SAF’s Spring 2008 Floral Trend Tracker was released yesterday (see http://news.safnow.org/saftt/issues/2008-03-20/index.html). Some of the highlights included:
- “During hard economic times consumers might not want to buy a BMW or other luxury items, but there are still people getting married, babies born and funerals to service,” she says. “There is always a need for flowers.”
- “Flowers and plants are a terrific, cost-effective way to express human emotion across all life occasions,” Williams says. “As business owners, we need to promote that.”
- Businesses in all industries are beholden to what’s known as a value proposition — the reason, or reasons, a customer should buy your goods and services and not someone else’s.
- Surviving during an economic slowdown might also entail acquiring the customer base of recently defunct local florist business to help support existing overhead expenses.
- “Recessions can cause a lot of financial pain. The quicker you can react, the better. Monitor your sales monthly compared to the previous year. Whatever trend you see, project that into the future and make staffing adjustments accordingly. Keep marketing and promoting, but be realistic about what is happening that is out of your control.”
- Exchange rates influence the trade balance by changing the demand for domestically produced and imported goods and services. A strong dollar will lead to an increase in the trade deficit, because it lowers the price of imports and makes domestic consumers more willing to buy goods from overseas. It also will make U.S. goods more expensive in overseas markets and therefore export growth will be weak. By contrast, a weak dollar will raise the price of imported goods and consumer demand for those goods will fall. U.S. exports abroad will increase since the weak dollar lowers the prices of U.S. goods in foreign markets.
- A weak dollar makes it more expensive for U.S. consumers and producers to buy foreign goods and services so some will shift to buying domestically produced products instead, which are now relatively more affordable. This increases demand, which is good, but can also lead to an increase in inflation, which is bad. Nor does this increased consumption help every industry, since many service industries see little competition from overseas and will therefore see little change when the dollar depreciates, or falls in value relative to other currencies. Also, companies that depend heavily on foreign markets for their inputs also will suffer from higher import prices, since they increase the cost of production.
- This economic softness, which many expect will evolve into a recession, is different than the last two recessions, which were both relatively mild and brief. The 1991 and 2001 recessions came about as the Federal Reserve tried to put a lid on rising inflation. It pushed rates high enough to cause the slowdown that it believed would reverse the inflationary trends. With a slowdown in evidence, it changed course and allowed rates to decline, initiating the economic recoveries. But that’s not today’s story. Rates were already low when trouble became evident last year, as housing prices began to decline and mortgage financing tightened up. Lower interest rates from the Federal Reserve can’t directly solve the problem of falling asset prices, but it can provide some cushion.
- Over the past year, inflation has jumped. In the past twelve months, the Consumer Price Index is up 4.3%. Those are the kinds of readings that should ring alarm bells, on Wall Street and in the Federal Reserve boardroom.
- On the positive side, we started this re-evaluation of real estate in a fairly healthy economic environment. The unemployment rate has been low, though it’s inching up of late, standing today at 4.9%. Meanwhile, export growth (thanks to the low value of the dollar) and business spending are robust, although weakening credit conditions suggest that business spending in the months ahead will be more restrained.
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