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Love It When Economists Get Egg on Their Faces?

By Howard Olansky
January 8, 2001
Time and time again during the final four months of 2001, economists and analysts ended up with egg splashed on their faces. Which is great, except for those retailers and contractors mired in doom and gloom who sit waiting for business to come in over the transom instead of going out after it.

Let’s review some of the miscalculations promulgated by the so-called “experts.” I’ll start with a classic head-scratcher. From mid-October to Nov. 26, the National Bureau of Economic Research Panel was the subject of a massive hype. The nation waited with bated breath for the panel to proclaim whether or not the economy was in a recession. On Nov. 26, the panel said we had been in a recession since March. That’s nine months. Gee, and a lot of our friends found that we were not at the end of the world. Far from it.

The panel is made up of academic economists from Harvard, Stanford and other prestigious universities. Many private economists, along with some panel members, believe the current downturn will be mild. A significant comment from the “experts” is this: “Although consumer spending has slowed, it is surprisingly strong for a recession.”

Allow me to mention some of the other miscalculations. In October, housing starts beat the forecasts. Existing home sales, which the “experts” expected to remain stagnant, instead bounced back in October with a 5.5% increase. Consumer sentiment/confidence rose (surprising many economists) in early November. Durable goods orders surged — and I mean surged — 12.8%. Which is a far better showing than analysts expected. October new home sales remained solid, again putting egg on the faces of many of our so-called “experts.”

It doesn’t take a rocket scientist to figure out that these facts and figures are far from the pits, and they relate in a positive manner to our industry. It is no secret that key driving forces for our industry are existing home sales and new home starts/sales. We have a huge — really huge — market waiting to be tapped, waiting to be served and waiting to be asked to buy. A big plus: today, people are more focused on their homes and are inclined to spend money to make them more comfortable, livable and inviting. Floor coverings certainly satisfy those needs, and then some.

For those who hone in on the basics, who take every opportunity to create and attract customers, this can be a fantastic year for sales and profits. Those who think business will come in automatically are destined for the junk heap — deservedly so.

There is no question that consumers are doing their own thinking and are not slaves to the “experts.” Everything points to the fact that there is a more than ample number of consumers interested in floor coverings.

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