ECONOMIC NOTES:
- Global Business Confidence
- Global businesses remain darkly pessimistic.
Sentiment was at its worst in mid-December, but has
improved only marginally since then. European and
South American businesses are most worried,
followed by North American businesses; Asian
companies are negative but less so. Confidence is
poor across all industries, particularly business
services. Hiring intentions remain very weak and
pricing power has collapsed suggesting that deflation
is increasingly likely. The intensity of the global
economic downturn shows no sign of letting up.
- US Business Confidence
- Weak economic conditions have pushed
confidence near its all-time low. Consumer
confidence edged lower after remaining stable over
the past three weeks. According to the
ABC/Washington Post consumer confidence index,
sentiment fell 4 points to -53 for the week ended
January 18. No president has entered office with such
a low level of consumer confidence since the
beginning of the survey in 1985.
- Risk of Recession
- The chance that the U.S. will be in recession in six
months inched lower to 55% in December compared
with November's 60%. The economy is threatening to
shut down as the recession is hurting nearly every
industry, occupation, demographic group, and region
of the country. The historic policy response will help
heal the economy but it will take time. The economy is
expected to contract through the third quarter of this
year, but a self-sustaining expansion will not take hold
until 2010.
- Quarterly Household Credit Report
- Household credit conditions deteriorated further in
the fourth quarter. Delinquency and default rates rose
for all loan categories. Taking all household liabilities
together, delinquency and default rates are now much
higher than they were in the 2001 recession. Balance
growth fell further in the quarter although it remained
positive.
- Jobless Claims
- nitial jobless claims increased by 62,000 to
589,000 for the week ending January 17. This
increase was in line with expectations and offset the
drop in late December. This adds further evidence that
the labor market is rapidly deteriorating.
- FHFA Purchase-Only House Price Index
- The FHFA purchase-only house price index for the
U.S. fell by 1.8% from October to November. The index
is down by 8.7% from November 2007 and shows no
sign of decelerating. Worse yet, the house price index
declined across the board for all nine Census Bureau
subdivisions, underlining the effect that the recession
is now having on the housing market nationwide. The
U.S. house price index is now where it was in March
2005, having fallen by over 10% from its peak in April
2007.
- New Residential Construction (C20)
- Homebuilding is sinking to new lows. Residential
construction plunged again in December with a 15.5%
m/m decline in total housing starts. At 550,000
annualized units, starts have descended to an
unprecedented postwar low. The Census Bureau
revised slightly upward construction starts for
November. Permit issuance was down sharply as
well in December compared with November.
Exceptionally weak demand is constraining
homebuilding. The main bright spot in this report is
that slower construction will help clear the housing
market of excess inventories.
- MBA Mortgage Applications Survey
- In the week ending January 18, the MBA market
index fell, burdened by rising contract rates. The
composite market index decreased 9.8% to 1,195.3.
This was driven by a decrease in the refinance index,
which fell 12.4% this week to close at 6,491.8.
Continuing a pattern, the purchase index was the odd
man out and rose 2.5% this week to finish at 303.1.
- NAHB Housing Market Index
- Despite a slight improvement in expectations,
declining home sales led the NAHB housing market
index lower in January. The overall index came in at 8,
compared with the previous December's value of 9.
The housing market index has again reached a new
low, but slight improvements in sales expectations
and home buyer traffic indicate that the index may at
last be bottoming out.
- Chain Store Sales
- Chain store sales rebounded 1.1% in the week
ending January 17, reversing a little under half the
prior week's decline as consumers remain very
hesitant to spend. The year-ago decline shrank
modestly to 1.8%, but remains among the largest
decline in decades.
- Oil and Gas Inventories
- Crude oil inventories increased by 6.1 million
barrels during the week ending January 16, according
to the Energy Information Administration, far
surpassing expectations of a 1.4 million barrel build.
Gasoline inventories surged by 6.5 million barrels,
dwarfing expectations. Distillate inventories rose by a
modest 800,000 barrels. Refinery operating capacity
fell to 83.3% from 85.2%. Total domestic petroleum
demand rose modestly. This report points to lower oil
prices.
Luxury Slide Could Spur Closings,
Consolidation
Last week's announcement by Saks Fifth
Avenue that it plans to cut 9 percent of its workforce as
a result of slumping economic conditions could
portend things to come for the luxury retail sector,
warn analysts. Little more than a year ago, analysts
forecast luxury retailers would average annual growth
of 6 percent, making the sector resistant to the effects
of a downturn. But today, as wealthy consumers reel
from the plunge in the stock market and mid-tier
shoppers shift to discount retailers, luxury looks like
the most vulnerable retail sector.
While most of the retail industry struggled in 2008
(same-store sales for all U.S. chain stores rose just
1.1 percent for the year), the luxury sector experienced
same-store sales declines during 10 of the past 12
months, according to ICSC. Things got worse as the
year went along as well. In each of the last four
months of 2008, luxury retailers posted double-digit
same-store sales declines, including a 10.5 percent
decline in November and a jaw-dropping 17.4 percent
decline in December. During those months, same-
store sales for all U.S. stores declined 2.7 percent
and 1.7 percent, respectively.
