Today’s pool market seems to
be a glass-half-full vs. glass-half-empty sort of environment. When
compared with the dismal conditions last year, it’s easy to
focus on the positive. But when looking back at 2006, the empty air
sitting at the top of that water glass becomes very apparent.
Whatever your personal take, it’s clear that conditions have
improved a bit in the first half of 2010. The questions are: Will
this continue, and for how long?
“I think the biggest issue is the speed of
improvement,” says Gary Dean Painter, an associate professor
at the USC School of Policy Planning and Development. “We
could easily have a period of relatively slow job growth over the
next year or so. And while that’s the right direction, I know
many people would like to see the U.S. economy add a lot of
Recently, Pool & Spa News spoke with experts from both inside
and outside the industry to discuss the economic outlook for the
Currently, many pool industry professionals are reporting modest
This is part of an overall rise in consumer spending, which is
giving business owners a much-needed infusion of revenue.
“[Last year] more people were focused on essentials rather
than discretionary purchases,” says Kathy Grannis, a
spokeswoman for the National Retail Federation in Washington, D.C.
“People would hold off on buying that patio set if they could
make do with what they had. In recent months, we’ve seen an
increase in spending on sporting goods, home décor and home
However, these encouraging figures should be tempered by certain
realities. Home sales received a shot in the arm from a generous
federal tax credit. But that largesse has now expired, and the
housing market remains wobbly at best.
In addition, unemployment figures are high, in part because small
businesses — which create the majority of new jobs —
are strapped for credit and unable to invest in hiring more
And speaking of credit, a historically tight lending market has
hampered buying power for millions of Americans.
“Until the credit situation is resolved, new pools are going
to be for people who have the access to the cash … it’s
going to be a wealthy person’s product for a while,”
says Bruce Fisher, vice president of global marketing for Hayward
Pool Products in Elizabeth, N.J.
The twin issues of unemployment and credit will define how quickly
the middle class comes back into play for big-ticket items such as
inground pools, experts say.
“I think if job growth picks up [later this year],
that’s a very positive sign for the middle class,” says
Stephen Happel, a professor of economics at the Arizona State
University WP Carey School of Business. “If job growth
remains tepid, that’s a sign that the middle class is just
going to continue to struggle along.”
In examining those numbers, Painter cautions against relying solely
on the overall unemployment figure. It’s also helpful to keep
track of the labor force participation rate, which measures the
percentage of people aged 16 to 64 who are working, or are
unemployed or seeking a job. “If you want to look at the
change in the number of people actually working, that one is
probably a more pertinent measure,” he says.
The level of government intervention also has these experts on
watch. Some are concerned that stimulus funds injected into the
economy may have artificially propped it up, and they wonder what
will happen when the funds expire.
“For a real recovery to take place, it has to come from the
private sector, and I believe that we are still not there,”
says Manuel Perez de la Mesa, president/CEO of Covington, La.-based
This may prove key to fixing the lack of available financing, Perez
de la Mesa says.
“Those deficits have to be funded,” he explains.
“And they’re funded with capital that would otherwise
have been available for private investment. If those deficits are
eliminated, the government doesn’t need to borrow as much.
Then the money that the government is now borrowing is available to
be lent to private industry.”
Some wonder when interest rates will begin to rise and how that
will affect the economy.
“I think [financing] will start opening up a little bit,
because there are some loans being securitized in the broader
market,” Painter says. “But at the same time, at some
point I expect interest rates to
increase, and then that will counteract some of the stimulus effect
of the underwriting.”
For now, these experts predict much of the same — namely that
the economy will continue to move in the right direction, although
not as quickly as most would like.
“The consensus by the Blue Chip forecasters is that growth
this year is going to be 3.2 percent, and growth next year is going
to be 3.2 percent,” Happel says. “They think inflation
will remain moderate and the unemployment rate is going to come
down next year.
“So all things considered, there’s a kind of
‘Don’t worry, be happy’ forecast from the crowd,
but I just don’t know at this point in time.”
On the home front, the National Association of Home Builders
expects a healthy uptick in the housing market. David Crowe, chief
economist for the Washington, D.C.-based organization, predicts a
increase in single-family starts this year, and 50 percent next
“The final straw is the significant amount of pent-up
demand,” he says. “There are a whole lot of
delayed households, and those people are anxious to get out and
begin the household formation that they’ve postponed.
“Even at a 50 percent [increase], 2011 will still be at half
the underlying demographic need. We have large percentages because
we were so far down in the cellar.”
But those numbers are not expected to translate, like-for-like, to
the pool industry. There may be growth, but the percentages will
“There could be 5,000 more pools this year, which is not
significant from an industry standpoint,” Perez de la Mesa
says. “It’s good but it’s not significant —
not when the industry is down almost 80 percent from peak levels.
If you’re at 20 percent of the peak level, then you go from
20 to 22, that’s not a real recovery. It’s just that it
didn’t get any worse.”
He expects several years to pass before new pool construction
reaches “normal” levels, meaning about 80 percent of
what the industry enjoyed during the bubble.