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Soaring energy costs fuel retail sales
Energy costs' effects on inflation and consumer spending hint at both recession and resiliency.
Soaring energy costs helped fuel a record jump in wholesale inflation and an unexpectedly strong gain in retail sales, government reports showed Thursday, sending mixed signals about the state of the economy.
The figures come as consumers struggle to get a fix on their financial future and economists scrutinize statistics, searching for signs of recession or resiliency. The latest economic data hinted at a bit of both.On the gloomy side, wholesale prices leaped 3.2% in November, the second-highest monthly gain in the producer price index since the energy crisis of the 1970s, raising fears that high energy costs 1could be igniting inflation throughout the economy.
On a brighter note, consumer spending, which accounts for about 70% of the economy, rose 1.2% last month, about twice what economists had forecast. Roughly half of that increase was caused by rising fuel prices, but analysts noted that the rest of the gains appeared to be spread across other retail sectors -- suggesting that consumer spending would buy economic growth in what many had feared would be a dismal fourth quarter.
Economists said the results showed that high energy prices were beginning to have a real effect on the economy. But they also cautioned against drawing conclusions based on either the Labor Department's producer price index or the Commerce Department's retail sales data.
"If you believe the retail sales number, you'd think we're in the midst of a boom. If you believe the [producer price index], you 2would think there's runaway, rapid inflation. I think neither one is accurate," said Joel Naroff, president of Naroff Economic Advisors, an economic forecasting firm in Holland, Pa.
The link between producer and consumer prices is neither quick nor direct, and the effect of a short-term jump in energy prices at the wholesale level could be minimal, Naroff said.
"Clearly energy costs are killing people," he said. "But as a broad-based indicator of inflation, that's just not there."Yadira Vargas is among those feeling the squeeze of higher prices. Vargas, 21, said the rising cost of fuel and groceries meant she couldn't buy new shoes for her 3-year-old son, Efrain. She quit her studies in medical office management a few months ago because she could no longer afford the tuition.
"It makes me want to leave here and go to another state or country," Vargas said as she eyed discount price tags at a Ralphs supermarket near her home in downtown Los Angeles.Still, many economy watchers have been surprised by the relatively modest ripple effect of sharply higher oil prices, which approached $100 a barrel last month. On Thursday, the cost of light, sweet crude for January delivery fell $2.14 to $92.25 a barrel -- almost $34 higher than at the beginning of 2007.The run-up in oil prices boosted the cost of gasoline and diesel to unusual heights for this time of year. The nation wide average price of self-serve regular was $2.985 a gallon Thursday, 30% higher than a year earlier.Diesel prices, up 20% since August, are of particular concern because diesel-fueled engines carry most of the nation's goods to market, including food, cars and popular holiday gifts such as toys and electronics."It's surprising that we have not seen more of it in all the data," energy economist James William said."Higher diesel costs means my head of lettuce is going to cost more to come from California to Arkansas," said Williams, who is based in London, Ark. "Eventually the prices 3have to get passed on, and that's what we're starting to see in the producer price index."
Williams sees a 50% chance of recession in the United States. If the economy skids, he believes that energy prices will tumble.Others think high oil prices could stick for a while, ratcheting up the cost to consumers -- and to the economy.
The figures come as consumers struggle to get a fix on their financial future and economists scrutinize statistics, searching for signs of recession or resiliency. The latest economic data hinted at a bit of both.On the gloomy side, wholesale prices leaped 3.2% in November, the second-highest monthly gain in the producer price index since the energy crisis of the 1970s, raising fears that high energy costs 1could be igniting inflation throughout the economy.
On a brighter note, consumer spending, which accounts for about 70% of the economy, rose 1.2% last month, about twice what economists had forecast. Roughly half of that increase was caused by rising fuel prices, but analysts noted that the rest of the gains appeared to be spread across other retail sectors -- suggesting that consumer spending would buy economic growth in what many had feared would be a dismal fourth quarter.
Economists said the results showed that high energy prices were beginning to have a real effect on the economy. But they also cautioned against drawing conclusions based on either the Labor Department's producer price index or the Commerce Department's retail sales data.
"If you believe the retail sales number, you'd think we're in the midst of a boom. If you believe the [producer price index], you 2would think there's runaway, rapid inflation. I think neither one is accurate," said Joel Naroff, president of Naroff Economic Advisors, an economic forecasting firm in Holland, Pa.
