RETAIL Online Spending Could Top $124B Over The Holidays

Kusama “Infinity Mirrors” and FRONT International helped art museum break attendance, membership records

CLEVELAND, Ohio – Attendance boosted by the popular Yayoi Kusama “Infinity Mirrors” exhibition and the FRONT International: Cleveland Triennial for Contemporary Art this year helped the Cleveland Museum of Art break a 26-year record for the number of visitors attracted in any single summer.

Between July 1 and September 30, the museum said it attracted 305,692 visitors, the largest summer total in the institution’s 102-year history, and the largest since the same period in 1992, when the exhibition “Egypt’s Dazzling Sun: Amenhotep III,” helped the museum pull in 290,000 visitors.

Visitors this summer came from all 50 states and 23 foreign countries, generating $6.9 million in museum revenues, including $2.3 million in new memberships, the museum announced Thursday.

“We were really thrilled to see so many people come from so far away as well as close to home to celebrate the summer with us,” said Elizabeth Bolander, director of audience insights and services at the museum, who described the new information in an interview Wednesday.

The Amenhotep exhibition, organized to celebrate the museum’s 75thanniversary, drew 186,139 visitors, far more than the 120,000 attendees for the Kusama show, which surveyed the artist’s 65-year career.

The museum had to limit the number of attendees for “Infinity Mirrors,” which involved circulating small numbers of viewers in and out of specially constructed mirror rooms in 30-second shifts.

But with FRONT and other exhibitions and a full calendar of events and programs, the museum cruised past its 1992 summer attendance record.

The museum reported that it topped 30,000 memberships this summer for the first time in its history, exceeding the total of 29,491 membership households reached on June 30, 2016, the middle of the museum’s centennial year.

Shows during that period included “Painting the Modern Garden: Monet to Matisse,” and “Pharaoh: King of Ancient Egypt.”

The museum said it created 120 temporary jobs to support the Kusama exhibition, and recruited 100 volunteers.

Data crunched by Cleveland economist Jack Kleinhenz show that the Kusama exhibition contributed $5.5 million in economic impact in Cuyahoga County.

The figure includes $3.2 million in direct spending by visitors from outside Cuyahoga County, plus additional sums calculated for the ripple of indirect and induced spending triggered by the new dollars flowing into the local economy. The increased spending created 58 new jobs in the county, according to the analysis.

Kleinhenz said the data were calculated from 732 visitor surveys, which represented a 33 percent response rate among those polled by the institution.

Figures extrapolated from the survey indicate that 44,522 visitors came to see the Kusama show from outside Cuyahoga County.

“It goes beyond pure economics,” Kleinhenz said of the museum’s impact on Cleveland and Northeast Ohio. “It’s such a unique brand, like the Cleveland Orchestra, the Cleveland Browns and the Cleveland Clinic.”

Bolander said the summer of 2018 helped the museum understand how its recently expanded and renovated complex could accommodate a million visitors a year – a major goal of a new strategic plan unveiled in 2017.

Attendance has averaged 630,000 in recent years. Attendance this summer – if annualized – would nearly double that number.

“It was actually very exciting this summer,” Bolander said. “We were able to test if, you will, what it meant to be at that level of attendance for a sustained period.”

By Steven Litt, The Plain Dealer

CNBC FED SURVEY: FED EXPECTED TO HIKE RATES TWICE MORE THIS YEAR AND THEN RISK A ‘POLICY MISTAKE

CNBC

Fed expected to hike rates twice more this year and then risk a ‘policy mistake’: CNBC survey

  • Nearly all respondents to the CNBC Fed Survey see the Fed hiking rates a quarter point this week to a new range of 2 to 2¼ percent.
  • In addition, 96 percent believe another quarter-point hike is coming in December.
  • About 60 percent see the Fed eventually raising rates above neutral to slow the economy.

Steve Liesman | @steveliesman

Look out for two more rate hikes this year from the Federal Reserve to go along with economic growth nearing 3 percent and a central bank that eventually raises rates explicitly to slow growth, according to respondents to the latest CNBC Fed Survey.

