For the past two years, the January issue of GCM has featured an economic forecast story for the coming year written by noted business writer Phil Perry. As every golf course — heck, every business and every family — looks ahead to how they'll deal with the economic uncertainty to come this year, we were excited to publish the 2009 version of this story in the issue of the magazine that is hitting the streets right now.
Alas, that didn't happen. One of the cruel realities of magazine publishing is that you don't always have room to publish every story you have planned in a particular issue. Sometimes, stories hold over until the next month. Sometimes, stories get killed altogether. And sometimes, stories are repackaged in other mediums, which is what we're doing with Perry's 2009 economic forecast story. Because we feel the information in this story is important to our audience, we'll be posting the story on the blog in three parts over the next several mornings.
Without further ado, here is part one of Perry's "Negotiating the economic maze: Experts on the economy offer insights on some tough times ahead as well as some ideas on how to survive them."
It’s a new year, and that’s a traditional time to “revision” your business. This turn of the calendar, though, presents the golf course industry with challenges that are more daunting than usual.
As we enter 2009 the world is experiencing tremendous turmoil in the financial and housing sectors. How is this going to play out over the coming 12 months? And what’s it all mean when it comes to fine tuning your course’s marketing and expansion plans?
Let’s see what the experts say.
Nation enters recession
First, the big picture: “As we enter 2009 the erosion of the housing market is the No. 1 problem facing the economy,” says Sophia Koropeckyj, managing director of industry economics at Moody’s Economy.com, a research firm based in West Chester, Pa. “As the economy continues to slow the risk of more foreclosures is rising.” And a bottoming out of housing prices is not expected to occur until the end of 2009. Total decline from the pricing peak experienced in 2007 is expected to be 30 percent.
The housing market erosion, in turn, has caused severe problems in the financial sector. “We are now looking at an economy that is going into a recession,” says Koropeckyj. “We anticipate very weak growth through 2009 before the economy gets back on track in 2010.”
The numbers tell the tale. The most important figure is the Gross Domestic Product (GDP), the yearly total of all goods and services produced in the United States, and in 2009, that figure is expected to drop by .05 percent, according to Economy.com. That’s a considerable softening from the 1.4 percent increase anticipated for 2008 when final numbers are tallied. To put these numbers in context, the GDP for an economy in average growth mode is 2.5 percent.
No wonder business people are bracing for the worst. “For many companies the financial meltdown feels like the business equivalent of 9/11,” says Walter Simson, principal of Ventor LLC, a New York-based management consultancy. “People are expecting big shocks and bad news.”
The bottom line will be under siege at most businesses. Corporate profits are expected to decline some 5.7 percent in 2009 according to Economy.com. That comes on the heels of a 6.9-percent drop expected when 2008 numbers are finally tallied. No rebound in profits is expected until 2010.
To position yourself for a successful ride through these troubled waters, start by understanding the three big trends that you will need to grapple with over the next 12 months. They are:
- A decline in consumer spending
- A freezing of business credit
- A rise in the cost of goods sold
Again, stay tuned. Part two of this story will be available Thursday morning.
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