It Is The Funniest Recession I Have Lived Through

[ralphmalph]

sure for a shop manager to see product turnovers change is a tool...... for national statistics....whats the point?

You see, i can get a report on turnovers for my business.....but I am not interested....I want to see profit.

the thread was saying that turnover is good from a national statistics point of view....I say...its meaningless without the profit details...and the OP did produce some of the report showing that while turnovers were up.....DISCOUNTING was the reason...

and no need to be sorry...I learn by being put straight.....thanks

You are still missing the point. The whole thread was about how come people can increase the total amount of money they can spend when we are in a recession with mass unemployment, no overtime, or pay cuts across the board, short time working.

You introduced the profit angle as a curveball. You still have not provided any factual evidence than retail profits have declined in the recession, but if you say so then we will just have totake it as gospel.

[BalancedBear]

It is nothing like Zimbabwe at all, Zimbabwe has massive WAGE INFLATION as well as PRICE INFLATION.

Not true, most people in Zimbabwe do not have jobs and have no wage inflation. Many obviously survive on trading things themselves.

[bagsos]

sure for a shop manager to see product turnovers change is a tool...... for national statistics....whats the point?

You see, i can get a report on turnovers for my business.....but I am not interested....I want to see profit.

the thread was saying that turnover is good from a national statistics point of view....I say...its meaningless without the profit details...and the OP did produce some of the report showing that while turnovers were up.....DISCOUNTING was the reason...

and no need to be sorry...I learn by being put straight.....thanks

I tend to think in terms of fixed cost, turnover and margin. Then cashflow. But thats at a micro level in our business.

At a macro level the reason its important is because every retail sale is someone's cashflow. If they are increasing it is either because (amongst other things)

1. The money supply is increasing (which it is); or

2. The velocity of that money is increasing, because more goods are being bought and sold (don't know about that).

And although turnover is up and margin down, the margins retailers make at full price can be astonishing, so if they shift more stuff at a lower margin and keep their fixed costs level, or even reduce them, then net they may be better off.

[BalancedBear]

But thats not happening in the financial sector of london and the SE. The banks have started hiring again and job insecurity has gone now. Majority of the jobs went a year ago. Credit is not really an issue since most get mortgages from employers and require only a 10% deposit which is pretty much a bonus payment for a lot as average bonus is around 20k. So where i am looking in most areas of london prices are rising. Not enough decent properties on the market is more of an issue.

Just because banks now have been bailed out does not mean job insecurity in London and SE is now gone. You must work in a well insulated bank position? Even in the SE, banking is only a very small proportion of the economy. There are many other people wo do not work in bailed out sectors who hare insecure in their jobs.

[BalancedBear]

Well done, if only everyone followed our lead the economy would out of this mess much quicker.

I have in the last year bought an LCD TV, surround sound, an iphone, an ipod, second laptop, a wii, PS3, a PSP, 2xDS and loads of games to feed these consoles. My kids think their dad is the best dad in the world

Only if in the UK we are exporting something else of similar value. I would guess that all the electrical items are imported. Where has the wealth in our economy been made to support this expenditure?

[Bloo Loo]

I tend to think in terms of fixed cost, turnover and margin. Then cashflow. But thats at a micro level in our business.

At a macro level the reason its important is because every retail sale is someone's cashflow. If they are increasing it is either because (amongst other things)

1. The money supply is increasing (which it is); or

2. The velocity of that money is increasing, because more goods are being bought and sold (don't know about that).

And although turnover is up and margin down, the margins retailers make at full price can be astonishing, so if they shift more stuff at a lower margin and keep their fixed costs level, or even reduce them, then net they may be better off.

except the article didnt make any of these points.....it said like for like is UP 1.8%

I say, inflation at 6.9% ( my own basket) thats a reduction in sales.

and if it takes discounting to even acheive that reduction, then we can see why shops are closing every day. thats because shops have loans, some paying 12% if reports are true, theyve had rates increases of god knows what percent, fuel costs up.

no, 1.8% is nowhere near enough.

[IwantaHome]

Products have never been cheaper. Chinese made goods will seem cheap for a while yet, though the tide is turning.

China has been wholly irresponsible with its population growth. You just cannot compete against a billion small subservient human beings.

