Category Archives: Economy

Black Friday Leaves Retailers Optimistic About Holiday Shopping Season

Consumerism, Economy, ,
Shoppers Crowd Store on Black Friday

Every year the holiday shopping season opens up on what is known as “Black Friday,” the day after Thanksgiving. A bit like the groundhog on February second that foretells how many weeks are left of winter, the success of Black Friday is said to predict the mood of shoppers and what retailers can expect in sales during that crucial winter rush to buy gifts for Christmas and other seasonal holdidays.

This year analysts and businesses were pleased with Black Friday’s turnout, especially with the sharp rise in online shopping. The stores that did the best, such as Wal-Mart and Macy's, were those that have a strong online presence coordinated in tandem with their physical stores and mobile channels, creating for shoppers a  more holistic experience.

"The more you can make a shopper shop multiple channels, they are at least twice as likely to be a loyal shopper and spend tons of money," Patty Edwards, chief investment officer at investment firm Trutina Financial, said.

Observers noticed that although there may be more shopping, individual shoppers were also practicing some restraint in the face of the flood of deals offered during the Black Friday weekend.
According to shoppers’ responses to a Reuters/Ipsos poll, 52 percent of BF shoppers said they stayed within their budgets and 34 percent they actually spent less than what they had planned to spend. Over-budget shoppers totaled only 14 percent of those answering the survey.

Of the 404 respondents to the poll that shopped on BF, 33 percent said that this year’s deals were better than last year’s; 39 percent said the deals they found were the same, and only 15 percent said that this year’s deals were worse.

Analysts are cautioning that just because sales this year appear to be off to a good start it might be premature to judge the rest of the shopping season by figures from just one weekend. The good start will have to be maintained throughout the rest of the shopping season in order for it to have the impact on the entire year: holiday season shopping can account for as much as one-third of annual sales and 40 to 50 percent of annual profits.

Holiday shopping also has a huge impact on the economy as a whole, since consumer spending accounts for approximately 70 percent of all economic activity. There has been a slow but steady improvement in employment statistics, but fears of the approaching “fiscal cliff” that is threatening the entire economy is keeping analysts alert to retail sales and buying patterns of consumers.
 

After Helping Obama Clinch Battleground States, Organized Labor Makes Demands

Economy, , , , ,

Key leaders of organized labor were rejoicing at the end of election night, as exit polls showed that labor’s enormous voter turnout turned the tide in favor of Obama in the key battleground states of Ohio, Nevada and Wisconsin.

These leaders, such as AFL-CIO President Richard Trumka are hoping their president will present as a more liberal, union-friendly, leader who will push their agenda from the White House.

Richard Trumka

“There are things the president can do, and we’ll be expecting that leadership from President Obama,” Trumka told reporters after the election.

At the top of labor’s expectations is a definitive tax-hike for America’s wealthiest citizens. Labor leaders also hope that Obama will not make any deals with Republicans over the approaching “fiscal cliff” the country is scheduled to fall off of, when safety nets such as Social Security and Medicare experience across-the-board budget cuts.

Labor leaders have other issues on their agenda as well. They would like to see new rules that could help increase their shrinking membership lists, including new investment in infrastructure which would create more construction jobs for trade unions. More liberal requirements for immigrants to become citizens could pave the way for 11 million undocumented Latino workers to flood the ranks of the labor unions. Other reforms could also make it easier to organize unions in certain spheres.

It might not be so simple for organized labor to get their way, however. Business groups which are opposed to these changes will continue, as they have in the past, reforms that will help unions get new members.

“My primary concern is in the regulations,” said Randel Johnson, vice president at the U.S. Chamber of Commerce for labor issues. “We are afraid that on employment issues, the administration will stay firmly to the left and follow the lead of the unions.”

