Jobs Propel Consumer Spending

As 2009 comes to an end and the holiday season is upon us, I think it's important to step back and give some thought to the lessons we've learned during the past 12 months. It's also a good time to look ahead with a renewed vision and a strong conviction that we will emerge from the current recession stronger and more competitive.

No doubt, this has been a bleak year for all of us - we went from good times to bad times in a matter of days.

While some economists believe that the recession actually started in 2007, things didn't really start to unravel until the fourth quarter of 2008. It didn't particularly matter what business you were in, the effects of the recession were felt throughout the country. As this year comes to a close, we are still wondering if the worst is behind us.

Many manufacturers are now saying they see a glimmer of light at the end of the tunnel, but I haven't heard of anyone willing to go out on a limb and say the economy is back on track. In fact, David Cross, president of Market Outlook, a San Diego, CA-based consulting firm, believes we will be in for a volatile kind of recovery. In other words, we are in for a weak recovery by historic standards. Cross believes the United States will not see any significant and sustainable job growth until the end of 2010. It is this job growth that will then set the stage for consumer spending to rebound. After that, the recovery will depend on the state of the job market and the availability of money.

This is a good news/bad news scenario - it takes jobs to induce consumer spending, and it takes consumer spending to stimulate jobs. So, as manufacturers, we can bemoan the unemployment rate is now more than 10%, or we can react in a positive fashion with the understanding that the actual employment rate is near 90%, and that consumer spending will build momentum in the months ahead.

After all, this country has approximately 80 million Americans, better known as Baby Boomers, reaching retirement age. Unlike previous generations, these individuals are expected to live longer and work longer. This equates to buying more goods and services than their parents did at the same ages. We also have another group of individuals known as Generation Y. This particular group represents another estimated 80 million people entering adulthood, and they will be spending their incomes on homes, appliances, automobiles and a host of other consumer products as they marry and raise families. As Cross points out, the United States is the only developed country expecting its population to grow at an estimated rate of 1% per year in the coming decade, which will make it a star in terms of the consumer marketplace.

So, during this holiday season, let's be grateful for what we've accomplished in this trying year, and look forward to the opportunities and challenges that come with an economic recovery in the new year. While we may not be completely out of the woods, we can now see the trees from the forest.

May the New Year bring good health, happiness and prosperity.