New York—In a “super session” on Jan. 14 at the National Retail Federation Annual Convention here at the Jacob K. Javits Center, three veteran retail investment analysts gave their views on where they see the economy heading this year. But if you were expecting a consensus or some sort of clear prognosis, forget it.
For instance, Stephen Roach, chief economist for Morgan Stanley, worries that the current economic shakiness is nothing more than “another one of these false alarms. … This recession has more to do with purging the excesses of the boom of the 1990s than with Sept. 11.” He added that he believes “we’re going to see a relapse on the demand front,” referring to the bump in consumer demand late in the holiday 2001 season brought on by deep discounting on the part of retailers. “This is a classic set-up for a double-dip recession,” he said, noting that five of the past six recessions had similar ups and downs. “Consumers are just not ready yet to begin a demand build-up.”
“We’re in a period of stagnation: Consumers are still worried about unemployment and the stock market uncertainty,” said Walter Loeb, president of Loeb Associates. “Maybe by the end of the year, we’ll come out of the recession.” In explaining the current retail customer dynamic, he noted that consumers have “downsized in their spending on vacations, luxury items, and smaller cars.”
Bill Wolf, managing director, head of the retail industry group for Goldman, Sachs & Co., said his view of the economy as it affects retail spending “is more tepid” than Loeb’s and Roach’s. “For the past nine to 12 months,” he pointed out, “consumers have continued to spend. Real income growth has remained steady.” At the same time, however, he cautioned that because of the uncertainty of the state of the economy, “it’s not a good environment for retailers to take on additional risks.”