A full 98 percent of the 46 respondents, who include economists, fund managers and strategists, see the Fed hiking rates a quarter point this week to a new range of 2 to 2¼ percent. And 96 percent believe another quarter-point hike is coming in December.

“Fed funds increases in September and December are as certain as certain can be,” John Donaldson, director of fixed income at Haverford Trust, wrote in his response to the survey. “Their real challenge starts after the first increase in 2019, which will bring the rate to 2.75 percent, or finally back to even to inflation.”

Respondents see the funds rate rising by two more quarter points (50 basis points) in 2019, which would bring it to a range of 2.75 to 3 percent. After that, divisions set in, with about half the group seeing a third hike in 2019.

About 60 percent of the group see the Fed raising rates above neutral to slow the economy. The average that respondents see the funds rate eventually ending this hiking cycle is 3.3 percent.

“This means that the U.S. bond market will reach a decision point sometime in the next year, when market participants will have to decide whether the Fed will go beyond current market pricing,” said Tony Crescenzi, executive vice president at Pimco. “If and when it does, U.S. Treasuries will move higher.”

A fifth of the group say a “fed policy mistake” is one of the biggest threats facing the expansion, second only to trade protectionism.

“We are in jeopardy of watching trade and monetary policy plunge into a head-on collision, with no one wearing seat-belts, and the airbags have been disabled,” wrote Art Hogan, chief market strategist at B. Riley FBR. “The biggest risk in the market is a policy mistake, and we are working on a two-for-one special.”

Respondents support President Donald Trump‘s handling of the economy by a 61 percent to 30 percent margin, unchanged from the July survey. But 59 percent say his trade policies will reduce growth, and 52 percent say they will lower employment in the U.S.

A slight 53 percent majority also say the president’s negotiating tactics will lead to better trade agreements for the U.S., while 20 percent say they will be worse and 22 percent expect them not to change much.

Overall, the tariff effects on the economy are seen as modest. Among those who see negative effects, the average is just a 0.2 percent decline for GDP in 2019 and a 0.2 percent higher inflation.

But some see more substantial effects.

“The president should be remembered for his cuts in regulations that served the economy so poorly for years but instead will be remembered for his illogical, un-economically justifiable support for trade protection and tariffs. How sad is that?” wrote Dennis Gartman, editor and publisher of The Gartman Letter.

Strong economic growth ahead

But forecasts suggest the president has some room for his trade policies to subtract from growth without doing enormous economic damage. Respondents look for GDP year over year to be up 2.8 percent in 2018, versus 2.2 percent in 2017, and up 3 percent in 2019, defying the general belief in a slowdown next year predicted by many economists.

Inflation is seen ticking up to around 2.5 percent this year and next, while the unemployment rate is forecast to fall to 3.7 percent by 2019.

“Rarely are so many economic gauges of the U.S. economy so strong — including employment, income, retail sales, business spending, manufacturing and small business,” wrote Jack Kleinhenz, chief economist for the National Retail Federation. “The near-term outlook appears to be steady as she goes.”

Respondents see a low 14 percent probability of a recession in the next 12 months.

Stocks are seen growing, but slowly. The average forecast predicts the S&P 500 will rise to 2,956 this year and end 2019 at 3,038. While it would break the 3,000 level, it would represent just a 4 percent gain over the next 15 months.

Treasury yields are seen ending this year at 3.15 percent and 3.45 percent in 2019, suggesting much of the Fed tightening is priced into the bond.

Federal Reserve approves its third rate hike of the year

The move indicates that the nation’s central bank may soon be able to take a back seat for the first time since the 2008 financial crisis and allow the economy to steer itself.

Wednesday’s widely expected rate hike of one-quarter of a percentage point comes after the Federal Open Market Committee’s scheduled two-day policy meeting, and is a response to a robust economic landscape that includes low unemployment, an uptick in wage growth, and sweeping corporate tax reform.

