Economic Recovery Still Delayed

The economic recovery is still some way from demonstrating it is fully on the road to recovery. Last week's budget may have had a mix of good and bad news but data from many market categories indicates that growth is a long way off.

We are involved in a number of markets. And can track short term variations in demand. Our observations showed that Autumn 2010 started poorly when a flood of bad news from the Conservative party conference depressed business and consumer markets. This news centred on the the so-called better off having to share the pain of paying for the deficit. Essentially anybody earning £42,000 was designated as rich. Effectively, families with a single wage earner on £42,000 were being asked to pay more so that the army of public sector workers and client state benefit claimants could carry on receiving their over generous transfer payments. The budget seems to have replicated the depressive impacts on many markets.

Bads news from a whole series of markets now seems the norm. With profit warnings and senior director dismissal being a regular feature of the newsflow.

I await some good news.  

Nike Losing in the Sports Brand War?

Welsh Rugby Player Jamie Roberts Wearing Under Armour

Nike, the giant American sports brand has issued a profits warning and the shares have shed 5%. This begs a question as to whether Nike is losing its position in the sports brand war. The company blames the rise in commodity prices. In my opinion Nike may well be losing some of its allure. Their sports icons such as golfer Tiger Woods and tennis player Roger Federer are losing their global standing. Meanwhile, new, more technical brands such as Under Armour are gaining ground in the more profitable sports accessories markets. Nike has focused its sponsorship activity on key personalities, such as Woods, with the inherent risks this brings. Meanwhile Under Armour has spent its money on teams such as football club Tottenham Hotspur and the Wales rugby team.

Nike's sports brand positioning has been unchallenged over the past two decades facing down Adidas, Puma and Reebok. The new environment is more challenging and I suspect that this latest downturn in the companies financial performance may be more than a blip.

UK Families Are Highest Taxed in OECD

A new report shows that UK families with one employed parent are the most highly taxed in the OECD. A family earning £33,745 will pay 39% more tax than the average for 33 other OECD countries.

The report has provoked charities, as well as economists, into attacking the UK governments ant-family stance. In essence, Britain is punishing middle income families in order to fund a benefits system that encourages workless families to remain dependent on state handouts.

As we know, price inflation is now rising faster than incomes. In addition taxation in the form of higher VAT and national insurance is hitting family incomes even harder.

Fuel bills, fares to work, basic food stuffs, rent or mortgages, council tax and water rates have to be paid. Families have to look to make ends meet so discretionary spending has to be cut and savings have to be made. One area that is now under scrutiny is money spent on things such as family holidays and and another is children's parties. In recent years these items of expenditure are no longer considered luxuries. In each case families will be looking for value for money.

The UK government should take a look at other systems of family taxation. The gap between working families and those where everyone is dependent on the state has shrunk. In many cases families gain very little from gainful employment. This trend needs to be reversed.