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Wednesday, September 21, 2011

New holiday forecasts signal subdued season

Retail groups are predicting a quiet holiday season, with smaller gains than in 2010, as consumers struggle with prolonged economic worries.

The International Council of Shopping Centers on Wednesday forecast that U.S. holiday sales would post a moderate gain, with sales expected to increase 2.2% during the November-December combined period compared with the same time frame a year earlier. The group said retail momentum lately had been good but that there were economic roadblocks ahead that could dampen sales.

Last month, the group's chief economist predicted that sales during that period would be up 3.5%. In 2010, holiday sales rose 5% year over year in what was the best Christmas season since the recession.

Also on Wednesday, retail group ShopperTrak said it expected holiday retail sales to rise 3% and foot traffic to decrease 2.2% year over year, signaling that consumers will limit their shopping trips.

ShopperTrak said it expected foot traffic to continue decreasing through the end of the year because of high unemployment and gas prices. So far this year, shoppers have visited an average of 3.1 stores per shopping trip, down from 3.19 in 2010. "Converting fewer numbers of shoppers to buyers has never been more important for retailers," the group said.

Many retail industry analysts predict a good holiday season

-- Andrea Chang

Photo: Shoppers will probably be watching their wallets again this holiday season. Credit: Kirk McKoy / Los Angeles Times

Pressuring the Fed Can Backfire

In a statement this afternoon, the Federal Reserve announced that it was engaging in more stimulus, by extending the average maturity of the securities on its balance sheet. This was basically what markets had expected, even though the Republican Congressional leadership wrote a widely reported letter to Ben S. Bernanke, the Fed chairman, urging him not to engage in any more easing.

Scratch that: “Even though” may not convey the right causal relationship between those two events. Some may argue that the letter could have encouraged the Fed to issue another round of monetary stimulus.

CATHERINE RAMPELL

Dollars to doughnuts.

The Federal Reserve is officially an independent body, and its autonomy is intended to shield it from short-term political interests that may be popular now but bad for the economy later.

Truth be told, though, efforts to put political pressure on the Fed go back much farther than this week. There have been many letters sent by Congressional committees and individual senators and members of Congress in just the last few years telling Fed officials to do or not do something or other, as well as in previous decades.

The letters linked above were generally for less significant decisions, of course. But in Congressional hearings and the like, legislators have attacked interest-rate policy and other important Fed actions, like quantitative easing, as well. Such confrontations, watched by a handful of people on C-SPAN, generally seem to be intended more as grandstanding than efforts that may actually change Fed policy.

When officials from the legislative and executive branches actually expect to influence Fed policy, they’re more likely to voice their arguments out of the public’s view, and in private meetings.

Why? As Bruce Bartlett, a former Treasury official from the George H.W. Bush White House and a contributor to Economix, explained by e-mail:

Historically, one of the main things that has held back politicians from publicly criticizing the Fed is that it can easily backfire and encourage it to do the opposite of what they want it to do. Certainly there have been many times in the ’80s and ’90s when administrations wanted an easier monetary policy. But they knew that the Fed jealously guards its independence and cannot allow itself to be seen as caving to administration pressure. Therefore, administration pressure to ease would force the Fed to remain tight lest it appear that it was caving to pressure. For this reason, administrations quickly learned that the best way to influence the Fed is through back channels. Historically, this has been done through the Treasury. I don’t know if it is still true, but for many years the Treasury secretary and the Fed chairman had breakfast every week, privately, no staff. This is the forum for the administration to tell the Fed what it should be doing.

I asked Mr. Bartlett whether he knew of specific cases where the Fed appeared to take an action precisely because there was pressure to do the opposite. He replied that he suspected such an incident occurred with Mr. Bernanke’s predecessor, Alan Greenspan:

When I worked at Treasury during the Bush 41 years, I had the definite sense that [Treasury Secretary Nicholas F.] Brady’s public criticism of Greenspan caused Greenspan to resist easing, which he might otherwise have done given economic conditions. Of course, I can’t prove it.

In today’s case, I doubt that the Fed decided to ease because of the Republicans’ letter; as I mentioned above, markets seem to think this was a sure bet already.