“The near-term outlook appears to be steady as she goes,” said Jack Kleinhenz of the National Retail Federation. “Rarely are so many economic gauges of the U.S. economy so strong.”

The new rate also signals that the White House’s tit-for-tat global trade actions have so far had a muted impact on the nation’s nine-year economic growth streak.

The Fed kept rates artificially low for seven years after the Great Recession, zeroing out the rate in December 2008 and only raising it again in December 2015, under Janet Yellen’s chairmanship. Since then, Yellen raised the benchmark rate by one-quarter of a percentage point just four more times. After taking over from Yellen in February this year, Trump-appointed Federal Reserve Chairman Jerome “Jay” Powell has raised rates three consecutive times.

Chairman Powell has made note of the Fed’s precarious position as the economy heats up, saying last month that the Fed currently faces two main risks — either “moving too fast and needlessly shortening the expansion” or “moving too slowly and risking a destabilizing overheating.”

But Trump slammed Chairman Powell earlier this year, saying he was “not happy” about this year’s series of rate hikes.

“I don’t necessarily agree with it,” Trump told CNBC in July. “I’m not thrilled, because every time we go up, they want to raise rates again. But at the same time, I’m letting them do what they feel is best.”

Wednesday’s FOMC meeting was the first for economics professor Richard Clarida, who was confirmed earlier this month for a four-year term as Federal Reserve vice chairman. The board of governors has three remaining vacancies.

NBCNEWS

KTAL

Retailers’ wish lists feature early holiday shopping

Most consumers haven’t bought their Thanksgiving turkey yet, but it’s already the holiday shopping season in the minds of many retailers.

Wal-Mart Stores Inc., Target Corp. and others are aggressively advertising holiday specials online and in stores to get a jump on the spending spree that remains a k.

Black Friday has become black November,” quipped Steve Barr, head of the U.S. retail and consumer sector at PwC, the accounting and advisory firm. That’s because so many retailers are rolling out their holiday price cuts well in advance of Black Friday, once the traditional start of holiday buying.

Although Black Friday remains a big shopping day, its import has been eroded by ever-earlier bargains, the growing clout of online shopping and retailers’ fear that the other guy is getting a jump on them. That competition anxiety was behind the push five years ago to open stores on Thanksgiving Day, and merchants are proving again this year that they can’t open their physical stores early enough to launch the season.

Wal-Mart, Kohl’s Corp., Toys R Us Inc. and several others plan to open on Thanksgiving again this year — some even earlier than in 2016 — a move that in past seasons drew grumbling from some consumers and retail employees unhappy with retail’s “Christmas creep.”

Brick-and-mortar stores are expected to lose more ground this year to the convenience of shopping by phone or computer.

E-commerce has become so pervasive that U.S. online retail sales this holiday season are expected to reach $107.4 billion this year, a 13.8% jump from last year and the first time they’ll top the $100-billion mark, the research firm Adobe Analytics forecasts.

Altogether, U.S. holiday retail sales (those for November and December) should climb between 3.6% and 4% this year, to as much as $682 billion, the National Retail Federation forecasts.

The economy is helping.

“The combination of job creation, improved wages, tame inflation and an increase in net worth all provide the capacity and the confidence [for consumers] to spend,” Jack Kleinhenz, the NRF’s chief economist, said in a statement.

And retailers are trying to cover every shopping preference and garner every possible sales dollar as they launch the holiday spending season, which can account for about 40% of a retailer’s annual revenue.

Indeed, it would be a mistake to confuse the woes of the retailers’ physical stores — which partly reflects that too many locations were built to survive the shift to online — with the notion that Americans no longer care as much to step foot in stores for “doorbusters” and other deeply discounted goods, analysts said.

After all, if online shopping is all the rage, why bother opening stores on Thanksgiving Day?

Because “a website can’t give you goosebumps” like those experienced in touching, buying and taking home the electronics, apparel and other goods bought during the holidays, Barr said.

