New report compares recoveries of housing and auto sales
U.S. automakers and home builders, which often experience similar recovery patterns following economic downturns, are following more divergent trajectories this time around, according to a new report published by Standard & Poor’s Ratings Services. Overall, auto sales have staged a significant rebound over the past two-plus years, but the market for single-family homes continues to struggle.
The key difference, in Standard & Poor’s view, is that while the period before the downturn amounted to a bubble in the overall housing market, especially the new single-family sector, it was still within the bounds of what was considered a "normal" cycle for the automobile — despite the extended period of highly robust sales growth. In both cases, however, the extended period of low unemployment, robust growth in income, low general interest rates and relatively easy credit terms, all of which contributed to the run-up in consumer demand.
At no point has the volatility of the home-building sector outstripped that of the auto sector more than during the recent downturn. While U.S. light vehicle sales fell 40% from the peak in 2000 to the trough in 2009, total housing starts in 2011 were down 66% from the peak in 2006, and deliveries for currently rated home builders declined 72%. In addition, Standard & Poor’s estimates that rated home builder market share (of new-home sales) declined from more than 30% at the market peak to less than 25% at the market trough.
However, there are good reasons to believe that the new single-family home market has bottomed and will improve over the next several years — albeit gradually, according to Standard & Poor’s. The credit rating agency believes that cyclicality remains for both housing and autos — even though U.S. auto sales have demonstrated a fairly smooth recovery off 2009 lows, while housing remains sluggish at best.
The complete article, "The Credit Overhang: The Differing Recovery Trajectories Of U.S. Auto Companies and Homebuilders," is available through Standard & Poor’s at globalcreditportal.com.
At Home Depot, First Phone Junior
The world’s largest home improvement retailer has described its First Phone on-the-floor scanner and sales tool as a competitive advantage. Now comes the smaller version.
The mobile sales-floor device known as the Home Depot First Phone has been described as competitive advantage for the world’s largest home improvement retailer. Now comes the “First Phone Junior,” which has begun to roll out to all Home Depot stores, said Frank Blake during the company’s first-quarter earnings call.
“This junior version of the First Phone provides our associates a tool that combines the communication features of a phone, with the product and inventory look-up features of the First Phone, but without the complex business analytics and product ordering functionality of the First Phone,” Blake said. “This allows us to spread the basic functionality of the First Phone throughout the store at a fraction of the cost.”
The phone takes its name from the initials FIRST, which stands for Find, Inquire, Respect, Solve and Thank — key points to Home Depot’s approach to customer service.
Man arrested in HD arson case says he’d do it again
A man who claimed his friend’s hardware store was being driven out of business had been arrested for torching a Home Depot in Shoreline, Wash., a town 9 miles north of Seattle.
As reported in the Seattle Post Intelligencer, Randol Stebner, 53, started two small fires near the Aurora Avenue North store on May 14. According to police documents, Stebner admitted to lighting the fires and said he’d do it again.
“I am upset with Home Depot because they are making business difficult for my friend,” Stebner said in a written confession, according to the newspaper report.