Slow Recovery Is Good News for C-stores

David Nelson opened up the NACS State of the Industry Summit, describing how economic trends are boding well for the convenience store channel.

April 14, 2016

By Angel Abcede

CHICAGO – If sloths were the antithesis of low productivity, a slow-moving economy can actually work in favor for a business climate on the mend, at least if 2015 and the start of 2016 are any indication, according to the economist who opened the general session at the NACS State of the Industry (SOI) Summit this week in Chicago.

Pinpointing areas such as unemployment, inflation and other key economic indicators, David Nelson, a professor of economics at Western Washington University, told about 600 attendees at the SOI general session that the current economic recovery has lasted seven years—longer than other comparable recoveries. 

That may not be a bad thing, Nelson said, as historic trends don’t allude to any future downturn despite such a slow comeback. “Just because the recovery is taking a long time is not an indicator,” he said. “You’ve got to instead look at other indicators of [a pending] recession.”

He cited several trends that bode well for the economy:

  • Different segments of the economy are exhibiting a slow recovery. He said contracting, manufacturing, construction and the government sector are all showing strong, consistent growth.
  • Gross Domestic Product (GDP) growth is projected around 2% for the next couple of years, a trend he describes as slow but steady.
  • Increased employment. In the last two years, the economy has seen 200,000 jobs a month, a strong figure even factoring in lower labor participation rates.
  • New housing rates are up, which is good for c-stores as construction workers are a strong customer base for the channel. Inflation rates remain low, which are a product of lower commodity prices and a strong dollar.

While he said higher labor costs due to increasing minimum wage laws and other factors present a challenge, retailers have many other benefits to look forward to in an improving economy, including increased consumer confidence and spending. He also mentioned opportunities with worker tax benefits, favorable depreciation options and improved technologies coming within reach.

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