Friday, November 16, 2007

Bellwether

A bellwether is a castrated ram with a bell tied around its neck which leads a flock of sheep. The word has come to mean a leading indicator or a harbinger of a trend. A bellwether tells us the shape of things to come.

However, given today's business news, we do well to recall the original image of the castrated ram. FedEx announced today that it expects a weaker annual result as a consequence of higher fuel costs (8% rise, or $85 million since September) and weakness in delivery orders. This signals at once that high energy costs are having a negative impact on a bellwether company of the bellwether transportation industry - the industry that gets nearly all the stuff we buy to us - while at the same time suggesting that "consumers" are not consuming as much as the economy wants and needs them to. The decline in consumption, it can be assumed, is likely also the result of higher energy costs. When a full tank of gas in the SUV costs upward of $75, there are fewer dollars to spend on increasingly expensive Chinese produced toys (increasingly expensive, in no small part, because of the decline of the purchasing power of the dollar). Then there's the all around dismal economic picture that's fostering profound anxiety.

I didn't need to read of FedEx's predicament to know the holiday season was looking bad for plastic peddlers: already a week before today's announcement I had encountered firm evidence that the retailers were in dire straits. Spinning through the FM dial earlier this week, I encountered three - count 'em, three - local DC area radio stations that had devoted their format entirely to Christmas music from early November until Christmas Day. Already Christmas displays were beginning to compete for eyeballs with Halloween decorations in the storefronts on M Street, but the change in radio format immediately struck me as an audibly desperate measure by the corporate owners of these stations to assist their advertisers by putting their audiences in the buying mood months ahead of Christmas and even weeks ahead of Thanksgiving. Like Pavlovian dogs, hearing Kenny G versions of Christmas favorites encourages us to reach for the worn down plastic in our wallets and buy plastic gifts poisoned, oops, made in China. If the season of shopping is to be salvaged and corporate America is to be able to report "growth" (i.e., the shilling of more foreign produced plastic) to its shareholders, then Americans must be encouraged by any sensory means available to dig deeper into debt. Given the choice between listening to once-lovely Christmas music being played 24/7 closer to Halloween than Thanksgiving or the lunatics on AM radio, I settled in for a drive with the lunatics. At least I can froth at them rather than be tempted mindlessly to sing along and let myself slip into that mood to shop...

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