“Let’s say you and I both want to buy a TV on Thanksgiving Day,” he said. “You go online and it’s going to be delivered in two to three days. I go to the store, get my TV and I’m home in an hour and watching it. It’s an emotional interaction, and that’s what they’re appealing to on Thanksgiving Day.”

The International Council of Shopping Centers, a trade group, said its latest survey indicated that 84% of shoppers on Thanksgiving weekend expect to head to stores. And 85% of the respondents said they expect that when they get there, their purchases will depend on deals or promotions.

That expectation of seeing tantalizing price cuts is partly the fallout from the surge in internet shopping, a segment in which the likes of Amazon.com have put huge downward pressure on prices.

Americans’ online purchases on Cyber Monday alone will climb 16.5% from last year to $6.6 billion, making it the largest online-shopping day in history, Adobe estimates.

The term “Cyber Monday” was coined by staffers at the National Retail Federation in 2005 when they noticed a jump in online sales following the Black Friday weekend.

Many consumers at the time had relatively slow internet connections at home. It became apparent that when they returned to work or school Monday, where they had computers with faster internet speeds, they shopped online.

Retailers seized on the trend and began heavily promoting Cyber Monday as another day for major holiday discounts. And now, of course, fast internet connections are ubiquitous on smartphones, tablets and desktop computers.

This year, Adobe Analytics expects that purchases made on mobile devices such as smartphones and tablets will account for 54% of all e-commerce holiday sales — the first time they’ll surpass online sales made on desktop machines.

Target Corp. and Best Buy Co. were among the retailers that released Black Friday promotional prices on hundreds of items last week — sale prices that will return on Thanksgiving Day and Black Friday.

Best Buy, for instance, was selling a 43-inch LG television at its “Black Friday price” of $279.99, which it claimed was a $150 savings.

Target and other retailers also heavily promoted “sneak peeks” of their Black Friday advertising fliers on their websites in hopes of luring consumers when Black Friday arrives.

Not every retailer will be open Thanksgiving Day, however.

Chains such as Home Depot IncCostco Wholesale Corp., Nordstrom Inc. and Marshalls are among those expected to stay closed Thanksgiving Day, according to BestBlackFriday.com, which tracks the industry.

Outdoor retailer REI Co-op also will close its 151 stores for the third consecutive year on Thanksgiving and Black Friday, a span in which it urges its customers and 12,000 employees to “opt outside.” REI said its website also would not process any online orders those days.

That doesn’t surprise Pam Danziger, who runs the retail consulting firm Unity Marketing. “Many consumers want Thanksgiving to be a pure holiday,” she said.

But Danziger said many chains still opt to open Thanksgiving Day “because they’re desperate to squeeze every last dollar out of their customers,” she said. “They feel like they have to, because the pressure is so high right now to avoid letting their competitors get an inch on them.”

Barr said there’s another reason why retailers open Thanksgiving Day: It’s a way for them to persuade customers to return before Dec. 25.

“If you make that experience as enjoyable as possible in stores on Thanksgiving or Black Friday, they’ll be back later in the holiday season,” he said. “Shoppers never forget how you made them feel.”

L.A. Times

Slower auto production leads to 4,286-job drop

Employment fell in Northeast Ohio in September by an estimated 4,286 jobs, according to the latest Crain’s Employment Report (CER), attributable in large measure to a decline in vehicle production.

The drop represents a 0.4% decline in the local workforce. It puts the estimate of employment in the seven-county Northeast Ohio region employed at 1,169,431 people in September, down from 1,173,717 in August.

The region has lost 6,682 jobs, or 0.6%, from an estimate of 1,176,113 jobs in September 2016.

Cleveland Heights economist Jack Kleinhenz, who developed the CER model, attributed the decline to slower auto production. The goods-producing sector of the regional economy, which includes auto production and other manufacturing jobs, lost 3,601 jobs in September, a 1.7% decline, while the service sector, which employs four times as many people as the goods sector, lost only 685 jobs, for a lost of less than 0.1%.

