Sharp Slowing in June???
Industry-wide sales so far in June have been about 20% worse than Chrysler's expectations for the year, according to the memo....
And so far in June, he said, J.D. Power and Associates and Citigroup are seeing a sales pace that is almost 20% lower -- only 12.5 million vehicles per year.
This was confirmed by CarMax's CEO:
Our first quarter sales were modestly below expectations and earnings were disappointing,” said Folliard. “Sales slowed through the quarter, and since Memorial Day weekend, traffic and sales weakened further. If the current trends persist, results for the full year could be significantly below the bottom of our original earnings guidance range.
As a result of the combination of the uncertain economic conditions, rising fuel and food costs and weak consumer sentiment...we are temporarily suspending guidance on comparable store sales and earnings for fiscal 2009.
Now airlines are cutting capacity and cutting out cities from its routes. This means millions of travellers will not be travellling. Tickets that were $400 are now $1400 in some cases. Businesses are cutting back on trips. So are consumers. Just the effect of deminished air travel will be profound....especially on those areas dependent on cheap fares for business like Las Vegas and Orlando.
In talking to friends that own shipping companies and restaurants, similar trends seem to be occuring in their industries....especially with the shipments of printed matter which is a very ominous sign.
Based on a few conversations with industry workers, it appears a number of retailers advanced June sales into May....especially in clothing. Even so, many chains had negative comps....we could see some very ugly numbers for June.
What makes this contraction so different is the depth and breath. It is affecting so many industries and now even health care.
The question is how will all these leveraged consumers, businesses, and municipalities deal with HUGE debt burdens with rapidly declining revenues?