THE BACK PAGE: If people watched a little less CNN
by Charles Anderer
January 8, 2013
Here’s what a GM in the Gulf Coast told me last month when I asked him how
the coming year looked. “Not bad, probably some growth; people should feel a
little better about things than they do. Maybe if they watched a little less
CNN...”
Not to pick on “The
Best Political Team on Television,” because all cable news channels are
designed to wind people up, or at least keep them in a slightly uncertain state
that will all be cleared up with the next program. Or not. Clarity, even with
the networks that strive for some measure of impartiality, can be very
difficult to come by, which only adds to viewer irritation. The contortions involved with assembling the
false equivalencies that keep the conversation going are often spectacular.
Sometimes I think if these guys covered the invasion of Poland in 1939, they
would have said it was really about the shooting. All sides did it.
Regarding the fiscal
cliff (there’s always a brand name for the latest American crisis), it’s of
particular interest to the gaming industry because it affords a glimpse at how
retirement might be redefined in the America of the future. It’s hard to save
$4 trillion over 10 years without taking something away from almost everyone.
After the usual hardline post-election posturing, both sides got down to
business late last month, and the key concession on the spending side centered
on something called “chained CPI,” which would apply a less generous formula to
calculating cost-of-living adjustments for Social Security beneficiaries,
coming to about 2.5 percent or so less per year. Those opposed noted that SS
beneficiaries didn’t receive cost-of-living adjustments in 2011 or 2012, and
that the CPI itself is lacking as a yardstick for inflation as it doesn’t
measure some key items, such as health care.
Still, that aspect of
the proposal appeared to have some bipartisan support, a rare thing in
Washington, so even if the deal fell apart, we can assume it will be revived
down the road. The estimated cost of applying a chained CPI to Social Security
would scale up to between $100 and $125 a month per recipient over the next 20
years, with some protection for the most vulnerable. Another cost-savings item that entered the
conversation, raising the Medicare eligibility age from 65 to 67, was
apparently a non-starter with President Obama, which means we probably won’t
see that this time around, at least.
The bottom line for
the gaming industry is something we’ve known for a long time, that older
customers, in general, are likely to behave more cautiously with their money
over time because they will either have less of it and/or be subject to a more
uncertain entitlement climate.
Avoiding the
automatic tax hikes and spending cuts that would result from failed
negotiations could lead to a fairly good year in 2013. In the U.S., the more
optimistic forecasts call for 3 percent growth later in the year. The positives
are in housing (the indicator that MGM CEO Jim Murren calls the most closely
correlated with gaming success), natural gas, low cost of credit for small business,
high corporate profit margins and pent-up demand for big-ticket items such as
cars and consumer durables.
On the downside,
Europe’s recession (which the OECD sees continuing at least another year),
China’s relative slowdown, inventory wind-downs and uncertainty over the
outcome in Washington pushed the fourth quarter growth rate down toward 1
percent, which is expected to carry over into the first quarter of this year.
In the key overseas market of Macau, China’s State
Information Center is forecasting a national 8 percent GDP growth rate this
year and an inflation rate of 3 percent. That would be a slight uptick from
last year’s third quarter rate of 7.4 percent, which was the slowest since the
first quarter of 2009, right after the financial meltdown.
The potential sour
note is debt overhang. “China’s economy may simply need more time to work
through the bad debts in its system, and to digest the surge in credit-fueled
investment that happened after 2008, so that the domestic economy can grow
again on a healthier, and more sustainable basis. That may take some more time,
“said Mikio Kumada, of LGT Capital Management told CNBC Asia.
Of course, China’s
growth rate still remains comparably remarkable. A sluggish year is expected
for Japan, which the OECD sees growing just under 1 percent. Elsewhere in Asia,
the World Bank forecasts 4 percent growth for Taiwan; 3.2 percent for Hong
Kong; 2 percent for Singapore and 3.1 percent for South Korea. The IMF sees
India’s growth rate increasing from 5 percent in 2012 to 6 percent this year.
All in all, some reason for hope. Turn off your televisions
and try to make the best of it. Life’s too short not to.
Charles Anderer
is executive editor of BNP Media Gaming Group and also oversees content development, sales and marketing for the company’s trade shows and conferences, which include Bingo World, Southern Gaming Summit, Gaming Technology Summit, New York Gaming Summit and Casino Marketing. He can be contacted at andererc@bnpmedia.com.
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