January 04, 2013
Ronald Friedman, Co-Leader, Retail/Consumer Products Industry Group, Quoted in WWD.com Article "Stronger Growth Expected in Second Half"
By Vicki Young
For pessimists who view the glass as half empty, plenty. A United Nations report published last month called “World Economic Situation and Prospects 2013” said growth in the euro area is predicted to average a 0.3 percent rise this year versus 2012’s 0.5 percent contraction. In the U.S., economic growth is expected to decelerate to 1.7 percent this year from an anemic 2.1 percent growth rate in 2012.
For optimists, those projections are merely baseline estimates. The U.N. report also predicted that the world economies will grow in 2013 in spite of the weaknesses in the major industrialized countries due primarily to high unemployment, heightened sovereign risks and fiscal tightening.
According to the report, world output is forecast to grow 2.4 percent this year, up from 2012’s rate of 2.2 percent. Growth in world trade is also projected to expand “at a rather tepid pace of 4.3 percent in volume terms in 2013, compared to 3.3 percent in 2012.”
Ron Friedman, retail practice leader at Marcum LLP, an accounting and consulting firm, said many of his clients were in a good financial position at the start of the holiday selling season.
“Corporations in general have better balance sheets than they did a few years back,” he said. That’s due to lessons learned from the deep downturn that began in December 2007, with many doing more at the same level of sales, but with reduced staff.
“Retailers in general have been operating smarter and maintaining better inventory levels. My clients who supply the retailers at the manufacturing and distribution level have balance sheets that were clean all year. They have been buying closer to the season, and buying smaller quantities,” the accountant said.
Friedman expects some pullback on discretionary spending now that consumers will no longer see the benefit of the payroll-tax holiday in their paychecks. That’ll mean businesses will continue to plan for growth, but curtail some capital expenditures. For example, retailers may open fewer stores than originally planned. For manufacturers hoping to expand through the creation of a new division,2013 may not be the year those plans are put into place, Friedman suggested.