Issue link: https://tradeshowexecutive.epubxp.com/i/78074
TRENDING & SPENDING Why Trade Shows Are Outper- forming the Stagnant Economy BY DARLENE GUDEA, president Oceanside, CA – Federal Reserve Chair- man Ben Bernanke characterized the U.S. economy as "disappointing" in a July speech before Congress and said that future improvement in unemployment is likely to be "frustratingly slow." He went on to say that Second Quarter GDP growth will be below the 1.9% recorded in the First Quarter and then lowered forecasts for the rest of the year and next. So now that the Fed Chairman has con- firmed what everyone already suspected, where do we go from here? "Bernanke's statements support what I have been proclaiming for about a year: the U.S. economy will remain in a period of prolonged stagnation until the delever- aging process is completed," said Frank Chow, chief economist for Trade Show Executive Media Group. "Consumers have reduced their credit card balances, stock trading, gas usage, mortgage payments, vacations, and most discretionary spend- ing. But that is not enough," Chow said. "Until consumers feel they have regained their net worth lost from the Great Reces- sion, this process will continue." He noted that a Federal Reserve survey pegged a typical family's loss at about 39% of their wealth, pushing Americans down to where they were financially in 1992. Large and small businesses are much further down the road due to extreme cost-cutting aſter the financial crisis hit. Tis was not borne out of any business acumen but due to great fear and a surviv- al response, Chow said. "Corporations still have over $2 trillion in cash waiting to be invested," he said. "Tis healthy corporate balance sheet is the main reason I believe trade shows in general have continued to perform better than most other sectors." The Hiring Equation In the final quarter of 2011, companies resumed hiring significantly but that tapered off by the Second Quarter of 2012. Monthly job growth averaged 226,000 in the First Quarter, but slowed dramatically to 75,000 in the Q2. Unemployment has hovered above 8% all year. Economists estimate that it takes gains of roughly 125,000 a month to keep the unemploy- ment rate from rising. To understand how stuck the economy is, Chow said to con- sider this: the number of Americans out of work at least six months remains near record levels at 5.4 million, which is 42% of all those unemployed. "Te economy must add 13 million jobs over the next three years — 362,000 jobs a month — to bring unemployment down to just 6% and GDP would have to rise 4% to 5%," Chow said. "Tis is not likely to happen." Corporations still have over $2 trillion in cash waiting to be invested. This healthy corporate balance sheet is the main reason I believe trade shows in general have continued to perform better than most other sectors. Frank Chow, TSE CHIEF ECONOMIST Instead, recent data point to an econo- my becoming more bogged down: y Economic activity in the manufactur- ing sector contracted in June for the first time since July 2009, according to the nation's supply executives in the latest manufacturing ISM Report On Business®. y Te Conference Board's Consumer Con- fidence Index fell in June for the fourth straight month. y Retail sales have fallen for three straight months with sales dropping (0.5)% in June — first time since the height of the financial SPONSORED BY Trade Show Executive Trending & Spending Economic Forecast MONTH, QUARTER AND FULL YEAR Reforecasting revenue targets are a common exercise these days for se- nior executives as business conditions change rapidly, sometimes for the bet- ter, sometimes for the worse. Volatility in the economy, geo-political develop- ments, competition, inflation and many other factors can wreak havoc with assumptions made a month, quarter or a year ago. Unbiased, reliable data — whether positive or negative — is the foundation of solid business planning. Trade Show Executive Magazine's Trending & Spending Forecast ag- gregates information from numerous sources: government and business re- ports; interviews with industry experts and economists; and the TSE monthly poll of its 20-member Economic Fore- casting Board. Here is their forecast for August, Q3 and 2012 Full Year: October 2012 FORECAST 2.3% NET SF 2.1% EXHIBITORS 3rd Quarter 2012 FORECAST 3.1% NET SF 3.8% EXHIBITORS Full Year 2012 FORECAST 3.7% NET SF 3.5% EXHIBITORS 4.2% ATTENDEES $ REVENUE =5.0% © 2012, Trade Show Executive Magazine, Oceanside, CA (760) 630-9105 3.8% ATTENDEES 3.6% ATTENDEES www.TradeShowExecutive.com | August 2012 19 = = =