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St. Louis Business & Technology News
"When you think Saint Louis, think Saint Louis Front Page," a weekly publication covering the news and events in the greater St. Louis area. 
How To Reach Us:St. Louis Front Page P.O. Box 1354 St. Louis, MO 63188 Voice: 314-771-0200 Fax: 314-771-0300 To submit news, contact: editor@slfp.com To advertise, contact: advertising@slfp.com |
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Financial Experts Claim Credit Crisis Not Over ST. LOUIS, MO (SLFP.com), December 23, 2007 - U.S. financial professionals believe the U.S. economy will weaken over the next 12 months but will not slip into recession in 2008, according to results of a new survey conducted in early December by the Association for Financial Professionals (AFP). More than a third of the survey respondents also expect their organizations to expand their U.S. workforce in the coming year. Financial professionals expect gross domestic product (GDP) to grow modestly in 2008, with the median prediction at 2.5 percent. Only four percent expect the economy to contract in 2008. After a year that featured a falling U.S. dollar, highly volatile energy prices, a deteriorating housing market, and a sub-prime mortgage crisis impacting parts of the credit market in the late summer and fall, financial professionals are less optimistic about business conditions than at the beginning of 2007. Forty-nine percent of financial professionals expect business conditions to weaken during 2008, while 37 percent expect business conditions to remain the same. Fourteen percent of respondents, however, expect the economy to pick up in 2008. "The financial professionals we surveyed have a deep, comprehensive understanding of the market forces and business dynamics affecting the U.S. economy," said Jim Kaitz, President and CEO of AFP. "They are managing operations affected by credit, employment, and dollar valuations day in and day out, leading corporate borrowing and business investment initiatives, and working in a wide range of industries and in public and private organizations of varying sizes. Their views are excellent indicators of future business conditions." Top concerns of financial professionals are the decline in the U.S. dollar, rising energy prices, and the housing market. Eighty-two percent of financial professionals are paying closer attention to the declining value of the U.S. dollar; 63 percent of respondents believe the U.S. dollar will continue to decline against the Euro, while 54 percent expect the dollar to decline against the yen. With regard to energy prices, 30 percent of financial professionals believe energy prices will increase significantly during 2008; 56 percent believe energy prices will increase but only "slightly." Home prices, respondents believe, will continue to decline in 2008. The turmoil in credit markets resulting in part from disruptions in the sub-prime mortgage sector has had some impact on corporate credit, according to survey respondents. Most financial professionals believe credit markets may suffer more disruption in 2008. Sixty-six percent of financial professionals believe the worst of the credit turmoil is not yet over, while only 15 percent of respondents think the opposite. A positive sign for business though is that access to credit has remained stable over the past six months. Seventy-three (73) percent of respondents indicate that there has been no change in their organization's access to short-term credit over the past six months with 77 percent reporting the same in regards to long-term debt. Relatively few financial professionals believe their organization's access to credit will deteriorate in 2008, even in a tightened credit market environment. In terms of hiring, slightly more than one-third (36 percent) of financial professionals report that their organizations plan to increase their U.S. workforce over the next year, while 39 percent expect that their organizations will maintain current workforce levels. Between November 29th and December 11th, AFP surveyed U.S. financial professionals about current and expected business conditions in the U.S. The survey generated 651 responses from professionals holding a variety of positions within their organizations, including CFO, VP of finance, and treasurer and assistant treasurer. Aggressive Cost-Cutting Boost Appeal for Holiday Shoppers ST. LOUIS, MO (SLFP.com), December 23, 2007 - With economic concerns contributing to sluggish early holiday sales reports, Standard & Poor's Equity Research Services believes that consumers will focus their spending on broadline and discount retailers this season. According to a 2007 Standard & Poor's Equity Research Services poll of consumers regarding holiday spending, 82% plan to shop at discounters and 40% at department stores. While Standard & Poor's Equity Research Services believes overall spending will slow to a 3% to 3.5% rate of growth in the current holiday season versus the average gain of 4.8% in the past 10 years, these retailers may stand to gain, as more than half (53%) of consumers polled see their biggest 2007 holiday spending increase coming from in-store purchases. The survey showed that among respondents, there was a preference for national retailers associated with heavy discounting and strong price-value propositions. The one-stop shopping convenience and low prices of big-box discounters, such as Wal-Mart (WMT: Hold; $48) and Target (TGT: Hold; $52), are particularly appealing, in our view, as consumers look to stretch their holiday dollars. In turn, super centers are looking to grow sales by increasing fresh food offerings, along with exclusive and branded products. "We expect the aggressive price cutting in toys, food, apparel and home merchandise, which started earlier in the holiday season, to continue," says Joseph Agnese, Super Centers Analyst for S&P Equity Research Services. "Discounters are well positioned to benefit as consumers facing seasonal factors, such as higher energy costs, trade down to lower-priced goods and take advantage of late discounts on products, including electronics." Among those surveyed, apparel is at the top of most shopping lists. Standard & Poor's Equity Research is anticipating stronger sales in men's apparel than women's, due to a perceived lack of fashion must-haves this season and expected markdowns. We also anticipate stronger sales growth in fashion and fine jewelry, cold weather accessories, and perfume, although European luxury branded apparel and accessories may be hurt by price increases attributed to a weak US dollar. "The slowing economy and dollar depreciation may cut into the purchasing power of the aspirational shopper, which is a growing segment for upscale chains," notes Jason Asaeda, Retail Analyst with Standard & Poor's Equity Research Services. "As moderate-price shoppers once again hold out for last- minute deals, we believe promotional activities will be key sales drivers for department stores, such as Macy's Bloomingdale's division (M: Hold; $27) and Saks Fifth Avenue (SKS: Hold; $21). However, this has also created an opening for retailers like Kohl's (KSS: Buy; $46) and T.J. Maxx (TJX: Buy; $29), in our view, as an increased number of consumers shop off-mall and off price for items, including home merchandise." Standard & Poor's Equity Research Services' survey of consumer behavior and attitudes was conducted during November 2007 by InsightExpress. The survey sample consisted of 1,100 respondents throughout the U.S. to an online survey consisting of approximately 25 questions regarding their holiday spending plans as well as their outlook in early 2008.  
The Saint Louis Front Page is owned and maintained by the Moore Design Group for the sole purpose of disseminating news and information about the Metropolitan Saint Louis area. Text or graphics may not be copied, rewritten or distributed in any manner whatsoever without written permission. For more information, contact editor@slfp.com All rights reserved world wide © 1996 - 2007 Moore Design Group. |
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