hen it comes to economic forecasts, experts butt heads on a lot of points, but they seem to agree on one thing: Economic conditions are creating a good environment for aboveground-pool retailers — at least for now.

Prime Rate

Source: Federal Reserve Board

Despite the recession, three indicators — low interest rates, relatively stable unemployment rates, and a strong housing market — are working in the industry’s favor, experts say.

“With interest rates so low, durable products like pools are really cheap,” says Dr. Edward Leamer, director of the Anderson Business Forecast at University of California in Los Angeles.

Government data confirms that contention. The U.S. Commerce Department’s monthly retail and food service sales report shows sales among “miscellaneous retailers” — which includes aboveground-pool retailers — totaled $9.27 billion in December 2001, up by about $500 million more than December 2000. And miscellaneous retailers in 2001 outsold their 2000 numbers from March through December, according to Commerce figures.

Still, there’s reason for caution as well, Leamer says. The low interest rates that have caused so many to buy may have caused consumers to over-borrow.

“Consumer debt is quite high right now and as the economy starts to turn around, [Federal Reserve Board Chairman Alan] Greenspan will begin to worry about inflation and take away those low interest rates,” he says. “And when that happens, interest-sensitive sectors, such as housing, will feel it.”

As the housing market goes, so goes the pool industry, according to economists.
In addition, Leamer says unemployment inevitably will rise. When it does, one of the hardest-hit sectors always is manufacturing — the very demographic that’s also the aboveground-pool sector’s bread and butter.

“The potential problem is that unemployment is likely to elevate and people will start to buy less,” he says. “It affects the blue-collar-type jobs.”

Nonetheless, a number of aboveground-pool retailers are reporting that 2002 is off to a good start, with an above-average number of pre-orders.

To economist Ken Goldstein of the Conference Board in New York, such reports are not surprising. He says one business succeeding while others around it falter is the very definition of a recession.

He concurs with Leamer that as long as the housing market and durable goods remain strong, aboveground pools should have a stellar year.

“In the milieu [of the housing boom], it is not surprising that those who want a pool, or a bigger pool, are putting those dreams into effect. The banks are willing right now to say, ‘Please, take our money,’ ” Goldstein says. “For as long as I can remember, I’ve never seen homes getting snapped up as fast they put them on the market.”

Two other factors also may contribute to a good year for aboveground pool sales.

The first is consumer confidence — Leamer says there’s certainly plenty of it.

“You can’t buy a house or a car and expect to make payments unless you feel really positive about your job,” he says. “And based on the sales of cars and houses, I would say there is considerable optimism.”

The next factor is escapism, says Goldstein. When times get tough (wars, recessions and the like), consumers often look for diversions closer to home — and a pool often is the answer.

Goldstein says even those who’ve already felt the bite of the recession still could contribute to a good year in aboveground-pool sales.

“There is some consumer behavior that is counter-cyclical,” he explains. “For example, we know that fees at tennis courts go up in an economic downturn and, to a lesser extent, so do golf courses.

“The reason the courts and courses are crowded is because [workers] have more time on their hands because they don’t have a job to go to. They don’t want to stay home and watch Jerry Springer all day,” he adds.

The good news for the aboveground-pool industry, he says, is that instead of golf or tennis, one segment of the population likely will turn to pools.