Most major media outlets herald a report showing that holiday sales were up this year. As noted by the Associated Press: "Holiday shoppers spent a little more this season, according to data released Monday, giving merchants some reason for cheer. Retail sales rose 3.6% from Nov. 1 through Dec. 24, compared with a 3.2% drop in the year-ago period."
Happy days are here again! Or are they?
Below are a few significant caveats to the Associated Press story:
1)These reports are estimates and not hard data from the Commerce Department and retailers (NPR). The government will report these real numbers concerning holiday sales in mid-January.
2)As noted by SpendingPulse, (which calculated the widely-reported holiday sale estimates):”Tempering these (holiday sale) results, however, is the fact that there was an extra day this year over last year’s holiday season. Adjusting for this could decrease the season’s year over-year-growth statistics by anywhere from 2% to 4%.”
3)SpendingPulse (an affiliate of Master Card) does not provide a comprehensive analysis of retail sales. Data included in its analysis are for sales in the electronics, specialty (apparel), and Ecommerce and luxury sectors of the retail economy.
4)Ecommerce (which does not help local merchants or most state revenues) was the big winner this year, with seasonal sales up 15.5% during the period.
5)Kamalesh Rao, director of economic research at Spending Pulse, cautioned that a consumer return was tentative and far below 2007 levelNew York Times.
6)Reuters reported that “an unprecedented 22 percent of U.S. consumers said they did not finish their Christmas shopping this year."This is the lowest number of consumers finishing shopping in all my 26 years of tracking retail sales during the holiday season," Beemer said. (Mr. Beemer is the founder of the consumer research and marketing firm—America's Research Group.)
Based upon these caveats, I cannot conclude that the 2009 Holiday Sales provided much holiday cheer to American merchants.
In response to the current recession, 30 states this year have enacted tax increases. Another seven states are considering similar measures.
This response is consistent with past practices. States often reduce taxes during economic expansions and increase them during downturns. In the recession of the early 1990s, some 44 states raised taxes; in the early 2000s, some 30 states did so.
Raising taxes can reflect sound policy judgment. Tax increases can be less harmful to families and less damaging to state economies than the likely alternative: deep cuts in services.
Federal economic recovery funds are reducing the size and extent of state tax increases. But those funds are insufficient to avert the need for tax increases.
Estimating the law’s overall effects on employment requires a more comprehensive analysis than the recipients’ reports provide. Therefore, looking at the actual amounts spent so far (where identifiable) and estimates of the other effects of ARRA on spending and revenues, CBO has estimated the law’s impact on employment and economic output using evidence about how previous similar policies have affected the economy and various mathematical models that represent the workings of the economy. On that basis, CBO estimates that in the third quarter of calendar year 2009, an additional 600,000 to 1.6 million people were employed in the United States, and real (inflation-adjusted) gross domestic product (GDP) was 1.2 percent to 3.2 percent higher, than would have been the case in the absence of ARRA. Those ranges are intended to encompass most economists’ views and to reflect the uncertainty involved in such estimates.
CBO’s current estimates differ only slightly from those CBO prepared in March 2009. At that time, CBO projected that in the third quarter of 2009, U.S. employment would be higher by 600,000 to 1.5 million people with ARRA than it would be without the law, and real GDP would be 1.1 percent to 3.0 percent higher. CBO’s new estimates reflect small revisions to earlier projections of the timing and magnitude of changes to spending and revenues under ARRA. On the one hand, tax cuts through September are now estimated to be roughly $10 billion larger than originally projected (mainly because certain tax changes were carried out more quickly than anticipated); on the other hand, the net change in federal spending as a result of the legislation has turned out to be slightly smaller than CBO initially estimated.
CBO’s current estimates do not reflect any change in the agency’s assessment of the effect that each dollar of spending increase or revenue decrease has on output and employment. Since March, CBO has continued to examine new research on the relationships between changes in government policy and changes in output and employment. To date, that examination has generated no significant change in CBO’s assessment of those relationships. CBO has also examined incoming data on output and employment during the period since ARRA’s enactment. However, those data are not as helpful in determining ARRA’s economic effects as might be supposed, because isolating the effects would require knowing what path the economy would have taken in the absence of the law. Because that path cannot be observed, the new data add only limited information about ARRA’s impact. Economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO’s judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects of ARRA.
(Media outlets and blogs are mostly putting a positive spin on this news. I disagree with that spin, but I don't see this news as overly negative. Looks like the economy and consumer spending are in holding patterns...)
According to a survey conducted by the National Retail Federation over the weekend, 195 million shoppers hit the malls and other retail outlets over the Black Friday weekend, an increase of 23 million over last year’s shoppers.
The increased number of bargain hunters did not translate into bigger sales, however, although the average shopper did spend $343.31 and the overall total was estimated at $41.2 billion. Those figures represent a significant drop from the $372.57 average and $64 billion total seen over the same weekend in 2008
…Fannie Mae is asking for an additional $15 billion in government aid after posting a $19.8 billion loss. Fannie Mae and Freddie Mac own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages.
The Federal Housing Administration (FHA), another government agency, is heading for the same kind of financial trouble. The FHA has insured about 1 out of 4 new loans made this year. 17% of FHA borrowers are at least one payment behind, or in foreclosure...
California’s fiscal problems are in a league of their own—but the Golden State is hardly alone. Some of the same factors driving California toward the brink of insolvency also are hurting an array of other states. This report( BeyondCalifornia)takes a close look at nine states particularly affected: Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin.
Sixteen states taxed working-poor families deeper into poverty last year, according to a new report from the Center on Budget and Policy Priorities. Income tax bills on poor families in those 16 states ranged from a few dollars to several hundred dollars, which is a significant amount for a family struggling to make ends meet, the report said.
Among the report’s findings:
Sixteen states, out of the 42 with an income tax, taxed working-poor, married couples with two children in 2008: Alabama, Arkansas, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, North Carolina, Ohio, Oregon and West Virginia
The number of states taxing extremely poor families of four – those with incomes below three-quarters of the poverty line ($16,513) – decreased from nine in 2007 to six in 2008. Three states that previously taxed such families began exempting them: Hawaii, Michigan, and West Virginia. States still taxing extremely poor families are: Alabama, Georgia, Illinois, Indiana, Montana, and Ohio.
The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade.
Household Survey Data
In October, the number of unemployed persons increased by 558,000 to 15.7 million. The unemployment rate rose by 0.4 percentage point to 10.2 percent, the highest rate since April 1983. Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points. (See table A-1.)
Among the major worker groups, the unemployment rates for adult men (10.7 percent) and whites (9.5 percent) rose in October. The jobless rates for adult women (8.1 percent), teenagers (27.6 percent), blacks (15.7 percent), and Hispanics (13.1 percent) were little changed over the month. The unemployment rate for Asians was 7.5 percent, not seasonally adjusted. (See tables A-1,
A-2, and A-3.)
The number of long-term unemployed (those jobless for 27 weeks and over) was little changed over the month at 5.6 million. In October, 35.6 percent of unemployed persons were jobless for 27 weeks or more. (See table A-9.)
The civilian labor force participation rate was little changed over the month at 65.1 percent. The employment-population ratio continued to decline in October, falling to 58.5 percent. (See table A-1.)
The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in October at 9.3 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-5.)
About 2.4 million persons were marginally attached to the labor force in October, reflecting an increase of 736,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in
the 4 weeks preceding the survey. (See table A-13.)
Among the marginally attached, there were 808,000 discouraged workers in October,
up from 484,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The other 1.6 million persons marginally attached to the labor force in October had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.