Boston, MA -- (SBWIRE) -- 08/30/2012 -- Our overarching view on the US economy is that the recovery will remain slow and erratic, with both fears of recession and hopes of a boom both likely to be dashed. We are forecasting real private consumption growth of 2.1% in 2012 and 2.4% in 2013, from 2.2% in 2011. Private consumption has been responsible for most of real GDP growth since the middle of 2011 (two-thirds of growth in Q311, and one-half in Q411), but we expect the consumer's contribution to fade as 2012 progresses due to the absence of strong wage growth. While overall real consumption is increasing, the main source of the increase has been durable goods as opposed to nondurable goods such as food. We see this is as a sign that US consumers are paring back on non-essential, non-durable goods but loading up on more essential durable goods such as automobiles, for which there has been pent-up demand since the recession began five years ago. The composition of consumption plays into our long-term view that domestic private consumption is set to decline as a percentage of GDP, and that the 'Great Recession' has altered US consumer habits on a semi-permanent basis.
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Headline Industry Data (local currency terms)
- 2012 per capita food consumption = +1.72%; forecast compound annual growth rate to 2016 = +2.12%
- 2012 alcoholic drinks value sales = +3.09%; forecast compound annual growth rate to 2016 = +3.46%.
- 2012 soft drink value sales = +2.52%; forecast compound annual growth rate to 2016 = +2.87%
- 2012 mass grocery retail sales = +2.60%; forecast compound annual growth rate to 2016 = +3.56%.
Key Industry Trends And Developments
Activist Investor Pushing For PepsiCo Split: In May 2012, an activist fund named Relational Investors purchased a US$600mn stake in PepsiCo in the belief that the firm will benefit from spinning off its US beverage business. The fund, run by Ralph Whitworth, purchased nearly 9mn shares, which represents a stake of around 0.6% of the soft drink and snack maker. BMI has previously suggested that PepsiCo is likely benefit from being split into two separate companies and has also suggested that Anheuser-Busch InBev could be a potential acquirer of the soft drink side's assets.
Momentum At Walmart Points To Strategy Success: US retail giant Walmart has posted a further uptick in its US sales growth for the first quarter of 2012. In the three months to April 30, sales at its US division increased by 5.9% to US$66.3bn, including comparable-stores sales growth of 2.6%. This was ahead of its own forecasts and represents the fastest rate of growth for three years. The firm has benefited from a renewed focus on value while also being boosted by signs of a modest recovery within the consumer sector.
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