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Will Liquidations Rise or Fall in 2012?

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It’s difficult to say whether liquidations will rise or fall in the coming year. Both sides of the debate offer compelling arguments in their favor, and no clear winner can be determined.

On the one hand, there are powerful factors indicating our economy may be starting a slow gradual upswing. 2011 wasn’t a great year economically but it ended stronger than it started, with U.S. salaries rising in December of 2012 for the first time in 9 months. Consumer spending has begun to rise over the last couple of months, and while it’s growth hasn’t been dramatic, any growth is better than obvious stagnation. Unemployment is still a problem, holding strong at 10%, but it isn’t rising and there’s no indication it will do so anytime soon.

Overall the economy isn’t fantastic, but it has been much worse in recent years, and it isn’t showing any signs of getting worse in the immediate future. If the economy stays in essentially the same state it’s in right now, then we probably won’t see a sharp spike in liquidations during 2012.

That being said, there are a few indications that liquidations could take a turn upwards over the next year, depending on a few key factors. Americans have spent a couple years now saving money and paying down their debt, but the rise in consumer spending seems to indicate that those same Americans are starting to spend their savings discretionarily, and may be beginning to accumulate debt once more to help finance those purchases. Many Americans have also responded to the recent Recession by going back to school and furthering their education, accumulating additional student loans in the process.

The big wildcard in 2012 is going to be the price of gas, which continues to rise and may drag the price of everyday goods along with it. If the cost of living increases dramatically over the coming year, then Americans will find their cash-flow choked and could easily succumb to their increased debt load.

Our current economic indicators seem to state that 2012 will be an ok year and isn’t likely to see a huge jump in liquidations. But our economy is unnervingly precarious right now, and it wouldn’t take much to push many Americans to unexpectedly liquidate.

What Does the Rise in Consumer Spending Mean for Liquidations in 2012?

Consumer Spending- Is It Actually on the Rise?

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There are plenty of ways to determine whether an economy is on the upswing or not, and one of the most popular to identify and discuss is consumer spending.  Most experts believe consumer spending and the general health of the economy directly correlate - that increased consumer spending indicates a growing healthy economy, and that decreased consumer spending is a sign of a poor economy. For this reason, analysts have been watching consumer spending like a hawk to determine when exactly we’ll transcend our current economic state.

Looking over these expert’s findings, we have some good news and some bad news. On one hand, consumer spending is on the rise. On the other hand, it isn’t rising as quickly as some experts feels it should be.

After years of savings and paying down debt, consumers are spending more on relatively non-essential items such as restaurant meals and new cloths than they have in years. Consumers aren’t, however, spending lavishly or purchasing too many big-ticket items, like new cars. The sort of consumer spending we’re seeing is promising, but it doesn’t indicate we’re out of the hole just yet.

Some analysts even worry that consumer spending should be much higher than it is right now according to other economic indicators. For example, at the end of 2011 U.S. salaries increased for the first time in 9 months, which some analysts feel should have resulted in a massive surge of consumer spending, yet didn’t.

Consumer spending, like so much of economics, is as much about psychology as economics. We’re unlikely to see a huge jump in discretionary spending until consumers not only have the means to buy lavishly, but until they feel ready to buy big ticket items again.