November 27th

In This Issue

Global Markets:

Advice for Entrepreneurs


This Weeks Leads:



Utah’s Tier III Cities

2006 Population

  1. Draper 34,873
  2. Lehi 31,468
  3. Tooele 27,752
  4. Midvale 27,587
  5. American Fork 25,762
  6. Springville 25,049
  7. Cedar City 23,299
  8. South Salt Lake 22,060

Source: US Bureau of the Census,

Utah’s Tier II Cities

  • The percent of anticipated growth in the next five years is highest in Lehi at 6.2 percent, and lowest in South Salt Lake at 0.6 percent. The state average is 3.11 percent.
  • The average household size is highest in Lehi — 3.7 persons per household, and lowest in South Salt Lake —2.4. The state average was 3.11 persons.
  • Median home value was highest in Draper — $314,289, and lowest in South Salt Lake — $146,980. The state average was $183,752.
  • The percent of residents 25 years and older that have completed high school was highest in Tooele at 93.1 percent, and lowest in South Salt Lake at 74.0 percent. The state average was 90.5 percent.
  • The percent of residents 25 years and older that have completed a bachelor’s degree was highest in Tooele — 35.6 percent, and lowest in South Salt Lake —13.4 percent. The state average was 26.2 percent.
  • The average travel time to get to work was lowest in Cedar City —12.0 minutes, and highest in Tooele —33.9 minutes. The state average was 21.3 minutes.
  • The percentage of workers traveling to work alone in a vehicle was lowest in Tooele —67.1 percent, and highest in American Fork —80.7 percent. The state average was 75.5 percent.
  • The percentage of single family detached homes was lowest in South Salt Lake — 39.4 percent, and highest in Lehi —83.6 percent. The state average was 67.7 percent.
  • The median year households were built was oldest in South Salt Lake — 1966, and youngest in Lehi — 1991. The state average was 1976.

    Source: US Bureau of the Census, ESRI, Bonneville Research, 2006

    Note: The term "Tier III Cities" is used by Bonneville Research to distinguish a natural population grouping of cities, and represents no official or governmental designation.

Economic Notes:

  • GDP

  • There was a larger than expected upward revision to real GDP growth for the third quarter—to 2.2% annualized from 1.6% in the advance estimate. The upward revision came from lower imports, higher inventories and greater consumer spending on services; these were partly offset by a downward revision to consumer spending on durable goods. Profits from current production increased $66.2 billion at an annualized pace in the third quarter from the second, setting another record. Growth remains below potential, largely due to the contracting housing market.
  • Personal Income

  • Personal income rose 0.4% in October, slightly below expectations and a 0.5% increase in September. Spending rose 0.2%, in line with expectations, and up from September’s downwardly revised 0.2% decline. The core PCE deflator rose 0.2%, while the top line deflator fell 0.2% due to tumbling energy prices. The saving rate rose to - 0.6%.
  • Global Business Confidence

  • Global business confidence remains fragile. Sentiment remains about where it has been since late summer, but it is down sharply from where it was a year ago, and its level is consistent with global growth that is below potential. Vehicle and transportation companies are dour, and confidence among residential real estate and manufacturing firms continues to slip. Businesses are turning less aggressive in their investment plans. Equipment and software investment is still strong, but weakening, while businesses are liquidating inventory. Pricing pressures are abating with the weaker conditions and lower energy and other commodity prices.
  • UBS Index of Investor Optimism

  • The UBS Index of Investor Optimism rose for the third consecutive month in November. This month the index rose 14 points to 93, its highest level since January. The improvement in the index over the past several months has been driven by lower gasoline prices, cresting inflation and subsiding fears of a housing market crash.
  • Existing Home Sales

  • Existing home sales picked up in October, according to the Realtor’s data. Sales of existing homes advanced a slight 0.5%, with the pace of sales up to 6.24 million units in October. House-price appreciation is down again on a year-ago basis, however, this month it is down by 3.5%. The months of inventory picked up a bit to 7.4, although this number is not adjusted for seasonal factors.
  • New Home Sales (C25)

  • New home sales are down in October. The pace of sales fell by 3.2% m/m to 1.004 million annualized units. Census also revised downward September sales. Months of inventory increased slightly from September, but the median price did firm.
  • MBA Mortgage Applications Survey

