Recovery will be gradual, 'U-Shaped'; Consumer psychology shifts towards 'value'

CHICAGO, Aug. 20 /PRNewswire-FirstCall/ -- A combination of slowing job losses, heightened financial institution stability, housing sales increases, a better-than-projected GDP and improving consumer sentiment could be the catalyst needed to revitalize the retail industry beginning in the first quarter of 2010 following a bottoming of the current recession by the fourth quarter of 2009, according to Jones Lang LaSalle's Mid-Year Retail Outlook for 2009. These key indicators defy prevailing sentiment that economic conditions within the retail industry will remain negative, or even worsen. Unlike previous recessions which saw a brisk, "V-shaped" recovery, existing data points to a more gradual, "U-shaped" recovery as vital indicators of economic conditions slowly stabilize, according to Jones Lang LaSalle, a market leader in retail sales, management and leasing.

"Because the speed and intensity of the recovery will largely be determined by consumer psychology and a willingness to spend, I envision true economic stability won't take root until the first quarter of 2010," said Greg Maloney, CEO and President of Jones Lang LaSalle Retail. "Consumer confidence will play the biggest part in our return-to-normalcy and retailers that offer 'value' options will be at the forefront of the recovery."

Different Regions, Different Recoveries

Although the nation at large continues to suffer from the effects of the recession, it is clear that distinct geographic segments of the country have experienced different levels of intensity. On a micro level, the country can be separated into nine divisions (West South Central, New England, Mountain, West North Central, Middle Atlantic, East South Central, South Atlantic, Pacific, and East North Central), while on a macro level it is divided into four distinct regions (Northeast, South, West and Midwest). Using a set of criteria that includes employment, gross metropolitan product (GMP), wages, housing price changes and unemployment, the West South Central Division stands out as the country's strongest division, despite Louisiana's adverse conditions.(1) Each division and region has been assigned a ranking score where the lower the score, the better the overall performance.

Texas, in particular, is well equipped to emerge early from the recession, according to IHS Global Insight, an economic research firm. The state has been "somewhat insulated" from the more serious effects of the recession due to its lack of a major housing bubble and its energy industry. On a broader, regional level, the Northeast appears to be more advantageously poised for a recessionary breakout than the other three regions.