Last week: The jobs report for October was a pleasant surprise. Is it real? Will it last? Yes it was real, as opposed to a statistical result. But whether 150,000 new jobs will open up per month remains a question.  The number signing up for unemployment checks has now dropped below 450,000 for a second time. Nor is all the good news limited to the labor market. A survey of purchasing managers showed an uptick in confidence. Still, these positive developments will only turn into a brighter economic landscape if sales volume finally picks up. Will businesses invest in new equipment and software and structures? Will consumers open up wallets and pockets and spend this holiday season? The report on retail sales this week is likely to show that consumers have responded to steep discounting. The combination of better data on the labor market and continued discontinuing has the chance to brighten spirits — especially those of retailers this time of year.

THE SITUATION ABROAD

The global economy is still recovering from the Great Recession. It is also in the throes of some major transformations. The emerging world is and is very likely to continue growing more strongly than the developed economies through this decade. The Conference Board estimates that the global economy could grow at an average annual rate of 4.4 percent over this decade. That pace is a little faster than growth in the 2000-2010 period. It will only happen if the world’s financial system fully recovers; if trade is not constrained by new outbreaks of protectionism; if currencies are allowed to reflect economic fundamentals; and of course as always, if  there is a little luck in terms of avoiding cyclical downturns.  The base case also includes no major asset-price bubbles.  And, if all this happens, there clearly will be a shift in the world’s economic engine. One of the real challenges/benefits of this forecast path is that the world economies are taking on a more shared role as engines of growth. In turn, that sharing of the burden might even enhance prospects. Time will tell.

FACT OF THE WEEK

Seventy-one percent. An ounce of gold sold for a little more than $1400 —  a record price – in November. Or was it? When adjusted for inflation, the price hit a peak of almost $2400 in 1980 or almost 71 percent more than the current level. Gold investors, among other investment goals, are hedging against inflation: As fears of inflation heat up, gold prices generally rise. But is gold a hedge when it rose in price by almost half the general rate of inflation over three decades?

QUESTION OF THE WEEK

I recently heard a retail consultant talking about HENRYs. What are HENRYs?

The Great Recession has hit the reset button. Retailers have spent the better part of a decade adjusting to consumers browsing, shopping, and even buying online. Now, the lingering impact of the recession and the ensuing prolonged period of high overall unemployment is changing their outlook and marketing strategy.

In general, consumers are busier today paying down debt and building up savings. One theory suggests that the baby boom generation (because it is closer to retirement) is the most active in reducing debt and building up assets for retirement years. Consequently, this group is less likely to be spending on high-end or luxury goods.

If that is true, then retailers will be turning their marketing and advertising to Gen Xers or the even younger Millennials over the next few years. The problem is that many consumers in these age brackets are HENRYs (High Earners Not Rich Yet). And if that is true then they are not yet in position to replace Boomers as the primary target audience for luxury items. Finally, retailers are stuck trying to compete with online providers in terms of capturing what could be a shrinking boomer market while waiting for HENRYs to mature economically. It is not easy to make money retailing.