  • Mortgage demand decreased 3.9% in the week ending November 24. The decline was solely due to refinance applications, which fell 9.6%. Purchase applications increased 1.3%.
  • Chain Store Sales

  • Chain store sales grew 2.1% in November, down from 3.0% in October, according to the ICSC chain store index. Results were modestly below expectations although they were mixed across retailers. Warm, wet weather and weakening housing markets received some of the blame for the weakness.
  • Durable Goods (Advance)

  • New orders for durable goods fell 8.3% in October, following a gain of 8.7% in September. Ex transportation orders were down 1.7% and core capital goods
  • Weekly Natural Gas Storage Report

  • Underground storage of natural gas decreased by 32 billion cubic feet during the week ending November 24. This was more than the expected draw of 22 Bcf from storage. Inventories are now 7.2% above the five-year average. This report is likely to add some bullish pressure to prices.
  • Oil and Gas Inventories

  • Crude oil inventories fell by 0.3 million barrels for the week ending November 24, according to the Energy Information Administration, slightly above expectations of a 0.1 million barrel draw. Distillate inventories fell by 1 million barrels, above expectations of a 0.4 million barrel draw. Gasoline stocks fell 0.6 million barrels, in line with expectations. This is a neutral report, and will have a limited impact on prices.
  • Agricultural Prices

  • The All Farm Products Index of Prices Received by Farmers rose 4.3% in November from October. The crop index increased 8.7%, while the livestock decreased 0.9%. In addition to price movements, the index is also affected by seasonal factors based on the mix of commodities sold. Farmers received lower prices for cattle, tomatoes, oranges, and hogs. Higher prices were posted for corn, soybeans, eggs, and milk. The Index of Prices Paid by Farmers was unchanged from October, but 2.8% above the level of a year ago. Farmers paid higher prices for feed grains, feed supplements, feed concentrates, and complete feeds, and lower prices feeder cattle, mixed fertilizers, LP gas, and herbicides.
  • Construction Spending (C30)

  • Construction spending decreased 1.0% in October, lower than projections. Private construction decreased 1.5%, due to a weakening in both residential and nonresidential construction. In addition, public construction increased 0.8%.
  • Vehicle Sales – AutoData

  • Vehicle sales on a seasonally adjusted annualized basis eased slightly in November to a pace of 16 million units, despite rising incentives. The easing occurred because of weakening light truck sales - 8.6 million units, while cars sales edged higher, to 7.4 million.

Source: Economy.com


Tier III Cities

Advice for Entrepreneurs


Economic notes

This weeks leads

  • Global Markets:
  • US: The National Association of Realtors recently announced that existing home sales in the United States rose 0.5 percent in October, following a seven-month decline. Though that decline, and a drop in home prices in 2006, might seem to indicate trouble for the U.S. housing market, the market is quite stable.

    CHINA: China's National Development and Reform Commission announced plans Nov. 30 to demolish 26 steel firms in 2007 as part of a move to reduce output by 100 million tons by 2011. Spurred by subsidized credit, China has witnessed an explosion in the number of producers of steel products during the past five years, most of which are small inefficient producers of low-quality steel. Consequently, China is currently the world's largest importer, exporter, producer and consumer of steel.

    MEXICO: The World Bank, the International Monetary Fund and the Bank of Mexico have demanded that Mexico open both private and public sectors to competition, El Universal reported Nov. 28. The organizations point to monopolistic conditions in the electricity, petroleum, telecommunications and education sectors. The Bank of Mexico will present a report Nov. 28 documenting the failure of the Federal Commission on Competence to resolve monopolistic practices in Mexico's telecommunications company, Telmex. But do not expect any changes; legalizing foreign involvement in the energy sector would first require a deeply unpopular change in the constitution.

    ANGOLA: Angola's Council of Ministers officially filed the country's application to join the Organization of the Petroleum Exporting Countries (OPEC) on Nov. 30, and hopes to join the oil cartel by March 2007. By joining, Angola would become OPEC's 12th member, and its ninth largest in terms of production. However, Angola has no intent of abiding by OPEC's quota regime, and instead plans to boost its oil output by nearly 50 percent, from its current 1.4 million barrels per day (bpd) to 2.0 million bpd by the end of 2007.

