The Home Depot, Inc. Market Conditions

When the economy is in a downturn or in a recession, economists' uses leading indicators to provide a clear representation of what economic issues businesses may face in the upcoming months. Some indicators are the unemployment rate, manufacturer's new orders for consumer and materials, number of new building permits, money supply, and the interest rate. Therefore, monitoring such indicators will help determine the future market conditions and help make the necessary adjustments in its operations to facilitate short-term and long-term goals to succeed in any economy.

Faced with some very critical economic challenges, financial markets are in trouble, and prices for oil and other commodities are irregular. The Home Depot fell 0.6% amid the 2007 profit warning. The housing market, automotive, and other industries are fighting to survive; and if that is not enough, over 10 million people are suffering changes in their personal income adding to our unemployment rate.

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According to the Bureau of Economic Analysis, personal income decreased $29.1 billion, or 0.2%, and disposable personal income decrease $10.5 billion or 0.1% in February (See figure 1).

Figure 1. Personal income (Bureau of Economic Analysis, 2009).

Retail sales have seen a dramatic decrease in the last year. The increasingly worried and fragile economy has led to some apprehensive consumers. Disposable income has decreased as stated below and is creating the shift in supply and demand. The changes in retail sales are evident in the chart (See figure 2) where sales had been steadily rising until a dramatic change that occurred approximately mid 2008.

Figure 2.US Retail Sale (Economagic, 2009).

As indicated by the US Retail Sales graph of hardware stores (See figure 3), there seems to be an almost exact similarity to the graph of US retail sales figures, to that of the Hardware stores industry. The Home...