It should be news to no one that 2009 was a less than buoyant retail year.  OK, it was a spectacularly abysmal year.  Retailers’ reaction to the crash and burn economy of latter 2008, and anticipation of imminent lackluster consumer demand (what demand..??), resulted in historically low levels of new-goods inventories for 2009 –a true deplenishment of supply across the board, and rightly so.  This glass is half-empty.

Ah, but can this glass be viewed as half-full today? I believe perhaps, yes. Earlier this morning, I went online to purchase and replace my much cherished (read: well-worn and disintegrating) slippers from my favorite Maine retailer, only to find out that no slippers are available until May 16^th, four long, cold months from now. In the dead of a freezing New England winter, this famed Maine store is out-of-stock of a cold-weather staple until late spring. Wow. Now I’m frustrated, with cold feet mind you, BUT, optimistically, I see the glass is half-full. Why, you ask? Well, here’s why. Simply speaking, without any real demand from the market, the consequent reaction in the supply chain is to reduce, recede, refrain. And we have all felt the repercussions of that, thank you very much. The situation eventually drops so low it cannot really go any lower but up (prevailing question is when and how fast, but that’s for another time). Inevitably, people need to replenish some goods at some level – I find myself needing to replenish some goods, at some level… now… today. This, I maintain, bodes well for the economy.

GDP for fourth quarter of 2009 increased at an annual rate of 5.7%, the fastest pace in more than six years. Quite nice, although many economists debate the sustainability of this pace of growth while most businesses remain skittish about hiring — which brings us to today. This week, we have learned of President Obama’s $3.8 trillion budget for fiscal 2011, which includes a jobs bill that could cost around $100 billion. In addition to small business credits and continued state aid, the White House has proposed a $30 billion job creation plan that would give employers $5,000 dollars for each new hire. This is a good start. Perhaps a really good, optimistic, glass half-full start.

Today, I feel warmer and cozier about the potential to turn this moribund economy around, although, and quite ironically, my feet are not so much.

Posted by Karen Albrektsen, Partner/COO