Anders Petterson: I Saw It All Coming

The Art Newspaper carries this item from Art Tactic’s Anders Petterson:

In November 2007, the ArtTactic Art Market Confidence Indicator fell 40%, signalling a significant change in sentiment from the previous reading in May 2007, largely caused by a gloomy outlook on the economy. The correction started in autumn 2007, but record volumes and prices at the top end of the contemporary art market disguised the fact that the trouble had already started further down the value chain.

In June 2007, ArtTactic’s Auction Indicator (measuring the relationship between the number of lots selling above the average estimate) changed direction, and fell 48% by May 2008. This was an early sign of what has become the market’s biggest problem—the failure to adjust estimates and expectations in light of the global economic environment. The hubris caused by ever-rising prices and high expectations of sellers forced the auction houses to be over-aggressive in setting their estimates, and limited their ability to adjust to the situation.

There’s nothing wrong with Petterson plumping for his services but the story omits most of the texture of the market. First, it lumps everything together. Even in this miserable auction environment, record prices are being set. Second, it ignores the significant ups and downs that took place at the highest end of the art market within the period he is discussing. From Fall 2007 until this week, there has been both caution and aggressive behavior on all sides of the art equation. There was no straight line of declension from Art Tactic’s signals to the struggling sales this week. And, most likely, there won’t be a straight line forward either.

Tough Times Will Provide Opportunities (The Art Newspaper)