Thursday, January 06, 2011
And The Retail News Trickles In
Sales at stores open more than a year rose 3.2 percent in December, according to Retail Metrics Inc. That compared with the 3.5 percent average of estimates compiled by the firm and a 5.5 percent increase in November. Gap, based in San Francisco, and Target each fell more than 6 percent.Waiting for Walmart....
Macy's missed. Same store sales are the ones showing the drops. Most of this seems to be aligned with income levels; retail targeted toward higher income levels probably did much better than the stores which target lower income brackets. I find the snow explanation less than convincing, because in most of the affected area there were days when consumers could get out before New Year's.
Gas and food prices are going to be a factor going forward.
More detail in this article. Anyone who was following this news a few years ago is going to be having a deja vu moment, what with the economic weather report and the split in results between stores targeting different income levels. Those who were following the split years ago will remember that an odd occurrence was noted - it only snowed around stores like Target, but somehow the roads to and parking lots around higher-end stores such as Saks and Nordstroms were ice-free.
We're going to have to wait for over a month for Walmart, but I can tell you now that it will have snowed at Walmart even in strikingly southern climes.
I guess now we wait for retail consultants claiming that stores are painted the wrong color....
This is why I am in such agonizing suspense over the next few months of employment and wages reports. This will prove to have been a good holiday sales season, although it was shifted a few weeks earlier. I told you about that in the fall.
The reason why I am so critical of the combined effect of the Fed moves and the DC Ding The Poor coalition is that the effect will be to raise inflation for the lower income ranges beyond what is viable over the longer term by blowing up price adaptation for a few months. That could be a very, very bad economic mistake.
Raising taxes on the lower income brackets, cutting taxes by the thousands on upper income brackets, and dumping a lot of money into the market which can only go toward commodities is kind of a recipe to generate economic unsustainability.
Those itty-bitty Hyundais are probably better in snow.
Let's hope for the best for this year. I'm soooooo ready for this to be over. I think we all are. We weren't on a bad path before all the "fixes". Maybe we can still haul out. It probably depends on exactly where we are now.
There's probably a Fed monetary analogy in there somewhere, but I'm too distracted to find it.
I'll slake my desire for speed and daring with the toy helicopter.
Just so long as you're not prone to sudden bouts of inexperience-induced over-confidence.
Or cell-phone use.
MoM, some states may be more than halfway through this, but others like CA, IL, NJ aren't at the halfway point yet. I'm in IL and the tax situation is going to cause more mortgage failures. Whoever took advantage of the 8K FTHB program is going to be taken advantage of.
I was looking at some ads in different areas.
Okay, so the house value has fallen from 485K to 325K, but the property tax has gone up from 13 to 15K.
A 350K loan at 5% a year is going to cost 17.5K in interest, but when the property tax on that sucker is 14.5K, it's still not affordable for most people.
In almost every state and locality, when property values fall millage rates rise to maintain revenue. That's how places like Camden, Detroit and Buffalo became what they are today.
The public debt at the states and localities is the real crisis for housing in many areas, and it's not going away. The public unions are going to have their retirements cut in many cases, because the public just can't pay these rates. This is what we have mindlessly created, and now we are going to have to dig ourselves out with a teaspoon.
And are retirees going to be able to stay in these homes on limited incomes? HAH!
It's walkaway city in these places. People can't sell and they can't stay, and that will persist until the property taxes are cut.
That's one of the dirty secrets of the country going back to the 50's.
In Chicago, municipal taxes went way up (in part because so many properties were razed for the interstates) and the movement to the suburbs wasn't merely "white flight". People felt they were getting fleeced. Cook County was able to convince the state in the 60's to allow the property tax to be levied at different rates for residential and commercial property. (commercial becoming higher instead of equal)
It slowed the pace of residential flight to suburbia for a while, but sped up the pace of jobs moving to collar counties. The residents may not have up and sold their houses to live closer to their jobs (it's just a little longer drive), but when the kids grew up and moved out the kids certainly moved closer to the jobs; the higher state property tax was offset by much lower municipal taxes.
Chicago (the city proper) was fortunate to have a more diversified economy than Detroit or Cleveland so it didn't hollow out so quickly. But most of Chicago's southern suburbs were highly industrial (proximity to both the Eastern railroads and the western railroads mattered at the end of the 19th century) and are now just as hollowed out as Detroit (Harvey, IL for example). It's where I grew up and I was somewhat disgusted and fascinated by watching the phenomenon as a teenager in the 70's, so learning the causes always interested me. (Even more fascinating may have been the reasons for the hollowing out proffered by outsiders that never lived in the area.)
"Top Illinois Democrats have agreed to push for a plan that would boost income taxes by 75 percent, at least temporarily, and double cigarette taxes, Senate President John Cullerton said Thursday.
Illinois' personal income tax rate is currently 3 percent. The plan Cullerton outlined would raise it to 5.25 percent, then after four years drop it to 3.75 percent. That means someone who now owes $1,000 in state income taxes would owe $1,750 at the new rate, then $1,250 after four years.
The permanent portion of the increase would be devoted to schools and to property tax relief in the form of annual $325 checks to homeowners, Cullerton said." http://tinyurl.com/2bkug79
You left out the corporate tax rate which goes from 4.8% to 8.4%. We in IL are apparently ecstatic about structural unemployment and would like to expand the institution because of our "Michigan Envy".
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