U.S. auto production has slowed in recent months, declining from 326,000 units in August 2016 to 252,800 units in August 2017, according to data compiled by the Federal Reserve Bank of St. Louis. That has led to shutdowns or layoffs at the region’s auto plants. For example, General Motors Corp. scheduled nine weeks of down time at its assembly plant in Lordstown for 2017, according to the Youngstown Vindicator .

By contrast, construction contractors were experiencing a shortage of experienced labor, making it difficult to fill newly created positions, according to regional information in the Federal Reserve Bank’s September summary of economic conditions, or Beige Book.

The Beige Book also reports that disruptions to spending and production are expected to reduce economic activity nationally in the third quarter of the year but boost it in the fourth quarter. Kleinhenz, who is chief economist for the National Retail Federation, agrees with that outlook, as he expects hurricane-hit households to replace lost vehicles and to fix up damaged homes, while businesses in the path of the hurricanes return to full operations in the last quarter of the year.

“A key reason to remain upbeat about the outlook is the optimism evident in business and consumer sentiment surveys,” he reported.

He cited, for example, the University of Michigan’s Consumer Sentiment Index, which jumped 6.0 points in early October to 101.1, its highest level since the start of 2004.

“The surge appears to be driven by increased optimism about employment and income prospects,” Kleinhenz said, though he noted that the NFIB small business sentiment index dropped. However, the index still held at a level higher than a year ago.

Jay Miller

Crain’s Cleveland Business

Economic outlook seems positive for retailers, economist says

By JOHN REID BLACKWELL Richmond Times-Dispatch Sep 8, 2017
Jack Kleinhenz

 

Jack Kleinhenz, the National Retail Federation’s chief economist, spoke Friday morning at an economic outlook breakfast hosted by the local Retail Merchants group.

GREGORY J. GILLIGAN/TIMES-DISPATCH
Predictions of the demise of bricks-and-mortar retail because of online shopping are premature, an economist told Richmond-area merchants Friday as part of a mostly optimistic economic outlook report.

“Ninety percent of spending by consumers is still brick-and-mortar,” said Jack Kleinhenz, the National Retail Federation’s chief economist, speaking at an economic outlook breakfast hosted by the local Retail Merchants group.

“E-commerce is changing our lives, there is no doubt about it. It is going to gain,” he said. “I think that retailers who can adjust and incorporate e-commerce into various channels are going to be successful.”

Despite some high-profile retail store closings nationwide that have grabbed attention this year and raised questions about the impact of online shopping, retail store openings still have outpaced closings, Kleinhenz said.

He cited a report by IHL Group, touted on the National Retail Federation’s website, indicating there will be a net increase in retail store openings of more than 4,000 in 2017. In June alone, he said, there were 620,000 job openings in the retail industry.

“I am trying to suggest to you that the retail industry is a lot more healthy than it is made out to be,” he said.

Kleinhenz gave a mostly optimistic outlook for the economy, pointing to positive gross domestic product growth, falling unemployment rates and solid job gains as good signs for retail sales.

He declined to give a prediction for this year’s holiday retail sales, saying more data need to be collected before a forecast is done.

An informal, text-message poll about holiday sales expectations was conducted among the roughly 160 attendees at the event held at the Westin Richmond hotel. Of those who responded, 68 percent said they think sales will be up.

“I think the economy has been doing OK — it is a solid outlook,” Kleinhenz said. “We are getting very close to full employment, so we won’t see a lot of job growth.”

Potential negatives include uncertainty about federal government policies affecting business, and lackluster wage growth since the recession ended. “Wages have not moved up as fast as what we would have thought during an expansion,” he said.

jblackwell@timesdispatch.com

(804) 775-8123

How and why NRF forecasts the economic future

August 07, 2017
Susan Reda

As the chief economist for the largest retail trade organization in the world, Jack Kleinhenz’s days revolve around big data and economic forecasting models. With over 35 years of experience, Kleinhenz is well-versed in examining data patterns and trying to provide some perspective. “I’m a storyteller,” he says, and forecasting is “like a jigsaw puzzle.” Raw data is put into models and it’s Kleinhenz’s job to provide the narrative — a combination of art and science.