    RUSSIA/EU: The European Union and Russia signed an agreement Nov. 24 on the reduction and subsequent abolition by 2014 of overflight tariffs for trans-Siberian flights levied on European airlines, which are expected to total some $331 million in 2006. Russia will begin reducing tariffs in 2010 and phase them out completely by the end of 2013. Russia and the European Union have had a long- standing conflict over the fees, with the union threatening to stall Russia's accession to the World Trade Organization over the issue.

    KAZAKHSTAN: Kazakhstani Energy Minister Baktykozha Izmukhambetov said Nov. 28 that the country has downgraded its long-term oil output forecast and plans to produce 2.6 million barrels per day (bpd) by 2015 rather than the previously projected 3.0 million bpd. The reduction is due to production delays in the Caspian and the difficulty of developing the offshore fields. The Kashagan project in particular is unlikely to launch until 2009 at the earliest, as it is proving one of the most difficult to develop. However, the Kashagan consortium now expects ultimate output from the project to be 50 percent higher than originally predicted -- 1.5 million bpd instead of 1.0 million bpd.

    IRAN: Ali Faraji, chief of the board of directors of Mazandaran Oil Refinery Co., said Germany's Siemens will soon begin construction, in league with Iranian firms, of an oil refinery in the northern province of Mazandaran. Faraji said the refinery will be built between the northern cities of Neka and Behshahr, and that the crude oil required for the refinery will be supplied by Azerbaijan (all of Iran's oil is in the country's south, but its population centers are in the north). If Iran can realize this project, it will finally establish itself as a destination for Caspian crude oil as well as increase exports from its southern oil fields, both of which are long-time goals.

    GERMANY: Germany's Cabinet has approved plans to raise the retirement age from 65 to 67. If the move gets parliamentary approval, the change will be gradually phased in between 2012 and 2029. According to Labor Minister Franz Muentefering, only 45 percent of Germans over the age of 55 are currently employed. Germany's pension program is in far more dire straits than its U.S. counterpart. By 2050, Germany expects the average age of its citizens to have increased to from 42 to 50 and the workforce to have shrunk from 50 million to 39 million.

    Source: Strategic Forecasting

  • Advice for Entrepreneurs
  • Start young: "When my Mum told me to tidy my bedroom I would take all my half-used Barbie lipsticks, put price tags on them and go door-to-door in our neighbourhood."
  • Be secretive: "I didn't tell family or friends my idea for a year. When I revealed it, they came up with all sorts of reasons why it wouldn't work. If I'd listened to that from day one I'd have given up."
  • Think like a consumer: "Mill owners were fixated on hosiery being seen on the leg. They didn't understand that girls might want to hide it. I told them: 'I'm a woman. Trust me'."
  • Use word of mouth:"Once women tried our products they got hooked and told their friends. Spanx makes women look a size smaller, so who wouldn't want to tell their girlfriends?"
  • Know when to let go: "Entrepreneurs are good at starting something from nothing but they're not always the best person to take the company to the next level."

    Sara Blakely is the founder of Spanx. She still owns 100 per cent of the company, which has been profitable and self-financing from the outset. “Everything has grown out of that original $5,000,” she says.

    “When I started Spanx, my friends asked what my exit strategy was,” she recalls. “I told them my only strategy was to exit a room looking good in cream pants.”

    Source: The Financial Times Limited 2006

  • Grants
  • Improve Families!

    • Children, Youth, and Families at Risk Sustainable Community Projects
    • POSTED: 11/3/2006
    • ELIGIBILITY: Cooperative Extension Services at 1862 Land-Grant Universities $ AVAILABLE:
    • $1,000,000 GRANTS AVAILABLE: N.A.
    • MAX GRANT SIZE: $100,000
    • DEADLINE: 12/8/06
    • CONTACT INFORMATION: Sharon Wright, 202- 720-5075
    • DESCRIPTION: Grants to improve the quality and quantity of comprehensive community-based programs for at-risk children, youth, and families supported by the Cooperative Extension System.

    Reduce Lead Poisoning!

    • Targeted Grants to Reduce Childhood Lead Poisoning
    • POSTED: 11/13/2006
    • ELIGIBILITY: Nonprofits, public agencies, Indian tribes, and local governments $ AVAILABLE:
    • $3,000,000 GRANTS AVAILABLE: N.A.
    • MAX GRANT SIZE: $100,000
    • DEADLINE: 1/12/07
    • CONTACT INFORMATION: http://epa.gov/lead/pubs/nofa2006.pdf
    • DESCRIPTION: Funds to conduct a wide array of activities to reduce incidences of childhood lead poisoning in vulnerable populations.

