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Issue: November 2008 APPLIANCE Magazine

Appliance Line
The Enemy Is Uncertainty

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Tim Somheil, Editor

There’s nothing worse than not knowing. But how do we look ahead from here?

Tim Somheil, Editor

This is traditionally a time of year when APPLIANCE magazine starts to forecast what the coming year might bring to the appliance industry. Never has it been more difficult to do so. So I’m asking you to help. I’m inviting the people of the appliance industry to share their thoughts on the new APPLIANCE blog. In this place we can examine the recent upheaval and postulate its impact on the industry. Better, we can share ideas for making the best of it. I’m hopeful that, by the time you read this, the chaos will have died down somewhat.

The Crucial Balance

On October 10, 2008, Bart van Ark, PhD, vice president and chief economist of The Conference Board, had this to say: “If government and business leaders can calmly—and privately—focus squarely on a way out of all this, looking to prevent tomorrow’s fires even as they fight today’s, we can still avoid worse. This means finding a crucial balance between the short-run steps needed to get the economy back on its feet and the long-run needed to foster a new phase of global growth.” The statement was part of a Conference Board release forecasting further contraction of the U.S. economy into the first half of 2009. That’s assuming that there will be some loosening of credit markets in response to measures taken by the U.S. government, that interbank lending will recover, and that investor and business confidence will gradually return.

Are those reasonable assumptions? It’s impossible to say from where I sit now, writing this editorial in mid-October, with global markets fluctuating wildly and the U.S. fitful over a heated presidential election.

There are a number of economic and political scenarios that could play out in the coming months. The success of worldwide bailouts, the housing markets in the United States and parts of Europe, the stability of burgeoning third-world economies (they’re becoming important appliance markets), and the global reaction to the U.S. election outcome are all linked, and all could affect the overall recovery. A terrorist/geopolitical event could skew the trajectory of the global economy and hence the success of the appliance industry.

Writing this in October, there is only one thing I can predict: the morale of the United States will change after November 4. Reading this after the fact, you can already judge whether that change was for the better.

This presidential election has riveted America’s attention like no other in my lifetime. In mid-October, one of the candidates is statistically favored to win, but no one can say for sure what the outcome will be. This election has been a mirror of the times: filled with surprises.

But with that one significant uncertainty settled, there is a chance for psychological inertia to spread more calm. To help the financial markets grow steady. To foster global progress on economic repair efforts and the development of more-secure financial systems. With less uncertainty and some feeling of stability, consumers will begin to find a new footing. Housing can then begin to recover. A short recession and minimal damage to the global financial system is about the most optimistic near-term future we can expect. Then things can slowly—probably over the course of several years—get back to whatever the new “normal” turns out to be.

Call this scenario wishful thinking. And by the time you read this it may have proved to be hopelessly naive. Inaccurate predictions are a shortcoming of writing for print publication in such dynamic times. But I’ll be updating these thoughts on the new APPLIANCE blog, and I invite you to respond.

What Does the Future Hold?

What should the new President and the new Congress do to foster growth in consumer products industries? What’s the best outcome for the changes to the global financial systems?

How has the appliance industry been affected by the events of 2008, and how will the industry fare in 2009?

Perhaps most importantly: How can the appliance industry create success in 2010 and beyond? You’ve got an opinion. Don’t keep it to yourself.

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