The link between producer and consumer prices is neither quick nor direct, and the effect of a short-term jump in energy prices at the wholesale level could be minimal, Naroff said.
"Clearly energy costs are killing people," he said. "But as a broad-based indicator of inflation, that's just not there."Yadira Vargas is among those feeling the squeeze of higher prices. Vargas, 21, said the rising cost of fuel and groceries meant she couldn't buy new shoes for her 3-year-old son, Efrain. She quit her studies in medical office management a few months ago because she could no longer afford the tuition.
"It makes me want to leave here and go to another state or country," Vargas said as she eyed discount price tags at a Ralphs supermarket near her home in downtown Los Angeles.Still, many economy watchers have been surprised by the relatively modest ripple effect of sharply higher oil prices, which approached $100 a barrel last month. On Thursday, the cost of light, sweet crude for January delivery fell $2.14 to $92.25 a barrel -- almost $34 higher than at the beginning of 2007.The run-up in oil prices boosted the cost of gasoline and diesel to unusual heights for this time of year. The nation wide average price of self-serve regular was $2.985 a gallon Thursday, 30% higher than a year earlier.Diesel prices, up 20% since August, are of particular concern because diesel-fueled engines carry most of the nation's goods to market, including food, cars and popular holiday gifts such as toys and electronics."It's surprising that we have not seen more of it in all the data," energy economist James William said."Higher diesel costs means my head of lettuce is going to cost more to come from California to Arkansas," said Williams, who is based in London, Ark. "Eventually the prices 3have to get passed on, and that's what we're starting to see in the producer price index."
Williams sees a 50% chance of recession in the United States. If the economy skids, he believes that energy prices will tumble.Others think high oil prices could stick for a while, ratcheting up the cost to consumers -- and to the economy.
Martin Roll: Product Launches As Branding Events
One of the most awaited events in the global electronics industry is the annual Mobile World Congress. It is the time and place where world leaders in mobile communications, including phone manufacturers, makers of advanced software and hardware, wireless companies and others, congregate to applaud, criticize and showcase the very latest their companies have to offer.
More important, the event, which wrapped up late last week, also allows leading brands to set the tone for the coming year in terms of technological advances, designs, potential collaborations and the promise that their respective industries hold.
While it is very easy to frame the annual gathering in terms of these very utilitarian benefits that it offers to onlookers, it is important to also view the congress and similar forums for their very strategic branding value. These events allow brands to create an experience with multiple external stakeholders while simultaneously reinforcing their market positioning and underlying brand value, and reiterating their brand identity.
In the current business landscape, where hyper-competition and technological innovation have reduced the shelf life of products and have made attaining competitive advantage ever more elusive, it becomes extremely important for CEOs and brand managers to strategically use product launches at global events to the fullest benefit of the brand.
One of the pioneering brands to create a full-fledged experience out of the launch of its products is Apple. Under Steve Jobs’s visionary leadership, Apple launched each of its now iconic products, including the iPod, iPhone, MacBook Air and the iPad, in widely publicized and anticipated events orchestrated by Jobs himself.
These events not only helped Apple to raise its already vaunted profile with customers and other stakeholders, it also enabled the brand to rope in an ever increasing band of loyal customers, app developers and other ancillary product makers. Now, each year in March, the world waits with baited breath for Apple to unleash its latest technological marvel.
Recently, Samsung has begun to follow in Apple’s path. Samsung has launched a series of smartphones using the Android platform that have largely been heralded as the products that may actually challenge the market hold of the iPhone.
Instead of revealing its products via advertisements or at the Mobile World Congress, Samsung has announced that is will be holding its own product launch event in late March or early April to usher in the next set of Android devices. Interestingly, Samsung is also likely to use its sponsorship of the summer 2012 Olympics in London to showcase its range of products.
More important, the event, which wrapped up late last week, also allows leading brands to set the tone for the coming year in terms of technological advances, designs, potential collaborations and the promise that their respective industries hold.
While it is very easy to frame the annual gathering in terms of these very utilitarian benefits that it offers to onlookers, it is important to also view the congress and similar forums for their very strategic branding value. These events allow brands to create an experience with multiple external stakeholders while simultaneously reinforcing their market positioning and underlying brand value, and reiterating their brand identity.
In the current business landscape, where hyper-competition and technological innovation have reduced the shelf life of products and have made attaining competitive advantage ever more elusive, it becomes extremely important for CEOs and brand managers to strategically use product launches at global events to the fullest benefit of the brand.