    Prevent Head Injuries!

    • Abusive Head Trauma Prevention
    • POSTED: 11/7/2006
    • ELIGIBILITY: Nonprofit and public agencies
    • $ AVAILABLE: $1,200,000 GRANTS AVAILABLE: 3 MAX GRANT SIZE: $400,000
    • DEADLINE: 1/22/07 (LOI); 2/21/07 (Final)
    • CONTACT INFORMATION: Phyllis H. Niolon, 770- 488-1362
    • DESCRIPTION: Funds to research and evaluate strategies for the prevention of abusive head trauma (AHT)

  • This Weeks Leads:
    • Atlanta Bread Company
    • Atlanta Bread Company operates over 150 locations nationwide.
    • The bakery and sandwich restaurants occupy spaces of 3,800 sq.ft. to 4,500 sq.ft. in freestanding locations, endcaps, inline spaces and lifestyle and power centers.
    • Plans call for 20 to 30 openings throughout FL, GA, IL, MA, SC, TX, VA and WV during the coming 18 months.
    • Typical leases run 10 years with two, five-year options. Specific improvements are required.
    • Preferred cotenants include Barnes & Noble, Bed Bath & Beyond, Best Buy, Circuit City, Kohl’s and Target.
    • Preferred demographics include a population of 25,000 within three miles earning $50,000 as the average household income.
    • Major competitors are cited as Panera Bread. The company is franchising.
    • For more information, contact:
      • Barbara O’Marra
      • Atlanta Bread Company
      • 1955 Lake Park Drive, Suite 400
      • Smyrna, GA 30080
      • 770-432-0933
      • Fax 770-444-1991
      • Web site: www.atlantabread.com
    • Panda Express, Panda Inn and Hibachi- San
    • Panda Restaurant Group, Inc. trades as Panda Express, Panda Inn and Hibachi-San at 900 locations nationwide.
    • The restaurants occupy spaces of 1,800 sq.ft. to 2,600 sq.ft. in freestanding locations, college campuses, airports, malls, entertainment, mixed-use, power and strip centers and in urban/downtown areas.
    • Plans call for 150 openings nationwide during the coming 18 months.
    • The company requires .5 acres of land for freestanding units.
    • For more information, contact
      • Frank Miller or David Landsberg,
      • Panda Restaurant Group, Inc.,
      • 1683 Walnut Grove Avenue.,
      • Rosemead, CA 91770;
      • 626- 799-9898,
      • Fax 626-927-9888;
      • Web site www.pandaexpress.com
    • Putting Edge
    • Putting Edge Corp. trades as Putting Edge at 23 locations throughout CA, CO, FL, IL, MI, MS, NY, PA, TN, TX and in Canada.
    • The entertainment centers, featuring indoor glow-in-the-dark miniature golf, occupy spaces of 6,000 sq.ft. in entertainment centers.
    • Plans call for two to three openings nationwide during the coming 18 months.
    • Typical leases run 10 years.
    • Specific improvements are required.
    • Preferred demographics include a population of 300,000 within 10 miles earning $55,000 as the average household income.
    • Dave & Buster’s is cited as competition.
    • For more information, contact
      • Jerry Vanderburgh,
      • Putting Edge Corp.,
      • 2010 Winston Park Drive, Suite 502,
      • Oakville, ON CN L6H 6A3;
      • 905-855-5750,
      • Fax 905-855- 5745;
      • Email: jerry@putting-edge.com;
      • Web site: www.putting-edge.com.
    • College Shop, NFL Shop, Shirtique and T- Shirt Emporium
    • Courtney Enterprises trades as College Shop, NFL Shop, Shirtique and T-Shirt Emporium at five locations throughout CA and at a store in the Mall of America in MN.
    • The stores, selling, t-shirts, caps and specialty apparel, occupy spaces of 2,000 sq.ft. to 3,000 sq.ft. in specialty centers.
    • Growth opportunities are sought throughout CA during the coming 18 months.
    • For more information, contact
      • Ron Courtney,
      • Courtney Enterprises, 800 South Broadway, Suite 300,
      • Walnut Creek, CA 94596- 5210;
      • 925-937-8870,
      • Fax 925-934- 8494.

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