On this week’s episode of Retail Gets Real, Kleinhenz sits down in the podcast studio to explain how and why we forecast the economic future and what he thinks is on the horizon.

Jack Kleinhenz in the podcast studio

https://nrf.com/news/how-and-why-nrf-forecasts-the-economic-future

While economists use different models, they all use the same variables, so there are established core patterns. To measure income levels, for example, the Bureau of Economic Analysis collects data on a month-to-month basis, taking into account such factors as personal income, after-tax income and consumption levels. “These are estimates,” Kleinhenz clarifies. “They’re not perfect numbers.”

To get a more accurate picture, part of Kleinhenz’s job is to continually converse with retailers. “It’s kind of a moving picture we’re trying to figure out,” he says. Technological innovations have greatly changed the task of forecasting. The concept of big data is transformative; when information comes in real time instead of through surveys, it greatly increases the accuracy of predictions.

“The market has been changing and consumers have changed their behavior.”
Jack Kleinhenz

“What’s going on in the financial markets and these stores does not necessarily mean that consumers have gone away and stopped shopping,” Kleinhenz says about the shifts taking place in the retail industry today. “The market has been changing and consumers have changed their behavior.”
Kleinhenz is optimistic about the future, saying the changes have more to do with demographics: The dense population in the U.S. Midwest 20-30 years ago, as one example, has moved to more urban areas in the Southeast and Southwest, and the shopping malls that catered to their needs do not attract as much demand anymore.

Another reason is that consumers don’t spend the way they used to. Younger consumers have drastically different buying habits, make life decisions later and seek more experiences — opposed to products — than older generations. “People still want to shop,” Kleinhenz says, “It’s recreational. It’s social.”
Listen to this week’s episode to learn why the perception of retail’s transformation is far from the reality, and catch up on some of our most popular past episodes, like Get ready for Gen Z and the future of the retail store.

 

Susan Reda is one of NRF’s co-hosts on Retail Gets Real. Meet all the co-hosts and learn more about the show.

ACE Report: Jobs jumped in July, but longer-term data is down

ACE Report: Jobs jumped in July, but longer-term data is down

Scott Suttell

July was a good month for jobs in Northeast Ohio, as the region added 6,200 positions on a seasonally adjusted basis from June, according to the latest Ahola Crain’s Employment Report.
But dig a little deeper into the numbers and there’s less to be excited about.

For one, the July increase followed declines in the previous two months — losses of 5,527 jobs in June and 3,708 in May in the seven-county Northeast Ohio region. And, as Cleveland Heights economist Jack Kleinhenz, who developed the ACE Report economic model, pointed out in an analysis of the most recent data, the region’s estimated total employment of 1,173,216 in July represents 3,577 fewer jobs than the like month a year earlier.

The July total payroll estimate for the region also was ever-so-slightly below the six-month trend, which is 1,173,492, according to the ACE Report data.

Service-producing firms registered a larger share of the July increase, at 3,944 jobs, while the goods-producing sector showed a gain of 2,256 jobs, Kleinhenz reported. The report is based on payroll data from about 3,000 employers and is gathered by The Ahola Corp., a Brecksville-based payroll and human resources firm.

In his analysis, Kleinhenz wrote that the growth in regional employment last month “is consistent with July’s national employment release showing a solid increase of 209,000 jobs. The job gains are consistent with 2%-plus economic growth, steady consumer spending and Fed policy as currently projected for a December rate hike.”

The so-so ACE Report results are consistent with a Federal Reserve Bank of Cleveland report released on Thursday, Aug. 17, that found employment growth in Cleveland “has been weak,” and stated that while the economy here is growing, it’s doing so at a slower pace than that of Ohio and the nation as a whole.
Stronger growth could be ahead, Kleinhenz noted, as the U.S. economy “bounced back in the second quarter, growing at an estimated 2.6% on an annualized basis. This is more than twice the pace of the first quarter and brings expansion in the first half of 2017 close to the 2% underlying trend pace.”