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Marketers Trim Their Projections...Can Inventories be Far Behind?

October 30, 2008

Now it's official. The U.S. economy slipped 0.3% at an annualized rate in the third quarter. The decline in real gross domestic product was the largest since the end of the last recession in late 2001. The economy grew at a 2.8% pace in the second quarter.

The news wasn't unexpected; in fact, most analysts had predicted a 0.5% drop. Meanwhile, household and personal product marketers are trimming projections, delaying projects and looking for ways to cut costs. Today, L'Oréal trimmed its fourth quarter forecast and Ecolab's chairman told analysts last week that the company was "preparing for the worst and hoping for the best."

Funny thing is, despite all the doom and gloom out there, most marketers have reported good results for the nine months, suppliers tell us that orders have been strong during that time and even industry magazines like Happi are having good years.

Will all these good results be negated between Oct. 1 and Dec. 31? Somehow, I don't think the fourth quarter will be as bad as everyone is projecting. By next Spring, in fact, the global economy could start revving up again, powered by lower commodity costs and a new sense of bullishness on the part of investors and consumers.

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