Forecast Schmore-cast: Is Forecasting pointless in today’s economy?


World leader and the largest in the advertising and marketing corporation, WPP, has decided to cut its full year growth outlook forecast after the discovery that clients have cut on spending for advertising due to the economic crisis.

WPP has has looked into expanding into more international markets. Currently making more than two third sales in Latin America the Middle East, Central and Eastern Europe and Asia Pacific, WPP’s goal is to increase sales by forecasting for the next three and four years. However, their forecasting hasn’t been 100% accurate recently after showing that the markets in Brazil have slowed by 1.9% in their third quarter from 3.6%, sales in North America have dropped .4% and a 2.1% decline in Europe (Bender). In August, WPP ended up changing their forecasts of high expectations to lower growth expectations that advertising needs from clients would decrease, which ended up decrease particularly in the health care, call center and public affairs market. Even in their most popular time of client expectancy was at an all time low in September.

I believe that there have been many challenges for many companies to forecast the growth rates in the market with the current economic crisis which has set many companies back. Large companies such as Fannie Mae, GMC, Bank of America and many more major corporations primarily in the financial sector have had the greatest impact.

The question is, if forecasting isn’t providing a beneficial outlook for the future of a business, what else can businesses do to try to predict their future outlook within the market place? With the economies aggregate behavior of employment, output, and prices shifting since 2008, is cutting off the full year growth outlook such as WPP has decided to do, the best option?

Fiat and Americas Car Market

I read an article in The Wall Street Journal earlier this week about how Fiat is already cutting back on producing new cars due to the stall in the market. In Europe, the worlds 3rd largest car buying market besides China and the United States, new car sales are decreasing. This is seen all over the United States as we can all see how car dealerships are going under, some companies have stopped producing, and others are cutting back on their different makes and models. The WSJ also says that imported car sales are down in America 89% this past May 2012 from May 2011. I would believe that Fiat is still in their growth stage when it comes to America’s market, so it seems alarming to me that they are already needing to make cuts in production, but then again, the stats prove why. This is just a  reflection of America’s economy as a whole though, because American’s are not buying as many new cars at the rates that they used to. They do not have as much excess money to spend on buying nicer cars, so they look to other options such as leasing or just buying used, which makes sense to me because how can someone with a tight budget justify the decrease in value a car has just driving it off the lot? Many dealerships aren’t stocking the lots with as much inventory because they are  just not getting the sales that they used to. And has anyone even seen a FIAT dealership in Chicago? I haven’t, only the commercials on TV. Today, consumers are shopping around more and trying to haggle the prices down as low as they can. Some dealerships are selling at these lower prices because they know if they don’t accept offers the cars will just be sitting on the lot for longer. Something else that is surprising about Fiat’s recent cuts is that they are relatively conscious of the MPG rating. Fiat’s get good gas mileage and with the gas prices on the rise I feel that more consumers should be looking towards these types of cars but that just does not seem to be the case. If Fiat wishes to increase their sales in the United States, I feel they should make a stronger effort to gain more of the market share through dealerships and advertising campaigns. How do you feel when it comes to buying a car, small or large? New or used? Import or domestic?