Slow Spending Drives Deep Discounts: What Does This Mean?

Posted 12/16/14

Slow Spending Drives Deep

Discounts: What Does This Mean?

“Depressed consumers are depressing prices:” Gerald Celente

KINGSTON, N.Y., 16 December …

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Slow Spending Drives Deep Discounts: What Does This Mean?

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Slow Spending Drives Deep
Discounts: What Does This Mean?

“Depressed consumers are depressing prices:” Gerald Celente

KINGSTON, N.Y., 16 December 2014  The world is at war, and there is no end in sight.

It’s a Price War and it’s being waged in a country near you. From commodity exchanges to retail sales, prices are plummeting and the fight is on to sell products at whatever price the market will bear. 

While not all prices will deflate, the more that cash-strapped consumers cut back on spending, the deeper the discounts will be.

On the retail front, holiday shopping this year will be, at best, flat or up just slightly over last year. Despite dramatically lower prices at the gas pump and deep discounts on popular product lines, the latest retail sales projections are, by most measures, disappointing.

Gallup, for example, has significantly lowered its sales projections. The polling giant recently reported: "Though up from 2013, the current spending estimate is well below the November reading in several earlier years, particularly in 2006 and 2007, when the figure exceeded $800. It is also below what Gallup found in October, when Americans predicted they would spend $781 this holiday season."

Gallup now expects Americans will spend $720 during the holiday shopping season. This projection is consistent with one of the Trends Research Institute's Top Trends for 2015 (available here): "Price Wars."  

As global forecaster Gerald Celente wrote in a special digital edition Trends Journal last week: "Too much product is flooding the global marketplace and there’s a chronic shortage of people with enough money to buy those products. Price wars will mark a new age of retail marketing."

We are seeing the dawn of that powerful trend line this holiday season. Consider the facts.

Oil's Decline More About Demand

When oil prices started tumbling this summer, the "experts" anticipated lower prices would stimulate consumption around the world, especially during the holiday shopping season. That was the way things had always worked. But six months later, oil continues to drop and Price Wars across a number of commodity and retail sectors are revving up. Copper is at a five-year low. Silver is at a five-year low. Same with corn. A ton of reinforcement rod (rebar) is selling for less than a ton of cabbage in China.

Simply, too much over-capacity and declining consumption are driving down prices. Unlike in recent years, prices can’t be artificially propped up because with real wages in decline across the globe, there is less money to buy the goods.  

"I call it 'deconsumption," said Celente. "That's when overproduction meets a decline in consumption. And retailers will wage Price Wars aimed at a consumer base with dwindling income and bleak prospects for more money to spend. Depressed consumers are depressing prices.”

It’s a worldwide slowdown, Celente said. With economies across the globe falling deeper into depression, recession and/or bordering on it while struggling to prop up stagnant economies, the consumer is handcuffed. Falling wages, unemployment, under-employment and pervasive pessimism are hardly incentives to shop. And while the economy is the United States fares better than most of the rest of the world, those Gallup numbers and other indicators suggest the same dynamics are at play.

What is being called deflation are lower prices that are battering commodities.

"With prices being dramatically cut, with aggressive marketing campaigns in high gear, with retailers in cut-throat competition with one another to drive sales, the results so far and the projected results are alarmingly off course," said Celente. "The trend line is indicative of how strained and depleted the consumer base has become. If there was a true economic recovery, the numbers should be much stronger. “

They’re not.
 And "Price Wars" will continue to emerge strong as a means to squeeze every expendable dollar, yen, yuan, euro or ruble left in the working class pocketbook."

The quarterly Trends Journal, available in both print and digital formats, provides trends analysis and forecasts across a wide range of topics. It is produced by Gerald Celente's Kingston, N.Y.-based Trends Research Institute's team of analysts. In addition to the magazine, the institute also publishes Trends Monthly, provides multimedia content for subscribers at 
trendsresearch.com, and offers services for organizations and industries, including consulting, customized trend forecasting, keynote addresses and conferences at the institute's facilities.  

©MMXIV The Trends Research Institute®