Marina Von Newmann Whitman joined General Motors Corp. as chief economist four years ago, just as the economy began to sour and car sales began a sharp decline.
Finally, car sales are making a comeback and Whitman is clearly enjoying being part of the auto industry. "For someone who came into the industry in 1979, it is neat to finally be in a period of upturn. It's nice," she says.
Whitman is not alone in her enthusiasm over sales. And many economists, retailers and financial analysts are equally optimistic about the future, cautiously confident that the surge in consumer spending that began six months ago will continue through the end of the year, to make the holidays the best sales season in at least four years.
"You should be pretty enthused about the depth and breadth of consumer spending," said Stuart M. Robbins, a New York analyst with Paine Webber Mitchell Hutchins.
Noting the healthy increase in spending over last year, Robbins said, "The consumer is as liquid as he has been since before the energy embargo. He is seeing the lowest inflation rate for food and gas since the 1960s. He has the highest level of confidence in many years." Together, he said, these factors present "a setting for continued strengthening of consumer spending."
Noting that consumer spending is one of the better performing sectors in the economy, Robert Ortner, the Commerce Department's chief economist, predicts that "department stores should enjoy a very healthy, if not robust, Christmas."
Despite last week's announcement that retail sales slumped 1.4 percent from July to August, Ortner said he "sees good solid double-digit gains in sales, unadjusted for inflation for retailers." Economists and financial analysts say that the recent sales drop was probably just temporary, largely the result of a shortage of automobiles to meet increased demand.
Additionally, Ortner said, "the economy is settling back into a more normal growth rate." Instead of the sharp surge in retail sales experienced last spring--when consumer spending increased about 10 percent on an annual basis--Ortner expects sales to increase only half that much in the next three months.
Ironically, GM's Whitman said, economists are counting on a slower rate of growth in retail sales, noting that a high rate like that experienced over the spring could substantially slow the recovery.
"A slightly slower pace is good news for the financial market and good news for interest rates," Whitman said. If sales were to increase sharply, the Federal Reserve Board might feel compelled to increase interest rates to curb demand to ward off any increase in inflation, Whitman explained.
Even so, retailers are eagerly looking forward to the next few months, expecting sales to increase about 10 percent over last year. For many retailers who experienced a drop in sales--or just a marginal increase--last year, a 10 percent increase would be welcome news.
However, that good news may produce some less cheerful results for consumers.
As Thomas Swanstrom, chief economist for Sears, Roebuck & Co., noted, "There should be lower evidence of promotions this year." With sales on the upswing, retailers will no longer have to offer as many bargains to lure customers into their stores or to unload overstocked goods.
Even so, Robbins said that consumers probably will not see substantial price increases since operating costs are only up minimally thus far.
Additionally, Eliot H. Benson, director of research for Ferris & Co. Inc., said that with the increased competiton in the Washington area--most notably from the new Bradlees chain--"consumers will still find some very good values, even though they may not see the great bargains that were put on the shelves last Christmas."
A problem perhaps of more concern to consumers will be shortages of several different types of products, retailers say.
"Unlike past years," Fredric J. Bell, senior vice president of W. Bell & Co. Inc., said, "we are beginning to see some indication of shortages in the products we carry." He said jewelry supplies have been tight, largely because the manufacturers' gold inventory was too small to fill orders. "We're out of stock already of some of the jewelry in our promotional flyer sent out in late August ," Bell said.
Bell and other retailers predict similar problems for electronic equipment, particuarly imports. The reason, they say, is that manufacturers caught with high inventories last year suffered large losses after demand did not meet expectations. Trying to avoid a similar fate this year, manufacturers are keeping their production lines at a minimum until they are sure of demand, retailers say.
"Retailers love to talk about shortages and lost sales," Paine Webber's Robbins said. "But, frankly speaking, it's a problem retailers much prefer to have over what they have had."
Sears, for example, had only a 3 percent increase in sales last year. This year, the nation's largest retail chain expects a larger increase, with Swanstrom, the company's economist, predicting a 6.2 percent rise, adjusted for inflation, over 1982 general merchandise sales for the entire economy.
Durable goods--Sears' strength--will be the strongest, Swanstrom predicted, with sales, unadjusted for inflation, running 10.9 percent ahead of 1982. Nondurable goods, on the other hand, will climb by 8.3 percent, he predicted.
Encouraged by the strength of durable goods, Sears' chairman, Edward R. Telling, recently said he expected "a strong Christmas selling season."
Most local stores are equally optimistic, giving buoyant predictions that are a far cry from last year's cautious, and often pessimistic, forecasts.
"I think it's going to be a good Christmas," said Hecht Co. Chairman Edgar Mangiafico.
And Tom Bothe, vice president and general manager of Evans Distributors & Jewelers Inc., noting that store sales are up 58 percent over last year--thanks in large part to an aggressive promotional campaign--says he expects "a spectacular Christmas."
"I expect things to be real good, hunky dory," said Scott Goode, owner of Lowen's toy store in Bethesda.
Meanwhile, Mahler's Ethan Allen Gallery in Bethesda expects sales to continue far above 1982, when they remained fairly flat. "They are running close to the high-growth end of our projections, about 15 percent ahead of last year," said vice president Ruth Mahler.
Not all local retailers are so optimistic, however. Mortimer Lebowitz, president of Morton's Department Stores, said that after a "very good spring, we had a disappointing summer. I expect very little improvement in the fall." Noting that his lower price stores serve a special segment of the economy, Lebowitz says, "I don't think that section of the economy is going to be doing any better for awhile."
Even the optimistic retailers express concerns that their bright forecasts could be adversely affected by circumstances far beyond their control.
Hanne Merriman, president of Garfinckel's, believes "we're going to have a very strong fall compared to last year." Yet, she fears, a continued spell of hot weather could dampen sales at a critical time for buying clothes.
Even worse, retailers worry that interest rates could shoot up again. "It's a fragile enough period that our optimism could disappear and sales could turn down," says Garry Curtis, manager of the retail bureau for the Greater Washington Board of Trade. "The likelihood is small, but it is still a potential."