One of the pioneering brands to create a full-fledged experience out of the launch of its products is Apple. Under Steve Jobs’s visionary leadership, Apple launched each of its now iconic products, including the iPod, iPhone, MacBook Air and the iPad, in widely publicized and anticipated events orchestrated by Jobs himself.
These events not only helped Apple to raise its already vaunted profile with customers and other stakeholders, it also enabled the brand to rope in an ever increasing band of loyal customers, app developers and other ancillary product makers. Now, each year in March, the world waits with baited breath for Apple to unleash its latest technological marvel.
Recently, Samsung has begun to follow in Apple’s path. Samsung has launched a series of smartphones using the Android platform that have largely been heralded as the products that may actually challenge the market hold of the iPhone.
Instead of revealing its products via advertisements or at the Mobile World Congress, Samsung has announced that is will be holding its own product launch event in late March or early April to usher in the next set of Android devices. Interestingly, Samsung is also likely to use its sponsorship of the summer 2012 Olympics in London to showcase its range of products.
It is very apparent that CEOs and brand managers should strategically use these opportunities to create memorable and powerful occasions to showcase their brands and capabilities. But before deciding to implement this, it is imperative that leaders have a full appreciation of the benefits that such events afford them.
As with an overall brand communications strategy, successful product launches must see to it that no one channel is used in isolation from the others. Rather, there should be a careful integration among the many channels available to the brand, and each channel 4should be used in accordance with the type of benefits it affords the brand. This article proposes that brands can reap two main benefits from such brand events, provided they are well managed.
Showcase innovation prowess: Product launches 5can be very tricky business, but brands must still seek to launch new products in their quest to stay relevant with the times and expand their strategic scope.
Global events offer an excellent middle ground for brands in terms of providing a forum for real-time feedback. When brands launch their products at these events, not only can they showcase their innovation prowess, but also test it for market acceptability and reaction. They can6 afford to launch even test products and not have the brand equity negatively affected. As such, global events serve brands as both a promotion and market testing strategic channel.
Strike strategic collaborations: When the competitive advantage of brands in industries such as consumer electronics is a function of the latest technologies and the different partners who provide the components that go into making a product, striking new strategic collaborations with the most innovative players in the market becomes extremely important.
Global events allow brands an opportunity to assess the competence of potential partners while also letting others evaluate the brands’ commitment to growing their brand while effectively harnessing technology’s relentless advance. As such, these events can add strategic value to brands by enabling the formation of many crucial strategic affiliations.
As with an overall brand communications strategy, successful product launches must see to it that no one channel is used in isolation from the others. Rather, there should be a careful integration among the many channels available to the brand, and each channel 4should be used in accordance with the type of benefits it affords the brand. This article proposes that brands can reap two main benefits from such brand events, provided they are well managed.
Showcase innovation prowess: Product launches 5can be very tricky business, but brands must still seek to launch new products in their quest to stay relevant with the times and expand their strategic scope.
Global events offer an excellent middle ground for brands in terms of providing a forum for real-time feedback. When brands launch their products at these events, not only can they showcase their innovation prowess, but also test it for market acceptability and reaction. They can6 afford to launch even test products and not have the brand equity negatively affected. As such, global events serve brands as both a promotion and market testing strategic channel.
Strike strategic collaborations: When the competitive advantage of brands in industries such as consumer electronics is a function of the latest technologies and the different partners who provide the components that go into making a product, striking new strategic collaborations with the most innovative players in the market becomes extremely important.
Global events allow brands an opportunity to assess the competence of potential partners while also letting others evaluate the brands’ commitment to growing their brand while effectively harnessing technology’s relentless advance. As such, these events can add strategic value to brands by enabling the formation of many crucial strategic affiliations.
1. energy crisis of the 1970s, raising fears that high energy costs 1could be igniting inflation throughout the economy.
· Less than 50% certainly.
2. If you believe the [producer price index], you 2would think there's runaway, rapid inflation
· Preference
3. "Eventually the prices 3have to get passed on, and that's what we're starting to see in the producer price index."
· Necessity
4. Rather, there should be a careful integration among the many channels available to the brand, and each channel 4should be used in accordance with the type of benefits it affords the brand
· Advisability
5. Product launches 5can be very tricky business, but brands must still seek to launch new products in their quest to stay relevant with the times and expand their strategic scope.
· possibility
6. They can6 afford to launch even test products and not have the brand equity negatively affected.
· Ability
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