Marketing Review — Summer 2008 - (Page 25) TRENDS Economic 19) The economy of the developed world is growing steadily, with only brief interruptions. When the United States catches a cold, the rest of the world gets pneumonia, or so economists used to say. In late April 2008, it looks like the United States has pneumonia. Home prices remain in free-fall, mortgages are hard to get, and the market for mortgage-backed securities has collapsed. Factory orders are slipping, inflation is rising, and real wages are contracting. Private employment was down 98,000 in March, its fourth monthly loss, according to the government’s survey of employers. The household survey, which is generally considered less accurate, put the monthly loss at 434,000 jobs, bringing the unemployment rate to 5.1 percent. Consumer confidence is plummeting. America is set for a recession, if it isn’t in one already. Looking abroad, we can see the noses running. GDP growth has been declining in Germany and France, Britain (just slightly), and the Eurozone as a whole, with Italy probably in recession. European banks face painful losses in the American mortgage market. Inflation in Europe ran at 3.6 percent in March, the highest level recorded since the euro was launched in 1999. Inflation is rising in China, Australia, Eastern Europe, Russia, and the Middle East as well. In all, the economies of the world seem a lot less healthy than they did a few months ago. Yet all this will not be as dire as it once would have been, thanks to the strength of the world’s other economic powers. China’s GDP grew by an estimated 11.4 percent in 2007, with 9.9 percent forecast for 2008. Nearly two-thirds of this economic output serves domestic markets; only 35 percent is SUMMER 2008 • 55 TRENDS FOR TRAVEL & HOSPITALITY 9 export-based. And the fraction of Chinese exports headed to the United States has dropped in recent years from one-third to an estimated 20 percent. India’s economy grew by 8.5 percent in 2007, with something like 9 percent expected in 2008. Only 10 percent of GDP comes from exports, and only 18 percent of exports go to the United States. When the U.S. gets pneumonia, these countries help their other trading partners stay healthy. For anyone with cash to spend, the current downturn offers opportunities. Many of the assets now going at fire-sale prices are among the most desirable real estate available— vacation homes in resort communities, beachfront mansions, and depressed commercial properties. With prices at least 20 percent below recent levels and the dollar off by 30 percent, overseas buyers in effect can pick them up at half price. In Florida, California, and Texas especially, they are doing so in large numbers. This infusion of capital will help to limit the depth and duration of any recession. So will the continued prosperity of trading partners such as China and Japan, where low-dollar American exports are finding ready markets. We therefore expect that any recession in the U.S. will be shallow, and the economy will rebound quickly. On the present evidence, GDP and employment growth should be healthy again no later than the first half of 2009. Late 2008 is even more likely. At that point, global economic growth—never seriously endangered—will resume its accustomed rate, a bit more than 5 percent per year as of 2007. ASSESSMENT: These trends have been revised many times since they were first codified in the late 1980s. Some trends have fallen off the list as they matured or as circumstances came along to change them. Others have been added as they 25 200297892-001/DIGITAL VISION/GETTY IMAGES Table of Contents for the Digital Edition of Marketing Review — Summer 2008 Marketing Review - Summer 2008 Contents Population Societal Generational & Family Economic Work & Labor Force Energy Technological Environmmental Management Institutional International Terrorism About the Author Marketing Review — Summer 2008 http://www.nxtbook.com/nxtbooks/hsmai/ianschrager_excerpt http://www.nxtbook.com/nxtbooks/hsmai/mr_fall_08 http://www.nxtbook.com/nxtbooks/hsmai/mr_summer_08 http://www.nxtbook.com/nxtbooks/hsmai/memberupdate_2008summer http://www.nxtbook.com/nxtbooks/hsmai/2008_natnlconf http://www.nxtbook.com/nxtbooks/hsmai/demystifying_execsumry http://www.nxtbook.com/nxtbooks/hsmai/2008_sprng-mktrvw http://www.nxtbook.com/nxtbooks/hsmai/2008_westconf http://www.nxtbook.com/nxtbooks/hsmai/sponsorship_opps http://www.nxtbook.com/nxtbooks/hsmai/2008_west http://www.nxtbook.com/nxtbooks/hsmai/2008_natnl http://www.nxtbook.com/nxtbooks/hsmai/2008_midamer http://www.nxtbook.com/nxtbooks/hsmai/2008_mtgplnr http://www.nxtbook.com/nxtbooks/hsmai/2008_accessmore http://www.nxtbook.com/nxtbooks/hsmai/2008_eteexpo http://www.nxtbook.com/nxtbooks/hsmai/2008_wntr-mktrvw http://www.nxtbook.com/nxtbooks/hsmai/resortconf_progrm_200804 http://www.nxtbookMEDIA.com
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