Sunday, March 30, 2008

Howard Davidowitz on US Consumer

I couldn't copy this over to the blog but here is a 4 minute audio file worth listening to... kind of funny to hear this in a NY accent - makes it sound even more ominous! :)

Same ideas we've been discussing for a long time - consumer under major duress and discretionary spending will be going down the tubes as people flee to bulk warehouses and Walmart... as I keep saying, all the current focus is on saving the banking system, but we have a "minor" problem called a consumer led recession that is being completely ignored. But since the bailout of the over levered, risk loving NYC bankers is the important thing that leads to the wall to wall CNBC coverage ;)

Thankfully "everything will be fine in 6 months" (post government bailout of home mortgages)... or I'd be worried.

"In this kind of economy, with the consumer so scared, we're going to see companies like Penney in big trouble," says retail consultant Howard Davidowitz. The chairman of Davidowitz and Associates says J.C. Penney's slashed profit forecast reflects a consumer who's limiting his spending to necessities. "The things Penney sells are optional," says Davidowitz. "You've probably got 24 sweaters in your closet. You can live without another one."

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