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Wednesday, June 15, 2011

Bad news if your customers are zombie consumers

Do you know when you know something but don’t know what to call it?

Today, a journalist in the FT gave it a name. In his words: “the global economy is being hobbled by a new generation of zombies — the economic walking dead.”

For the 13 quarters. since the beginning of 2008, inflation-adjusted annualised growth in US consumption has averaged just 0.5 per cent. Never before in the postwar era have US consumers been this weak for this long.

US consumers have hardly begun to pay-down the debt they acquired during the “good times”. Household sector debt came down to 115% of disposable personal income in early 2011. This is a hell of a long way away from the 75% average for the average of the 1970 to 2000 period. Since 2000 the ability of the US to compete and add jobs and prosperity has taken a nosedive.

The next time you have some strategic look at your customer base you should ask yourself the question: “what percentage of our hard earned customers are zombies.”

All this logic applies equally to the UK. Time are tough and getting tougher. Dick Stroud

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