Market Share Gains Are a Priority for 2014

March 28, 2013
Don’t get carried away with extending economic good news in 2013 straight through 2014; there are signals of future cyclical risk.

The Bureau of Economic Analysis revised the fourth-quarter-2012 GDP number to reflect 0.4% growth versus the original estimate of -0.1%.  This is good news, not only because a positive number is better than a negative one, but because this is the second time the number has been revised up

For forecasters that have been around a long time, upward revisions are generally considered to be a good sign in that it means there is more underlying strength inherent to the economy than is presumed to be true by the “powers that be”.  That having been said, don’t get carried away with extending some good news in 2013 straight through 2014.

We are monitoring a host of consumer related general economic indicators and three in particular are suggesting a cyclical shift lies ahead: Housing Starts, Retail Sales, and Employment.  You won’t be reading any “bad news” about these indicators in the immediate future, but the cyclical signals are there suggesting that the consumer isn’t going to be powering the economy ever higher in 2014.

This means that it would be up to the business-to-business sector of the economy to rotate up and provide ongoing lift to the economy.  The problem with that line of thinking is that why would businesses add capital equipment and maintain 2013 spending levels in light of slowing consumer activity and the imposition of new and costly federal programs? 

We think these facts point out a cyclical risk for 2014 that should be reflected in company budgets.  Assume market share gains are going to be the primary way individual businesses are going to grow in 2014.

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