to be incorporated into their curricula by 2011.

“University professors throughout the United States recognize that teaching IFRS is critical in preparing our accounting students to excel in the global marketplace and finding space to fit IFRS in the curriculum is the challenge,” said Manny Fernandez, KPMG’s National Managing Partner, University Relations and Recruiting. “Not surprisingly, nine out of ten professors surveyed by KPMG and the AAA believe it is very important to teach IFRS to U.S. students.”

When asked to assess their university’s preparedness to teach IFRS, only a small fraction (eight percent) thought at least half of their school’s accounting faculty were qualified to teach it. Slightly more than half of the professors (55 percent) were also concerned that administrators do not understand the magnitude of the curriculum change required to respond to IFRS adoption in the United States.

“The findings of the KPMG-AAA survey suggest that we have made progress, but there is still much work to be done in optimizing how IFRS is taught in our university classrooms,” said Philip M. J. Reckers, Ph.D., recent Chair of the American Accounting Association’s Education Committee and Professor of Accountancy at Arizona State University’s W. P. Carey School of Business. “Professors, university administrators, regulators and thought leaders in the accounting profession need to work together to make sure the curricula is timely and relevant.”

Other Key Findings

Given the dynamics of the current regulatory environment, 79 percent of faculty believe that U.S. GAAP should continue to be taught over the next 3 to 5 years, while progressively incorporating more IFRS concepts on a compare and contrast approach as the conversion date approaches.

The first graduating class of accounting students to enter the workforce with a substantial knowledge of IFRS education will be the class of 2015, according to 40 percent of professors – three years later than the date most often cited in the prior survey.

Fifty-nine percent of faculty believe that the CPA examination will include significant IFRS content by 2012/2013 and 54 percent expect comprehensive coverage of IFRS in intermediate accounting textbooks by 2011/ 2012.

Market: Slow to Recover, Slow To Adopt

But given current economic conditions and much slower-than-anticipated recovery, the delay in adopting these standards is understandable, according to industry research firm IBISWorld.  The present nature of work being undertaken by the industry is in a dramatic midst of change, with more emphasis now on bankruptcies, liquidations and workouts for clients. Far less emphasis is being undertaken on corporate advisory and capital raisings, constrained by the global banking crisis, credit squeeze, and stock exchange floats.

Entrepreneurs Haute This Fashion Week

In Uncategorized on September 4, 2009 at 10:14 pm

Fashion week is approaching and despite the recession putting a damper on retail sales, industry research firm IBISWorld ranks fashion design as one of the top start-up opportunities for entrepreneurs in 2009. As fashionable clothing is becoming more affordable and consumers start to regain confidence, the Los Angeles-based firm forecasts industry-wide recovery to take place in the second-half of 2010, with an average annualized growth of roughly 6.3 percent in the coming five years.

“Consumer attitudes toward spending are changing, and it’s shaping the direction of fashion,” said George Van Horn, senior analyst at IBISWorld. “Being style-conscious doesn’t mean people aren’t being budget-conscious, and vice versa. Successful fashion houses are those delivering style and quality with affordability, and we can expect this trend to linger for the foreseeable future.”

As the saying goes, cheap is chic. With overall prices being driven down, retailers offering luxury apparel, like Saks Fifth Avenue and Neiman Marcus, have been the hardest hit, cutting costs and discounting stock in an effort to sustain profit margins.

Industry-wide, fashion design businesses have seen significant pressures on margins in recent years, with current levels approaching 6 percent versus 30 percent only a few years ago. The need to retain contracts and ensure ongoing cash flow is yet another factor behind prices going down. Even prestigious designers are bailing on displaying their latest collections on the runway or have declared bankruptcy, such as German fashion house Escada and couture designer Christian Lacroix.

“This has certainly been a make-or-break year for fashion,” said Van Horn, who advices new entrants to differentiate their services based on smart pricing strategies, quality and creative self-marketing, rather than through reliance on advertisement. “In recent years, smaller independent designers have been sprouting like never before, largely attributed to the growing popularity of online retail, as well as relatively low entry barriers and start-up costs. This has helped give the industry the ability to move forward, despite the retail sector taking a big hit.”

Additional links

Fashion Design Services: http://ibisworld.com/industry/default.aspx?indid=1413
Clothing Accessory Stores: http://ibisworld.com/industry/default.aspx?indid=1070
Women’s Clothing Stores: http://ibisworld.com/industry/default.aspx?indid=1067
Big Box Retail Stores: http://ibisworld.com/industry/default.aspx?indid=1092
Miscellaneous Retail Stores: http://ibisworld.com/industry/default.aspx?indid=1106

Majority of Companies Believe U.S. Economy Will Rebound in Early 2010

In Uncategorized on August 25, 2009 at 6:24 pm

New research from Deloitte issued today shows that although most major companies surveyed believe that the U.S. economy will start improving in early 2010, many of those same companies will lag behind the general economy when the rebound occurs. The reason: Too much focus on short-term, tactical actions and little attention to structural changes and strategic investments that are needed to support growth in the new business environment.

