Mr. Moran: We are seeing some preliminary signs of economic recovery, which appears encouraging relative to the difficulty of the last year or so. Internet commerce companies have clearly felt the pain of a struggling U.S. consumer amidst a credit crunch and a housing crisis. We think the worst has passed at this point, that the environment has stabilized and that there will be a gradual moderate recovery of the U.S. economy and the U.S. consumer. We suspect that U.S. GDP will rise several percentage points in the second half of 2009 and remain at a low single-digit improvement rate through the first half of 2010. The U.S. consumer remains extremely cautious because jobs are scarce and consumer credit is relatively unavailable. Overall, the U.S. economy remains fragile, and although comparisons get much easier going forward, it's premature to start expecting an aggressive snap-back. Our assumption is that the U.S. economy will recover in the form of a drawn-out U shape.
TWST: Would you talk about how online retailers have fared in the recession as compared to traditional brick-and-mortar retailers, and why?
Mr. Moran: The online retailers have withstood the economic recession better than brick-and-mortar retailers for the simple reason of them being younger, less burdened by inventory and more efficient in general. Retail spending declined at about a 10% annual pace at the worst point in the recession, whereas online commerce spending held flattish. Now that we have entered a period of easier comparisons and are starting to see some signs of economic life, retail is trending down about 5% year-over-year, and Internet commerce should start to show a modest uptick in its growth rate going forward.
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