Reversals Of Fortune
As the U.S. real estate market continues
its downward slide, commercial construction firms are
suddenly finding themselves on the other side of the
looking glass. For the past several years, builders of
retail space benefited from a booming market as
retailers expanded and developers built shopping
centers, lifestyle properties and mixed-use complexes
wherever there was an empty patch of land. The
biggest issue for contractors had been inflation in
materials prices brought on, in part, by tremendous
global demand. That trend came to a head in early
2008 when the price of a barrel of oil eclipsed $140 as
part of a broad run-up in prices in all sorts of
commodities.
Now, however, the situation has reversed.
Circuit City To Liquidate
It's official. Circuit City will liquidate its
567 stores.
To date in 2009, here's a summation of the major
announcements from retailers. In the bankruptcies
and liquidations section I'm listing the number of
stores the chain owns and not necessarily how many
the company is planning to close if they have not
disclosed that yet:
Bankruptcies and Liquidations:
- Jan. 7, Goody's liquidates, closing 287 stores
- Jan. 8, Against All Odds files for bankruptcy
protection, operates 64 stores overall, plans to close
West Coast stores
- Jan. 13, Shane Co. files for bankruptcy, operates
23 stores
- Jan. 14, Gottschalks files for bankruptcy, operates
58 stores
- Jan. 16, Circuit City to Liquidate, closing 567
stores
U.S. Retail Absorption Vs.
Completions
Grubb & Ellis's 2009 Forecast Report
predicts continued softness for retail real estate. The
firm expects net absorption to end the year at negative
12 million square feet. Completions are also expected
to decrease to 20 million square feet. However, the
slowdown in development won't be enough to keep
the vacancy rate from increasing. The brokerage
company expects the vacancy rate to end 2009 at 9.9
percent up from 9.1 percent at the end of 2008 and for
asking rates to drop up to 10 percent this year.
Conditions Remain Cloudy for
Apartments
Conditions in the apartment sector continued
to be less than favorable, according to the
January survey of multifamily industry executives by
the National Multi Housing Council (NMHC) based in
Washington, D.C.
However, based on factors such as sales
volume, availability of debt and equity funding, the
industry seems to be coming out of the lows hit in the
October survey, even as it continues to feel the impact
of job losses in the current recession. Ongoing job
losses - 524,000 in December - have dampened
multifamily vacancies and rent growth, while the credit
crunch is also taking a toll on the financing side.
"Once again, apartment firms are facing tough
market conditions not of their making," says Mark
Obrinsky, chief economist of NMHC. "Earlier in the
decade the bubble-induced rise in homeownership
eroded apartment demand. Now the economic and
financial collapse caused by the bursting of that
bubble is taking a toll."
JP Morgan 2009 Forecast: Watch Prices
Fall
Although the current commercial real estate
cycle has seen relative supply restraint compared
with previous cycles, that won't be enough to bail the
industry out of a deep recession, which is causing
demand to fall off more than expected.
During a media briefing on the 2009 outlook for
commercial real estate in New York last week,
Michael Giliberto, a JP Morgan senior real estate
portfolio manager, said considering that real estate
lags the economy, even after the economy picks up
later this year, rents in all the major commercial real
estate property sectors will be down about 6% by
December 2009.
While JP Morgan expects all property types to be
hard hit, Giliberto predicts that retail properties are
likely to face a protracted reversal as consumers stop
taking on additional debt and try to manage existing
debt. "A huge hammering is going on in the consumer
discretionary sector," according to Giliberto.
Source: Retail Traffic, January 2009
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Greetings!
- Carbon Capture and Storage
- Public Policy Initiatives
- PE & Apprenticesip Grants
- Economic Notes
- This Weeks Leads
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Public Policy Initiatives |
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NH - Lynch Tackles State Budget Crisis Head
On. Here's an example of what Gov. John
Lynch means when he says the state budget crisis
and the economic downturn will be his "single-
minded focus" for the foreseeable future. Gov. Lynch
spent the entire day in budget meetings - and then,
like the movie "Groundhog Day," he did the same
thing again. "We are going line by line, dollar by dollar
and person by person," Lynch told the News-Letter
when asked about the task of finding the final $75
million to $100 million of the estimated $250 million
2009 budget deficit. "This is going to be a two- to three-
year problem, and we need to do our best not to hurt
the state five to ten years from now."
http://www.seacoastonline.com/-901130352
OH - Strickland Announces Public Works
Funds. Washington is just starting to debate
its economic stimulus plan - but public works money
from a state stimulus package already is starting to
flow to Greater Cincinnati. "We recognized, quite
frankly, there was an economic crisis developing in
the country and it was going to have an impact on
Ohio," Strickland said. "I think we were the first state to
try to help ourselves by passing a stimulus bill."
Strickland signed the $1.57 billion stimulus in June;
$120 million of it was just for public works projects.
