The Emerging Economy

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		THE EMERGING ECONOMY

		The robust economy propelling a decade of escalated spending producing exuberant growth, sales expansion and increased profits, has run its course; resulting in the deterioration of consumer’s "In-Pocket" spendable dollars . . . Conditions destined to slow consumption across the retail landscape. The ‘90’s launched solid upward trend-lines of economic prosperity and growth well beyond the pace of consumer compensation. Fueled instead with excessive “overflow” into consumer pockets from exuberant investment markets, surging real estate value coupled with extensive refinancing, and unfamiliar high levels of consumer credit . . . “Overflows” showing signs of subsiding are projecting considerable reduction in consumer spending; producing an Emerging Negative-Growth Economy

Early Warning	.......	Early signals of a surfacing downward economic trend appeared in the mid-'90's with the annual rate of consumer consumption outpacing the consumers wage growth rate. Conditions continuing through 2004, producing 1990 through 2004 disparities: Consumer Consumption out paced Consumer Wage Income 114% to 62% Consumer Wage Income fell behind total Consumer Compensation which includes benefits and other employer non-wage contribution, 62% to 99% growth Consumer Interest payments with a 62% growth rate kept pace with Consumer Wage income taking additional "In-Pocket" spending dollars previously headed to retailers out of consumers hands.
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Current Outlook		Reduced is the “Overflow” of funds from a surging investment/stock market. Slowing is the “Overflow” of funds from real estate growth and low interest refinancing. Approaching exhaustion is consumer’s ability to take on additional credit card debt. All sources the economy has enjoyed to bridge recessional dips and fuel expanding consumer spending. In addition, erosion of wages via job reduction and out-sourcing, along with rising inflation, soaring cost of medical coverage, higher energy/fuel prices, increased debt coverage payments; higher taxes and insurance on increased real estate values contribute to the trend of reduced net disposable income. Result . . . A damaging reduction of consumer "In-Pocket" spending dollars and slowing sales across the retail landscape, and that’s only the short-term outlook. The mid (next two years) and long (the next five years) terms enter with an extended outlook of discouraging forecasts including a slowly deflating housing/mortgage market, population bulge of baby-boomers leaving their high spending years, questionable Social Security System, huge accumulation of personal debt requiring ongoing payment, reduced demand resulting in labor and investment cutbacks, etc. . . . All squeezing those "In-Pocket" spending dollars previously destined to retailer's checkouts down to levels of the mid-'90's . . . ..
"Fragile Economy"		It will be argued that the economy has not tanked, and that we are in a brief slump . . . Not this time . . . The tradition of huge sums of available consumer credit and accumulated savings are not available, as in the past, to span economic downturns with consumer ego driven spending momentum. As we look to the next five years, the fuel in form of "overflow" bubbles, lifting retail sales the last fifteen years are projected to slowly deflate reducing consumer "In-Pocket" dollars. Also there is a question if an event or collection of events such as the recent pair of hurricanes and surging energy pricing could fracture the already extremely "Fragile Economy" . . . Accelerating the move to the 2010 forecast to this year or next.