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A roundtable hosted by WWD last month with West Coast factors provided insight on how retailers and vendors can survive this uncertain environment. The panelists included: Ronald Garber, senior vice president and portfolio manager at First Capital; Ron Vanek, executive vice president and Western regional manager at GMAC Commercial Finance; Mitchell Cohen, senior vice president and regional manager of commercial services at CIT Commercial Finance; David Reza, senior vice president of the Western Region at Milberg Factors; Jeff Enoch, vice president at Rosenthal & Rosenthal; Kevin Sullivan, executive vice president and Western Region manager of Wells Fargo Century, and Kenneth Wengrod, president of FTC Commercial Corp.
"Some [of our clients] have been able to continuously grow and are pretty optimistic; other guys are getting squeezed not only on the sales side, but also on the margin side. For them it's a recession, for the other guys it's just a downturn," Vanek said
"We are probably already at the beginning of a recession, although this may not be confirmed until we are right smack in the middle of it," Enoch said. "We have experienced an unprecedented credit bubble in the United States and other industrialized nations, and now that the bubble has burst, it is going to take some time for it to deflate."
Enoch predicted the housing downturn, weakening dollar, rising health care costs and massive trade and budget deficits won't let up until the beginning of 2009.
While the majority of the panel said the country is at the brink or beginning stages of a recession, Wengrod believes we are only in a "soft economy" based upon the Conference Board's positive consumer spending numbers and growth in exports. He said if a company identifies and delivers innovative product, consumers will spend. "I don't think we are in a so-called doomsday environment right now."
Since 1942, the average recession has lasted between eight and 16 months with an average of 13 months, Garber noted. "But what I think is more significant is the United States is leading the world in where the economy is heading. We probably will be the first to enter into the recession and the rest of the world will go in later and will come out after us. This means even when we start recouping, our growth potential will be moderated because obviously we depend on the economic activity of what the rest of the world is doing," he said.