[Dave Spart]

Retail Sales in July 09 are 3.6% higher than this time last year!

You'd hope that £175billion of QE alone would have some effect.

[Bloo Loo]

Products have never been cheaper. Chinese made goods will seem cheap for a while yet, though the tide is turning.

China has been wholly irresponsible with its population growth. You just cannot compete against a billion small subservient human beings.

they were cheaper last year when the £ was $2.1 .

and as rising living costs affect those on frozen wages, even same £ cost goodies actually cost more.

[Guest happy?]

A visit to a chain-store pawnbroker today. Noticed that the floor-space has been reduced by about 25%, the shop re-modelled with most stock now behind glass, what stock was left definitely looked small-time - all the bigger items (drumkits, pushbikes etc.) now mostly disappeared or in much reduced numbers.

There is a recession it's playing-out unevenly at the moment - devil taking the hindmost.

[iLegallyBlonde]

http://business.timesonline.co.uk/tol/busi...icle6790797.ece

We apparently have mass layoffs, every worker worried about thier job, savings rates as a percentage of income increasing, world trade crashing, reduction in the availability of credit, people struggling to pay thier mortgages and yet:

Retail Sales in July 09 are 3.6% higher than this time last year!

and they were up YoY in June as well.

This is the wierdest recession I have lived through and it is the third. In the 80's when we had a drop in GDP of half what we have seen over the past 9 months the high street was decimated, boarded up shops everywhere, poundlands galore.

I know that people will post just wait the real recession has not started yet, but that is missing the point if retail sales keep growing and do not fall of a cliff there will be no more recession.

Also look at the BAA traffic figures for July up .9% from last year and the best since July2006 and this is with MDoomed taxing the hell out of the traveller and resturanters on HPC.co.uk saying there is a large stay at home holidaymaker as well.

Also read the HPC thread of what is the latest gadget you have bought, lots of discrestionary wonga being spent by people that think the future is massive deflation.

Seems like the average brit to me has a lot of spare discresionary income to spend at the moment.

Recessions are usually viscious circles, they just get worse and worse and worse until people despair.

Child benefit has gone up, tax credits have gone up, if you are on benefits you don't have to worry about pesky things like council tax/interest on mortgages/rent and an awful lot of clothes, toys, food has gone down in price. Simples.

If you are still working and paying your own bills you might feel the pinch but according to many half the country isn't

[Fully Detached]

Well done, if only everyone followed our lead the economy would out of this mess much quicker.

I have in the last year bought an LCD TV, surround sound, an iphone, an ipod, second laptop, a wii, PS3, a PSP, 2xDS and loads of games to feed these consoles. My kids think their dad is the best dad in the world

Give it a few years - with your financial acumen you'll be a millstone around their neck for almost all of their adult lives, and they'll think you're the biggest ******ing ***** that ever walked the planet.

[ralphmalph]

Not true, most people in Zimbabwe do not have jobs and have no wage inflation. Many obviously survive on trading things themselves.

http://www.voanews.com/english/archive/200...date=2007-08-31

Teachers in Zimbabwe demanded 400% pay increase. You only need 25% of the population working with pay increases like that.

http://www.indexmundi.com/zimbabwe/unemployment_rate.html

And the unemployment rate is 72%.

So perhaps they are net net then.

[winkie]

Anyone can make a positive out of a negative if you have a good enough imagination great selling skills and a gullible audience.

[Super Mario]

off topic, but GDP includes a very large chunk of government spending. so you need to look at the makeup of the figures to see whats happening in the real world of business.

Had to stop reading the thread to reply at this point. It's a very important question - what % of GDP is the government, and what % is 'stimulus'. I bet it's significant.

Sorry if this has been covered in the next 5 pages already

[SNACR]

These things should be treated as nothing more than a press release. I wouldn't be confident enough in the fact that retail sales are up for it to be worthwhile debating why.

Edited August 11, 2009 by Soon Not a Chain Retailer

[athom]

Its the QE billions being pushed onto the idiots who are still going to borrow and spend it on crap. Nothing much to work out.

[Bloo Loo]

Anyone can make a positive out of a negative if you have a good enough imagination great selling skills and a gullible audience.

a personal favourite.

[winkie]

a personal favourite.

Now that made me laugh.

