Wednesday, March 25, 2009

How the Positive News on our Economy Today Affects the Licensing Industry

Today, via the major news reporting agencies, it was reported by The Commerce Department that durable goods orders rose 3.4 percent to $165.6 billion in February, the biggest gain since December 2007. As you probably know, in economics, a durable good is one which does not quickly wear out, or more specifically, one that yields services or utility over time rather than being completely used up when used once (such as food). I proffer that this screams licensing. If you think about the types of products that are manufactured using licensed properties (art, characters, trademarks, brands, etc), it becomes apparent that the vast majority are, by definition, durable goods. Products such as home d├ęcor, textiles, housewares, wall art, paper products and more are all durable goods. If the orders for these products are truly on the rise, as indicated by the February increase, then I would say this is a very good sign for the licensing industry.

Interestingly, the same report also provided that inventories of manufactured durable goods fell for a second consecutive month in February, easing 0.9 percent to $336.8 billion, after dropping 1.1 percent in January. This means to me that manufacturers will need to restock these lower inventories in order to meet the increased demand, as identified above. Or it means that demand has increased faster than manufacturers anticipated and they have to ramp up in order to keep up with demand. Thus, now is the perfect time to be submitting your newest and greatest designs to as many design departments as possible because, presumably, manufacturers will be in full product development mode now.

Moreover, another benchmark, new home sales, also rose for the month and, as the collapse of the United States housing market was considered a primary trigger for the current economic slump, stability in that market is seen as a key ingredient for the economy's recovery. This suggests that if the overall economy is slowly on the rise (or at least decreasing slower) individual areas of growth will be fueled and rise independently. Soon everyone will begin to exhibit positive attitudes and start spending some of that hard-earned money, thus further fueling the growth.

Now is the time for everyone to do their part to force this ever-so-slight positive report into the landslide we so desperately need. I like to think of it as a listing ship that is on the verge of toppling over. With this positive data we were just able to push it a little back towards center, but we need many more people on the right side of the ship to make sure it rights itself completely; otherwise it will fall back over to the bad side. In order to get back to perfect balance, we all need to capitalize on the momentum generated so far and add our collective weight to the side of the ship that will prevent it from capsizing. If we can all being to gradually take advantage of the upswing and start spending cash, investing funds, buying real estate, etc., we can positively affect a turnaround of the economy. And to think, it all leads back to licensing … simply.

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