Approximately 55 percent of companies surveyed feel the U.S. economy will start showing signs of recovery in the first or second quarter of 2010; though 25 percent think relief won’t come until the third quarter or beyond.

Industry research firm  IBISWorld forecasts the US economy will decline by 3% in 2009, and will not return to its normal course until 2011. Believing unemployment will continue to rise into the first quarter of 2010, Dr. Richard Buczynski, chief economist at IBISWorld, believes it won’t be until 2011 that overall economic activity will again surpass 2008 levels.

After implementing initial cost cutting measures when the economy first began to tumble — such as reducing salaries, layoffs and plant shutdowns — many companies are now are confused about their next steps,” said Kelly Marchese, principal, Deloitte Consulting LLP. “We believe these businesses should stop focusing on short-term concerns and look at their business in this new reality. Businesses need to focus on areas such as talent, growth and structural change so that their business doesn’t just survive — it thrives.”

Deloitte also identifies the following three key economic phases and their timeframes that businesses need to recognize, and provides recommendations for corporate leaders to consider as they focus their business revitalization efforts during these uncertain times:
Phase 1: Over the Edge: companies were focused on shuttering their business, generating cash, and looking at tactical cost reduction. Survival was priority number one.
Phase 2: Lumpy and Bumpy: the current phase of the economic downturn where companies need to place the focus on structural changes, strategic investments and a resetting the profit model.
Phase 3: Growing into a New Reality: this is what companies need to prepare for; where the new economics, market realities and competitors emerge.

“Like any recession, this one will play out in stages and will vary by industry,” said David Brainer, principal, Deloitte Consulting LLP. “And, regardless of which stage your company fits, or the speed of change, you must move beyond tactical, reactionary moves and make structural changes needed to support growth. To make this shift, companies need to be proactive and prepare now for the new growth environment, whatever it may look like.”
As Deloitte sees it, every organization grows at its own pace, determined by factors as large as the global economy and as personal as its current balance sheet. But, every business must grow — the only question is how. Getting it right requires deep industry and business insights that help identify smart, well-timed investments. But, that’s just the beginning. Profitable growth also involves effectively assimilating and integrating those investments, something far too many companies fail to accomplish. It’s not just about strategy; it’s also about practical execution.

For more information and a copy of the Deloitte survey visit: www.deloitte.com/us/heretodaywheretomorrow

For IBISWorld’s economic forecast “Economic Crisis: When Will It End?” visit: http://www.ibisworld.com/recession2009/default.aspx

Consumer Behavior Trends Sparked By Recession

In Consumer Trends, economy, Uncategorized on July 27, 2009 at 6:29 pm

Americans Spending Differently

According to Research and Markets, 90% of US consumers believe that they are currently living in a recession. This is indicative of an intensifying recessionary mindset influencing consumer behavior. Symptomatic of falling consumer confidence is the fact that more than one-in-three US consumers experienced a worsening financial situation, falling job security and falling confidence in the housing market in 2008-09.

The study shows that:

•56% of US consumers feel that their lifestyle has been impacted by the recession. Suddenly, they have been forced to re-evaluate their spending, including where they do their grocery shopping as well as their in-store choices.

•44% of US shoppers are frequent buyers of private label products. Many are now likely to consider private label products to be on a par, if not better than market leading brands across sectors.

•For 72% of US shoppers, lower prices have a high amount of influence over where people do their shopping. Nevertheless, the quality of products sold similar influence over their (changeable) grocery shopping destinations. This is symptomatic of the intensifying value-consciousness across FMCG product sectors.

Women More Likely To Pinch Pennies

Women are cutting back more on discretionary expenditures than men in poor economic times, according to a new survey conducted by Opinion Research Corporation. Of those who participated in the survey, 86 percent of women reported spending less on elective expenditures compared to 78 percent of men.

When asked specifically about the lifestyle changes that have been made in the past 12 months due to the current economic environment, those surveyed provided the following responses:

•58 percent of women are eating out less, compared to 48 percent of men
•54 percent of women are buying fewer clothes and shoes, compared to 40 percent of men
•48 percent of women are shopping more at discount stores, compared to 37 percent of men
•36 percent of women are cutting back on charitable giving, compared to 26 percent of men
•31 percent of women have cancelled or postponed vacations, compared to 22 percent of men
Additionally, the survey found that 22 percent of men reported making none of these lifestyle changes, compared to 14 percent of women.