But because markets thought more easing was a sure bet, not easing after receiving this letter definitely would have made the Fed look as if it were caving to political pressure. In that sense, the Republicans’ attempt at exerting pressure seemed doomed to fail.

Employer healthcare costs expected to slow in 2012

Healthcare expenses for U.S. employers are expected to slow next year to their lowest level in more than a decade, but the cost of benefits for workers is likely to outpace the growth of their earnings, a national survey has found.

Companies expect their bills for health benefits to rise 5.4% on average next year, the smallest increase since 1997, according to preliminary results from a survey of nearly 1,600 employers by benefits consulting firm Mercer.

The smaller increase reflects cost-cutting efforts by employers. Many are moving workers into lower-cost health plans or slashing expenses by raising insurance deductibles.

In the absence of any cost-cutting, employers said they expect their average health benefit costs to rise 7.1% That’s down from about 9% each of the last five years.

The lower overall expenses are due partly to workers staying away from doctors in the tough economy, the Mercer report found. It said that corporate programs to improve employee health also may be having a positive impact.

“Earlier risk identification and health education … are keeping people with health risks and chronic conditions away from the emergency room,” said Susan Connolly, a Mercer partner. “And consumers are more aware that overuse and misuse of health care services will directly impact their wallets as well as their employer's budget.”

Even as the growth rate in costs slows, employers still expect to pass many costs to workers by raising deductibles, co-payments to visit the doctor or contributions to insurance premiums, the survey found.

Mercer said its survey offered an initial forecast for 2012 and that final results from 2,800 employers will be released by the end of the year.

Census: Nearly 1 in 5 Californians lack health insurance

U.S. employers expand health benefits coverage under reform

Paying medical bills a steep challenge for senior citizens on Medicare

-- Duke Helfand

Photo credit: Los Angeles Times

Surge of holiday retail goods is starting at U.S. ports

The relative doldrums for import cargo traffic through the nation's major seaports are finally over, according to a report released this week by the Washington consulting firm Hackett Associates.

The group was predicting an 11.8% increase in cargo for September, compared with the same month last year, as retailers gear up for having goods on store shelves for the end of the year holidays.

That would end a summer-long downturn at the nation's major trade gateways and provide a welcome employment boost for workers all along the international trade supply chain. Those jobs include the longshore workers who load and unload ships, short-haul and long-haul truck drivers, railroad employees and warehouse and distribution center staff, to name a few.

"With the most crucial spending period of the year just weeks away, retailers have made careful decisions on the amount of merchandise they need to properly stock their stores during the holidays,” said Jonathan Gold, vice president for supply chain and customs policy for the National Retail Federation, which commissions the monthly Global Port Tracker report.

Gold added that 2011 has been a very different year for goods movement than 2010, when retailers were shipping goods much earlier to restock inventories that had reached record low levels. “This year, retailers have the luxury of importing holiday goods later than last year, which better ensures their inventory levels will accurately meet consumer demand," Gold said.

The surge in imported goods is expected to continue through October, with Hackett Associates predicting an increase of 9.5%, compared with October, 2010. An increase of 8% is expected in November, as the surge begins to taper off. By December, cargo movement through the ports is expected to be only 4.5% above the year earlier totals.

Ben Hackett, founder of Hackett Associates, cautioned against expectations of a sustained recovery in goods movement beyond the end of 2011, saying that there were too many uncertainties about the strength of the U.S. economy.

“We should not be lulled into too much confidence by the relatively strong import volumes of August and September,” Hackett said. “These are linked to the low levels of inventory that needed to be raised to meet the return-to-school and post-Thanksgiving sales. The third quarter will be positive for the ocean carriers and retailers but that will turn into negative growth" in 2012.

The Global Port Tracker report covers the U.S. trade gateways of Long Angeles, Long Beach, Oakland, Seattle, Tacoma, New York-New Jersey, Virginia, Charleston, Savannah, and Houston. It focuses solely on imports and does not count U.S.-produced goods that are destined for sale overseas.

Cargo terminal operators agree to cut emissions

A strong year for exports

Photo: Tugboats assist an MOL container ship at it prepares to dock at the TraPac terminal at the Port of Los Angeles. Credit: Port of Los Angeles.

--Ronald D. White

Kelley Blue Book warns of car-buying scam

Auto information company Kelley Blue Book is warning buyers not to fall victim to a scam using a fake version of its KBB.com website.