[Yoss]

thanks. your IOM is costing the rest of us in bailouts and tax rises.

spend it while you can.

Yeah Icelandic people had the same deluded dream..money for nothing... just before their base rates hit 17% and the currency tanked.

[punter]

Exactly. The recession and HPC were over when rates went to near 0%.

My IOM has fallen from £1050 a month to just £150

Rates are not going up anytime soon. And when they eventually do, they wont go up by much as people are now dependant on the lower rates. So in future only a small increase in rates will cause the demand destruction effects that are needed to tame any inflation.

Rates have to go up to attract capital and deliver growth. the next government will put them up

[interestrateripoff]

It does not matter. More money as a total was spent. They may have got less goods, but that is immaterial the money is in the hands of the consumer to spend and seemingly spend freely.

In tough times instead of people spending 100 quid a shop they will spend 90.

You don't appear to grasp your own logic, if they are spending more and buying less, this is really bad because jobs have been lost. If more items get sold this implies more things need to be made, keeping more people in jobs.

Higher monetary sales and lower volumes are a bad sign in an economy.

[SeenItAllBefore]

This is the wierdest recession I have lived through and it is the third. In the 80's when we had a drop in GDP of half what we have seen over the past 9 months the high street was decimated, boarded up shops everywhere, poundlands galore.

Same for me and I have to agree, if this is a recession, it’s nothing like the 80s or 90s versions...yet.

As I see it the main reasons for this are:

(1) Unlike all the other recessions since WWII this one hasn’t involved rocketing inflation and borrowing costs.

(2) As the problem isn’t just a UK one, Labour have been able to get away with dropping VAT, flooring interest rates, printing money and borrowing 12% of GDP to postpone the pain.

(3) Households have responded differently. According to the ONS, in 1981 the savings ratio was 12%, in 1991 it was 10.3%, last year it was just 1.7%.

(4) The Tories haven’t yet been elected in order to sort the mess out.

I’d say things will kick off towards the end of next year when the Tory public spending cuts begin to bite. Pickets in donkey jackets standing around braziers etc will be back big time by then. Winter of discontent II.

P.S. Looking at the savings ratio numbers is very sobering. In the early 80s the baby-boomers were aged between late teens and mid-30s so you’d expect the ratio to be skewed downwards by the demographics. Now most of them are staring retirement in the face they should be saving every penny they can, but those figures suggest they aren’t. Big, big trouble ahead.

[ralphmalph]

You don't appear to grasp your own logic, if they are spending more and buying less, this is really bad because jobs have been lost. If more items get sold this implies more things need to be made, keeping more people in jobs.

Higher monetary sales and lower volumes are a bad sign in an economy.

I am starting to feel I am speaking esperanto.

You are making a valid economic point but it is not the question I am asking and in fact the point you are making is that retail sales should be falling by a large ammount because more people are going to lose thier jobs because of less physical goods being sold.

Retail sales is just a measure of cash spent in certain types of stores. Last July 100 pounds this July 103.80 pounds.

500K more unemployed good wage to 60 quid a week, no overtime, bonuses slashed, shortime working with corresponding pay cut, whole factories sent home on basic pay (Honda), a population with more debt per head than anyother in the world that needs to be serviced.

Yet more actually cash was spent. In the last recession 80's GDP fell by half of the fall we have had to date yet retails sales consistantly fell.

My point is it is completely illogical that people can afford to spend more cash when they have had such a reduction thier take home pay irrespective of whether they got more or less goods. If you have 60 quid a week to spend you have 60 quid a week to spend. If you have 60 quid plus overtime of 60 quid you can spend 120 quid. Even more confusing they spunked the extra cash on furniture.

Edited August 11, 2009 by ralphmalph

[Blue Peter]

This is mainly spin. The retail sales increase will be worked out using the RPI figure as a deflator. RPI is currently very low as it is skewed by mortage interest payments and the VAT cut. However, food inflation is running at close on 10%, and there is no VAT on quite a bit of food either. Retail sales are very likely to rise at the moment, as people are forced to pay more for essentials.

FWIW, I checked with BRC, and the figures are nominal, not adjusted for inflation, so as Bloo Loo and others have suggested, the most likely cause of the rise in spending is the inflation in food prices.

Peter.