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TK's MORNING BUZZ: This Week's Retail Sales Reports Should Offer More Clues As to How Bad the Economy Really Is

8 Oct, 2001 By: Thomas K. Arnold

This week we should get more clues as to how bad the economy really is.

On Thursday, we should hear September chain-store sales from big retailers, followed on Friday by retail sales overall from the U.S. Commerce Department.

Everyone's bracing for a fall.

The economy was already softening before the Sept. 11 terrorist attacks socked us all in the gut.

The jobless rate was rising, same-store sales were slipping and those tax rebate checks the government sent us were deposited in savings accounts rather than spent, as George W. had hoped.

Signs for the home entertainment industry are a lot more positive, with videorentals flourishing and home electronics sales benefitting from the cocooning trend Americans have exhibited since the attacks.

But if the economy really breaks down into a full-fledged recession -- and I'mbetting it will -- the trickle-down effect may hurt us all in the long run.

Already, there is some skepticism about whether DVD players will hit the goalof 12.5 million players set at the beginning of this year by several trade associations. Sure, NPD Intelect, the market research firm, recently predicted calendar 2001 sales would actually come in at 13 million, but if money gets tighter in the weeks before Christmas the current pace of sales may slow.

If the industry sells fewer DVD sales than predicted, that's bound to impact DVD software sales and rentals. It takes more discs to feed an army of 12.5 million players than it does, say, 11 million. And if player sales come in 1.5 million short, that's 1.5 million fewer DVD households that will beconsuming discs.

I don't necessarily want to strike a negative note after a week of optimistic columns. The uptick in people preferring to stay home and watch movies in the safety of their own family, living or bed rooms may very well be high enough to counter any dampening economic effect.

But it always pays to be alert -- and prepared.

Comments? Contact TK directly at:TKArnold@aol.com

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