How Does The Current U.S. Economy Affect REI Retail Operations?

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Neal Widdows Profile
Neal Widdows answered
The U.S. Economy has historically been able to alleviate the impact of downturns in domestic retail consumer spending.
This is due to strong trade with foreign nations. Yet, given the current economic climate and the challenges facing the U.S consumer, it seems that foreign economic growth will not be enough to prevent further recession in the U.S. And this of course has an effect on the US economy in the retail sector.
A prolonged recession in the consumer and service sectors can have a significant effect on relations between the economy and its effect on the retail sector.
Everyone knows about the terrible situation regarding the downturn in the U.S. Housing market, but consumer spending is also significantly down.
This leads to more people borrowing and taking out possible loans, which has a detrimental effect on the U.S. Economy. This is coupled together with a much more restrictive, revised lending practice and increased cost of living.
In today’s society there is now a retail ripple effect with American consumers tightening their belts. Consumers have now exhausted a lot of their available credit and are finding access to additional credit restricted.
The result of this is that retailers are experiencing significant declines in sales due to people tightening up on their outgoings and ploughing into their properties or elsewhere, thus the economy suffers as a result.
Consequently, consumers in the U.S. Have seen their levels of purchasing decrease rapidly, which has led to a shortage in demand for foreign goods on a global scale, which can, in turn, weaken significantly the demand for American goods in multiple industries.
As U.S. Consumers decrease their spending habits, fewer goods are being imported, meaning less foreign goods have to be developed. And as foreign manufacturers reduce their sales predictions, they will either cancel or scale-back any planned capital projects.
Amanda Wells Profile
Amanda Wells answered
The best way to get information on this point would be to gather information about REI, its current performance and any changes that have taken place because of changes in the US economy. You could start with exploring this document on REI's market share and position, and it's also worth visiting the company website and looking at their figures or even contacting them directly - big companies will often answer students questions like this one.

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