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Perhaps you didn’t see it on Thursday. After Friday’s 1000+ point swing in the stock market you probably don’t want to look for it. But the economy may not be all that bad. WHAT??!!
If you didn’t notice, IBM, one of the bellwether stocks, released a positive earnings report that slightly exceeded analsysts’ expectations. Apparently, according to the article in the NY Times, Oracle has also been doing well. But who knew?
If you survived the front page of the paper with its doom and gloom headlines and photos and made it to the business section (more bloodletting) you may have read this on page 3. But what I really found interesting was the thought that we are so focused on the credit crisis that we’re not noticing that the non-financial sector may actually have some positive news. Here’s what it said:
“The I.B.M. report, analysts said, might be an early sign that the corporate sector outside of banking is withstanding the turmoil in the financial markets better than had been expected.
More evidence is needed, however, before investors will be convinced, they cautioned. While some other technology bellwethers, like Oracle, have said they see little sign of a slowdown, others, like Dell and SAP, have warned that the weakening global economy was hurting their results.
‘Every bit of sunshine helps here, but the stock market is totally obsessed by the credit crisis,’ said Edward Yardeni, an independent investment strategist. ‘But if we start getting better-than-expected numbers from other companies, that could provide a big lift.’”
Is that a big IF? Who knows? There’s been so much coverage of this crisis that even the war in Iraq gets scant mention these days. What are the other companies/sectors that are doing well? If you’re not in the finance or auto industries has your daily income been affected? Your 401k has taken a hit but has your lifestyle taken a big hit because of this or if so, is it more because of the high gas prices?
I do not deny the severity of the credit crisis but there do seem to be some bright spots and unless reporting in the media becomes more balanced the glass will be completely empty.
Faced with the economic crisis, American consumers may be eating out less and buying fewer cars. But their passion for digital electronic gadgets isn’t fading as quickly, according to the Consumer Electronics Association.
“Despite all of the other indications that we’re in a recession, consumer electronics spending continues to hold up pretty well,” said DuBravac. “In some categories, they’re doing phenomenally well.” For instance, sales of flat-panel TV sets are up 40 percent so far this year, GPS navigation systems sales are up 95 percent, and sales of video gaming hardware have grown 21 percent.
For the upcoming holiday season, DuBravac predicted sales of home entertainment gear would remain strong, with unit sales of TV and stereo equipment up 4.7 percent from the year before and unit sales of game hardware up 3.5 percent.
DuBravac said the US economy is certainly in a recession, with citizens slashing their purchases of many big-ticket items. But he added, “We’re allocating more of what we do spend to consumer electronics.”
He also said 16 percent of the average American’s purchases of durable goods are of some kind of electronic device, up from 14 percent in 2005.
“It’s never been this high,” DuBravac said.
But independent analyst Roger Kay of Endpoint Technologies Associates Inc. in Wayland was skeptical about the industry’s rosy scenario. “Most of the macroeconomic information that I’m dealing with shows the likelihood of consumer cutbacks in a lot of categories,” said Kay. “The higher price points are probably going to be hurt noticeably this holiday.”
Kay said less expensive electronic devices, like low-cost laptops and cellphones, will probably do well this year. “I would certainly look for declining average selling prices in every category,” he said. “The more expensive it is, the more likely it is to be dead in the water. If it’s cheap, it’s OK.”
But DuBravac said he’s seen little evidence of this. For example, sales of laptop computers have remained strong, even though desktop machines generally cost less. “Consumers really want that mobile experience,” he said.
Also, DuBravac said consumers will often buy expensive home theater systems as a substitute for travel, dining out, or going to movies.
By Hiawatha Bray, Boston Globe, October 8, 2008
http://www.boston.com/business/technology/articles/2008/10/08/consumer_electronics_sales_grow/