This is the same problem that has plagued rival auto information company Edmunds.com in recent years.

In both instances, the perpetrators are creating websites that imitate the look, feel and naming conventions of the companies and solicit money from car buyers.

Shoppers are sucked in though an attractive price offered for a car. They are then told to deposit a partial or full payment for the car in a special escrow account that supposedly operates as a guaranteed buyer-protection program by the auto information company.

They are told that after making the payment they will be shipped the car and have five days to get it checked out by a mechanic and test drive the vehicle.

But in reality, the money disappears and they never receive the car.

Both Kelley Blue Book and Edmunds provide online car reviews, price information and other car shopping tools but don’t sell vehicles or provide escrow services for automotive transactions.

Click here for tips from the FBI on how buyers can protect themselves from phony online car-buying scams or fraudulent buyer protection programs.

Will autos keep U.S. from recession?

Natural gas Ford taxis start rolling in O.C.

-- Jerry Hirsch
Twitter.com/LATimesJerry

Photo: Kelly Blue Book corporate office. Credit: Kelley Blue Book.

Consumer Confidential: Rude workers, holiday sales, PETA porn

Here's your which-way-did-they-go Wednesday roundup of consumer news from around the Web:

--What's the top consumer complaint? Well, take your pick. But very high on many people's lists are rude employees. In fact, about one-third of consumers say they get treated rudely an average of once a month and that such episodes of uncivil behavior make them less likely to patronize those businesses, according to researchers from USC and Georgetown University. The researchers surveyed 244 consumers and found that incivility is widespread. Consumers recalled incidents involving an uncivil employee in many industries, and particularly in restaurants and retailing. Furthermore, managers may not be aware of how frequently their customers witness an employee behaving uncivilly because consumers seldom report the behavior to employers. Bottom line: Be nice to your customers. It's just good business.

--Retailers are still waiting to see whether there's any ho-ho-ho this holiday season. A new forecast indicates that sales growth will likely not be as high as last year and that shoppers won't be hitting the stores as much. Retail sales for the November and December period are expected to rise 3% during what is traditionally the most critical period of the year for retailers, according to the research firm ShopperTrak. That would be below last year's 4.1% sales growth. Shoppers have been cautious about spending through 2011, faced with uncertain economic conditions, rising gas prices and high unemployment. Expect retailers to roll out plenty of sales to attract attention to their stores.

--PETA is mixing its animal-rights message with porn. People for the Ethical Treatment of Animals says it will launch a pornographic website to promote its stance. The group has already applied for the peta.xxx domain. PETA says the site will feature "tantalizing" videos and photographs, which will lead viewers into animal-rights messages. The idea is to reach a broader audience, by any means possible. The site could be up and running by November, although critics are already saying that by resorting to porn, PETA is alienating itself from a large swath of the population that might otherwise be sympathetic to its cause.

-- David Lazarus

Photo: Consumers hate it when employees are rude. Credit: American Movie Classics

Federal government wastes half of every tax dollar: poll

Americans are more skeptical than they’ve ever been of the federal government’s spending habits, convinced that it squanders 51 cents of each dollar it uses, according to a new Gallup poll.

Mistrust has steadily grown since the low 1986 estimate of 38 cents wasted on each dollar and is at the highest point since Gallup first considered the topic in 1979.

There’s only a 5% split by political party: Republicans say the government misuses 52 cents while Democrats peg the amount at 47 cents.

By ideology, though, there’s a wider differentiation, with conservatives guessing 56 cents and liberals estimating 44 cents. Back when George W. Bush was president, the sides were flipped.

Age also plays a part, with young people less inclined to fault the government’s expenditures.

It’s unclear why Americans are so down on how The Man wields a wallet, Gallup said. Some may feel that the government throws money at unnecessary programs while others may feel that essential spending is done inefficiently.

What’s clear is that respondents feel the federal government is far more bloated than state and local governments. Leaner operations mean that state governments waste just 42 cents while local ones misuse just 38 cents, according to the poll.

Millionaire tax sought by Obama is panned by GOP as 'class warfare'

-- Tiffany Hsu

Photo: Amy Davis / Baltimore Sun / MCT