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TRENDING & SPENDING The Pause That Refreshes BY DARLENE GUDEA, president Darlene Gudea, PRESIDENT Frank Chow, CHIEF ECONOMIST Trade Show Executive's 3.0% JULY Trending & Spending Forecast Fig. I: TSE Forecast of Net Square Feet of Exhibit Space 3.2% 3rd Quarter 3.2% 2012 Fig. II: TSE Forecast of Number of Exhibiting Organizations 2.5% JULY 2.3% 3rd Quarter 2.8% 2012 Fig. III: TSE Forecast of Professional Attendance 2.6% JULY 4.3% 3rd Quarter 3.2% 2012 Fig. IV: TSE Annual Forecast of Revenue 6.0% Year Ending December 2012 How Trade Show Executive Magazine's Trending & Spending was compiled Trade Show Executive Magazine's Trending & Spending Forecast aggregates information from numerous sources: government and business reports; interviews with industry experts and economists; and the TSE monthly poll of its 20-member Economic Forecasting Board. Unbiased, reliable data—whether positive or negative—is the foundation of solid business planning. Oceanside, CA – Many corporate execu- tives as well as consumers are concerned that the U.S. economy's recent slowdown may turn into a repeat of last year when the first four months saw great job growth only to begin plummeting in the Spring. However, Frank Chow, chief economist for Trade Show Executive, characterized the current state of the economy by reprising a 1929 slogan from Coca Cola: "Te Pause that Refreshes." He said that economic reports this past month put a ding in the prior four months of positive momentum, but one has to understand the reasons for the slowdown to determine whether it will be as severe as last year. First, let's look at what has been reported: } Payroll growth was disappointing in March, creating only 120,000 jobs when 205,000 were expected. } Te U.S. unemployment rate fell to 8.2%, but mainly because 164,000 dis- couraged individuals stopped looking for work. Te number of people employed actually fell. } Te average number of people seek- ing unemployment benefits over the past month is at a three-month high. Unemployment benefit applications have started to tick up in recent weeks aſter months of steady declines. } Te National Association of Realtors reported the sale of previously owned home fell 2.6% in March to an annual rate of 4.48 million. Tat followed a revised 4.6 million sold in February. Housing starts also fell in March. } Te NAHB/Wells Fargo Homebuilder Index fell back to 25 from 28 in February. } Manufacturing output in New York and Philadelphia slowed a bit in April. } Aſter six months of improvement, the National Federation of Independent Business (NFIB) Small Business Optimism Index declined to 92.5 in March from February's 94.3. As owners grow more doubtful about sales and profits, hiring plans may also be put on hold. "While the above list may seem alarm- ing, there is a solid explanation for much of the widespread malaise, which focuses on two critical markets: jobs and housing," Chow said. "Tere is definitely a lull in hiring. Only 29 states reported job gains in March compared to 42 in February." He also noted that housing activity slacked off as prices continued to fall and both hous- ing starts and sales declined in March. However, he said two common threads were weaving through both sectors: warm weather and high energy prices. When energy prices rise so dramatically in a short period, companies tend to respond by putting a hold on hiring, wage increases, expansion plans, investments, and the restocking of inventory. Frank Chow, TRADE SHOW EXECUTIVE "Tere was unusually warm weather in January and February. Many economists think this prompted earlier hiring than planned and took away from March," Chow said. Likewise, a mild Winter may have encouraged more people to purchase homes earlier, essentially stealing sales from March. Gasoline prices have risen about 20% since December 31, 2011, a little more than jet and diesel fuel did. "When en- ergy prices rise so dramatically in a short period, companies tend to respond by putting a hold on hiring, wage increases, expansion plans, investments, and the restocking of inventory," Chow noted. At the same time, consumers now have less disposable income to purchase goods and services. "Tis double impact on sup- ply and demand creates uncertainty in www.TradeShowExecutive.com | May 2012 21 SPONSORED BY