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CNBC and Bloomberg have been asking one economic pundit after another whether the U.S. economy is in a recession. The unanimous answer has been a resounding no.However, recent Office Depot Inc (NYSE: ODP) comments support a much different conclusion. At the Goldman Sachs retail conference yesterday, its CFO, Patricia McKay, said small businesses are slowing their spending and the retailer is also being hurt by the sagging housing market. How a sagging housing market effects Office Depot, I am not sure, but Office Depot does touch a number of different markets including the very important back-to-school market.
The Office Depot miss follows a late August warning from Staples Inc (NASDAQ: SPLS) that reported a 2% drop in same-store sales, down from 4% positive comps last year.
The office supply sector has proven a good measure of economic activity for most of this decade, forecasting the 2002 economic recovery and now, apparently, an economic slowdown. This is another data point for Fed Chairman Bernanke to use in his argument to drop rates.
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Reader Comments (Page 1 of 1)
9-07-2007 @ 2:35PM
TraderMark said...
Economists almost never forecast a recession. I agree with Staples. How a nationwide bubble in real estate that needs to be pop won't take us into a recession or at least a very slow growth environment boggles me. But I only play an Economist on TV.
http://fundmyfund.blogspot.com/2007/08/et-tu-september.html
9-12-2007 @ 9:20PM
Peter Van Schaik said...
We would definitely agree with Office Depot. Our research indicates we are most likely in the early stages of a 24 month recession. You can see the details of our research at Van Schaik's Economic Outlook - http://jpetervanschaik.googlepages.com