Faced with Fiscal Cliff Down the Road, Obama Gets to Drive

Economy,

With the tension of the election finally behind him, newly re-elected President Obama can now focus on the great challenge in front of him; the fear of falling off the great “fiscal cliff.” Confronted with a stew of tax hikes and spending cuts which are calculated to siphon off about $600 billion from the economy unless some deal is made with Congress, Obama has a lot to think about when the victory parties and acceptance speeches are history.

There are two essential but separate issues to lose sleep over: the coming expiration of individual tax cuts at the end of 2012; and tens of billions of dollars in spending cuts which will hit practically every agency like a sledgehammer, due to kick in on January 2, 2013.

Driving off the cliff could send shock waves to US markets, sending the country back into recession mode, with reverberations across the globe. It is clear that how Obama handles this crisis, especially given that Republicans won control of the House of Representatives, could make for exciting politics in the coming months.
 

Holiday Shopping May Suffer from Reverberations of Hurricane Sandy

Economy, , , , , , ,
Sandy’s Power Continues

Sandy’s power is extending beyond the immediate time and place her winds blew and waters surged as businesses see delays hindering their ability to get merchandise into stores in time for the holiday shopping season.

The superstorm not only closed down shipping terminals and covered warehouses with floor to ceiling water. Deliveries were also hindered by fallen power lines, blocked and closed roads, and severe gasoline shortages in New Jersey and New York.

At any other time of year this would be seen as a serious hinderance to business, but now, just as retailers usually begin to prepare for the frenetic shopping of the Christmas holiday season such a backup or cancellation of orders can spell complete disaster. For many merchants the holidays are when the bulk of their business is contracted.

“Things are slowing down,” said Chris Merritt, vice president for retail supply chain solutions at the trucking company Ryder. “This whole part of the supply chain is clogged up.”
Several examples include:

•    FedEx has rented fuel tankers to insure that its delivery trucks have a steady supply of fuel in the face of commercial stations running dry.
•    Ryder has been looking for trucks to rent to add capacity.
•    The major railroad company CSX has been advising their customers to expect delays at least 72 hours long on their shipments.
•    Retailers such as Amazon and Diane von Furstenberg informed customers to expect shipping delays.

Economic analysts are predicting that the storm will reduce economic growth by as much as a half of a percentage point in the last quarter of 2012. This is a large decrease considering the entire economic growth for all of 2012 was expected to be only about 1-2 percent.

Direct losses from Sandy are going to be much less than the losses caused by Hurricane Katrina in 2005, but the impact of Sandy may well be greater in its aftermath due to the dense population in the Northeastern states where Sandy let lose her destructive forces.

The Northeastern US is responsible for about $3 trillion in output, which is about 20 percent of the nation’s total gross domestic product.

“Part of what was lost will be delayed, but part is lost forever,” said Gregory Daco a senior economist with IHS Global Insight.

NYSE Opening After Hurricane Closes Trading for Two Days

Economy, , , ,
Hurrican Sandy Closes NYSE

Wall Street hunkered down on Monday and Tuesday as Hurricane Sandy blew through the region, leaving unprecedented destruction in her wake. But with minimal damage on the prestigious New York Stock Exchange trading floor and hours of preparation and testing of electronic communications systems, the exchange is going to open normally at 9:30am on Wednesday morning.

Peter Anderson, a senior portfolio manager at the Boston-based Congress Asset Management firm said,

“There will be no Halloween costumes on the New York Stock Exchange when the market opens back up because there will be a great deal of tension just in terms of restarting the markets and making sure … trading goes smoothly.”

The forecasting company IHS Global Insight is predicting damage from Sandy could amount to as much as $50 billion. In contrast last year’s hurricane/tropical storm Irene was the cause of $4.3 billion in insured damage.

IHS is saying that property damage could reach about $20 billion and lost business revenue may amount to $30 billion. Together the losses could reduce US overall economic growth by 0.6 percentage points in the last quarter of 2012. Retailers, airlines and home construction firms will most likely be hit hard.