Residents of Southwest Florida rely upon different signs of fall than do our friends in New England. Hints that the holidays are upon us have shifted from traditional fall foliage and the smell of wood stoves burning to more subtle cues, such as an ever increasing supply of holiday catalogs filling our mailboxes.
I confess that with the arrival of our first grandchild, I became an online shopper and ever since then, the catalog deluge began. The Internet is an amazing thing; somewhere out “there” in cyberspace, they’ve got me pegged.
Beyond the parade of catalogs for the grandchildren, my favorite is provided by a publication called “X-treme Geek.” The thousand or so geeky things this company offers are weird, cool, funny or sometimes even useful. The “Spy Scope” first captured my attention. This is a classic periscope-like device that allows you to see what’s happening around any corner; truly an essential piece of equipment for any financial advisor when paired with the trusty crystal ball.
Even without the benefit of the spy-scope to see around the corner, it’s apparent that when heading out to the malls or logging on to the Internet, consumers are facing tough issues. According to the most recent Federal Open Market Committee (FOMC) statement: “Household spending appears to be expanding, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth and tight credit.”
Moody’s U.S. Retail Outlook was recently released. This is an annual report of credit issues surrounding a particular industry and gives some insight to the stability of various segments of the retail sector. The inserted table outlines relative stability from most stable to least stable for specific retail segments.
Do your household retail expenditures match these trends? Take a look at your checkbook register and debit and/or credit card statements to observe your personal discretionary spending habits and compare that to your non-discretionary expenses, which fall into categories such as housing and utilities.
Right now, corporate profits are growing at the largest rates since mid-1975. However, unemployment at 10.2 percent is keeping many of us in a frugal mind set. The most wonderful time of the year will likely be a more modest time of year, as reflected by consumer retail sales. The cost of credit, as tracked by credit card interest rates, is increasing. Banks have hiked rates in the last 14 months, thereby tightening credit for consumers. We’re already feeling the pinch from fallen home values and rising unemployment and the option of saying “Charge it!” has become more costly.
Looking forward and gazing into the crystal ball, the outlook for retailers will likely be closely tied to consumers. Companies providing consumer staples, such as drugstores and discount retailers, continue to reap the benefits of decreased consumer spending habits, while specialty retailers will likely continue to lag.
‘Tis the season for gratitude, so here’s some good news. According to the American Farm Bureau Federation, we’ve had the biggest decline in the cost of preparing Thanksgiving dinner since 2000. This year’s survey, released Nov. 16, calculated the total cost to provide a traditional Thanksgiving meal for 10 people at $42.91, representing a 3.8 percent decrease from last year. This is the steepest fall since a 4.3 percent drop recorded at the beginning of the decade. This year’s cost decline was the first since 2004.
According to the bureau, out of the 12 items included in the cost of a Thanksgiving feast for 10, the price of a gallon of milk fell the most. Last year’s price was $3.78 and this year it is $3.09, down 18.25 percent. As reported by the American Farm Bureau Federation, the cost of a 16-pound bird at Safeway was only 37 cents per pound, taking into considering a total price of $5.88 for the bird with any additional purchase of $10 in the store.
Locally, one of our supermarkets is advertising turkey at 69 cents per pound. At that price, I’m filling the freezer. Christmas, Easter, Fourth of July – turkey is a great meal anytime at that price.
Actually, I doubt that it’s even possible to raise a 16 pound bird and deliver it your grocer’s freezer at these low prices. It is refreshing to note that our food providers understand that it’s not in anyone’s best interest to force prices up while unemployment is high.
My Spy-Scope will arrive soon, and then I’ll peer around the corner, gaze into my crystal ball and see what the future holds. For this week, I’ll focus on what we do, have rather than what we don’t. Wealth is measured in many ways, and each challenge provides an opportunity to lead a more focused and simpler life. Contentment and serenity pay dividends all year long. Invest accordingly. Happy Thanksgiving to you and yours.
Darcie Guerin, financial advisor and branch manager, Raymond James & Associates, Inc. 606 Bald Eagle Drive, Suite 401, Marco Island, FL 34145, provides this article. Gulfshore Life magazine named Guerin as one of the Best Personal Wealth Managers in the Southwest Florida area for 2009. If you have questions, e-mail her at Darcie.Guerin@RaymondJames.com or call 389-1041, toll free (866) 343-0882 or visit RaymondJames.com/Darcie. Past performance may not be indicative of future results.
If we could read the secret history of our enemies, we should find in each man’s life, sorrow and suffering enough to disarm all hostility.
Henry Wadsworth Longfellow