“More and more women are now responsible for managing the family’s finances, and they are more cost-conscious as the economy tightens their purse strings,” said Paula DeLaurentis, managing director, strategic alliances, TD AMERITRADE. “As a result, women are cutting back on daily expenditures and luxuries now more than ever.”

The survey also revealed that the down economy has affected the lifestyles of people living in the Northeast during the past 12 months, more so than any other region in the United States, particularly the West.

Key findings include:

•52 percent of those surveyed from the Northeast have postponed a major purchase compared to 39 percent of those from the West.
•19 percent of those surveyed from the Northeast have postponed adding to the family, such as, pregnancy, adoption and foster children, compared to 7 percent of those from the West.
•50 percent of those surveyed from the Northeast are buying fewer clothes or shoes compared to 44 percent of those from the West.

Strain on Career and Relationships

The recession is also splitting up and straining more marriages and relationships in America than in eight other major nations, according to a global survey commissioned by ING DIRECT. More Americans also believe that they will have to work at least ten more years before retiring – more than any other surveyed country. Yet, Americans are the least likely to sacrifice things people in other leading nations are willing to give up like their cars and pets to save money.

Nearly three in ten Americans (29 percent) say the recession has “added stress to,” “strained,” or even “ruined” their marriage/relationship. American love lives have been the hardest hit compared to just 12 percent in Germany, 24 percent in France and 23 percent in Canada.

Americans are not just feeling the economic pressure at home; it appears to be affecting their retirement plans too. Forty percent of Americans say the current economic situation will cause them to retire at a later age. Of those Americans who said they will retire later, 34 percent think they will have to work ten or more years than originally planned.

“Whether it’s at home, in the boardroom or in the car showroom, people around the globe are affected by the recession,” said Arkadi Kuhlmann, President of ING DIRECT USA. “The long term benefit is that people are cutting costs, saving more money, and learning to build a financial buffer for their future. Clearly, some of these global trends need to become a habit.”

In general, people around the globe agree that food is the last thing they would sacrifice to save money, but no nation loves their vehicles and pets more than America. Interestingly, a recent report from market research firm IBISWorld indicates that despite the recession, families purchasing dogs and cats as pets has actually increased by 2.4 percent since last year.

When asked to name the last three things they would sacrifice to save money, 30 percent of Americans said their vehicle. Only Brits (30 percent) love their cars as much, while Italians (14 percent) and Spaniards (18 percent) are more willing to unload their vehicle. In the US, nearly a quarter of Americans (22 percent) put a high priority on pets compared to Canadians (17 percent), French (15 percent) and Italians (12 percent).

Other sociological savings trends from the study include:

Having a financial buffer in case of emergency is the most important saving goal

Austria – 53 percent
France – 43 percent
USA – 35 percent (#1 saving goal)

 

Retirement is the most important saving goal

USA – 16 percent (#3 saving goal)
UK – 6 percent
Italy – 2 percent

Avoid credit card purchases to save money

USA – 46 percent
Germany – 11 percent
Italy – 17 percent

Cooking at home, bringing lunch to work to save money

USA – 51 percent
Canada – 44 percent
Italy – 20 percent

 The online survey was commissioned by ING DIRECT and conducted by TNS in nine countries where ING DIRECT operates, including Australia, Canada, United States, United Kingdom, France, Germany, Italy, Spain and Austria. In the United States, the survey took place between May 26 – June 9, 2009 among 1,052 adults age 18+.

 

For Research and Market’s full report, “The Global Economic Crisis: The Impact On Consumer Attitudes & Behaviors in the United States”, click here.

For IBISWorld’s full report, “Economic Crisis: When Will It End?”, click here.

Stagnant Forecast for Financial Services Companies This Year

In Uncategorized on July 6, 2009 at 5:21 pm

financeThe majority of global financial services companies expect no return to growth until the first six months of 2010 or even later, according to the latest research conducted by Ernst & Young.

Market research firm IBISWorld also projects revenue growth to remain low, with activity revolving around changes to the industry this year. Industry revenue for 2008 came out to over $37 million, representing a 34 percent plunge.

As an indication of just how deep the recession is impacting the financial services sector, just over two thirds of those polled expect to increase the amount of time they spend on securing the future of their business.

The industry was clearly taken aback by the ferocity and depth of the downturn: 72% of respondents were surprised at the severity and 70% were surprised by the speed of the financial crisis. Only 30% had seen any improvement in their business over the last 12 months, compared to almost 50% that had not.

Tom McGrath, managing partner of Ernst & Young’s EMEIA financial services business, comments: “The end of the recession and a return to profitability is a tough one for any industry to call. But financial services are naturally more cautious – and possibly more realistic – about when the return to profitability might happen.”

The reorganization of the industry will be fundamental and it will vary by sector. However, managers are working hard to position their organizations to emerge stronger when the recovery comes – but there may well be some more casualties.”

Pennies being pinched, as profitability continues to decline

What is clear is the business-changing impact that the recession is having on the structure of financial services companies – and the toll it is taking on their bottom lines.
The majority (70%) of institutions have permanently changed their risk management strategy as a result of the crisis: 68% had implemented permanent differences to their regulatory framework and over half (54%) have changed their operating model. And it is easy to see why: almost six in ten financial institutions have seen their profitability decline and 56% have seen overall revenues decline in the same period.
If there is any silver lining, it is that 61% of respondents have had more opportunity to improve cost cutting in the last six months. Four in ten also plan to hive off their non-core or non-performing business, compared to five in ten in a similar survey earlier in the year.
Keith Pogson, managing partner for Ernst & Young’s financial services business in the Far East, said: “Fierce competition, volatility in the capital markets and business complexity are key concerns for any large enterprises, but they weigh more heavily on global financial institutions.”

Financial services clear on action from authorities

The sticky issue of pay and reward strongly divided respondents: 45% thought it needed more regulation while just under a third disagreed.

 

Financial services were also found to be broadly supportive of national and global initiatives aimed at stimulating the capital markets and easing the impact of the recession. However, only a third believed that their government should retain a stake in the financial services industry, with banking and insurance respondents the most skeptical suggesting that the time for bailouts may have come to an end.

 

Almost two thirds were inclined to agree that cooperation between international governments had played a central role in helping domestic and international economies in the last 12 months. Two thirds were supportive of their national governments economic policies in the past six months and half of the respondents believed their governments were powerful enough to solve their economy’s woes although a distinct minority (29%) felt they were ineffective in the face of the global recession.

 

Carmine DiSibio, managing partner for Ernst & Young’s Americas Financial Services Office, comments: “The financial services industry has been battered, but will certainly emerge from this recession stronger and healthier, with more focus on risk management. As the industry recovers, we are likely to see changes in operating models and regulatory frameworks. It’s likely to be a new world, and financial services firms will find their way together.”

Americans Still Not Spending

In economy, Uncategorized on June 25, 2009 at 4:58 pm

spendingAccording to Mintz.com, Americans are continuing to tighten their belts through Q1 of this year. 2008 data shows users of the online personal finance service cutting spending by an average of 4% each quarter, and by another 4% in Q1 2009. Overall Q1 2009 spending was down 17% versus Q1 2008 across eight key categories. This indicates that, at a national level, the leading money management and budgeting service’s users remain concerned about the length and depth of the U.S. recession and its potential impact on family job loss and economic security.

This continuing trend of regular expense reductions tells me that consumer confidence is not yet on the rise,” said Aaron Patzer, CEO and founder of Mint.com. “Our users are looking for more concrete evidence that the U.S. economy is truly bottoming out before they’ll be returning to prior spending levels … if in fact they do. While it’s tough to know that 17% of last year’s spend has fallen out of the American economy, it’s satisfying to know that our financial management and budgeting software appears to be helping our growing user base weather one of the longest downturns in our nation’s history.”

The most dramatic decrease is in Shopping, where user spending has dropped by more than 40%, which is significant savings in aggregate, but was accomplished by a steady, gradual 3-5% cut each month in a discretionary category where that type of control is possible

Users have also cut spending quarter over quarter in Entertainment (by 24%) and Bills & Utilities (by 16%)

Other categories have fluctuated quarter over quarter based on seasonal shifts, but still show a net decline:

Spending on Gifts and Donations was down 1%, in spite of a 25% spike in Q3 and Q4 with election donations and the holiday season
Automotive spending has seen the broadest swing in spending, with the extreme variance in gas prices in the same time period, but still nets at a 24% decline over the examined quarters.

The only category that has completely recovered is Food & Dining, where spending in Q109 was actually higher than it was a year prior – but just by 2%.

“This data suggests that Mint’s current tools and guidance are working well for our users today,” said Patzer, “But there’s much more opportunity to make budgeting and planning easier and more effective for more Americans. We’ll be introducing new and improved product features and educational content in Q3 and Q4 designed to do just that.”

Economic Recovery Anytime Soon?

As unemployment continues to rise and disposable income drops, no one is anticipating a fast recovery. Consumers have become increasingly concerned for their jobs and are saving rather than spending.

According to market research firm IBISWorld and their latest report on the economic crisis, we can expect the economy to contract overall by 3% in 2009 – the worst decline in more than 50 years. The lowest point may have been reached in the first quarter, and it will not be until 2011 that overall economic activity will surpass 2008 levels.