Now, more than 300 road, sewer and other municipal
construction projects are set to get started statewide.
http://news.cincinnati.com/article/20090118/NE8/9011
80381
MO - Nixon Provides Details on
Bipartisan 'Show Me Jobs' Plan. Gov. Jay
Nixon detailed his Show Me Jobs initiative, a
bipartisan plan to get Missourians back to work and
support small-business growth. "For Missouri's
economy to get back on the right track and for us to
create good-paying jobs, we must do everything we
can to encourage the development and growth of
small businesses like this," Gov. Nixon said. "That's
what my Show Me Jobs plan is all about - putting
Missourians back to work and supporting small-
business growth during these difficult economic
times."
http://www.infozine.com/news/stories/op/storiesView/si
d/33289/
NJ - Editorial: Corzine Works to Protect
Homeowners. New Jersey homeowners in
danger of being cast out into the cold can take comfort
in a law signed last week by Gov. Jon Corzine. The
legislation authorizes $40 million for two programs to
help keep them from losing their homes. The plan
allocates $25 million to help homeowners refinance
first mortgages in imminent danger of foreclosure; the
rest of the money will go toward providing that those
already in foreclosure can remain in their homes as
tenants while saving to buy back their houses. "The
magnitude of the foreclosure crisis has made many
New Jerseyans feel that maintaining their dream of
homeownership is beyond their control. It shouldn't
be," said Gov. Corzine.
http://www.nj.com/opinion/times/.xml&coll=5
KY - Beshear Acts to Ensure Unemployment
Benefits. Gov. Steve Beshear announced the
formation of a bipartisan task force to recommend
long-term changes to the Unemployment Insurance
(UI) Trust Fund to ensure its long-term viability. Due to
the enormous demands of the global economic crisis,
Kentucky, like many states, is now depleting its UI
Trust Fund at an accelerated rate. Kentucky now has
about $50 million in the fund, representing more than
two weeks of payments on claims. "This is merely a
short-term solution to a long-term complex issue,"
said Beshear. "By taking this initial step, we can
assure those who are eligible for unemployment
insurance benefits will continue to receive assistance.
No one will see a disruption in their benefits."
http://www.kypost.com/Ensure-Unemployment-
Benefits/.cspx
MA - Patrick Sets Goal of Increased Wind
Energy. Providing further support to a
package of previously passed legislation impacting
renewables development, Gov. Deval Patrick set a
goal of developing 2,000 megawatts of wind power
capacity by 2020. "With the growing interest in wind
turbines we see in communities across the
Commonwealth of Massachusetts and the abundant
wind resource we have off our coast, wind power is
going to be a centerpiece of the clean energy
economy we are creating for Massachusetts," said
Patrick. http://www.renewableenergyworld.com=54550
ME - Baldacci to Open New England's Largest
Wind-Power Facility. A wind-energy
project that will produce the equivalent power needs
for 23,500 homes officially goes on line next week
when Gov. John Baldacci attends an opening
ceremony for the Stetson project in eastern Maine.
The 38-turbine, 57-megawatt wind farm along Stetson
Mountain's ridgeline is the second in the state
completed by First Wind, whose Mars Hill project has
been until now New England's largest commercial
wind power project. First Wind says Stetson alone will
produce the equivalent energy to what would be
produced by burning about 331,000 barrels of oil,
avoiding emissions that cause global warming.
http://www.wcsh6.com/news/local/story.aspx?
storyid=99130&catid=2
NJ - Corzine Helps Buildings Go Green.
Public buildings that can't go green because
they lack the green to pay for the work have a new way
to finance these projects through a law enacted
yesterday. Hailed as a way to get more New
Jerseyans back to work, the program was designed to
help public entities make their buildings more energy
efficient while saving taxpayers the expense of the
work and the energy inefficiencies. "Towns, schools,
counties and public colleges can now become more
energy efficient and save money when they retrofit
their buildings and enter into long-term energy
contracts with no additional costs," Gov. Jon Corzine
said.
http://www.nj.com/news/12/1232620850130200.xml&c
oll=1
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What is carbon capture and storage? |
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Executives and public policy makers should
familiarize themselves with the technologies involved
in carbon capture and storage (CCS) as they work
toward reducing carbon dioxide levels in the
atmosphere.
Climate change has businesses, governments,
and nonprofits examining how to stabilize
atmospheric greenhouse gases while still
maintaining economic growth. In plotting the course to
a low-carbon economy, they will weigh a number of
methods for addressing the various risks and
opportunities. Carbon capture and storage (CCS)-or
more accurately, the sequestration of carbon dioxide-
is an important topic in the emerging field of climate
change. It represents one possible approach for
stabilizing atmospheric greenhouse gases-although
there are many economic, technical, and legal
barriers to its implementation. As background for
informed discussion, the interactive depiction of the
technologies involved in CCS is available below:
Source: McKinsey & Company, January 2009
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Carbon capture and storage |
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Grants |
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Improve Physical Education!
Carol M. White Physical Education Program
- POSTED: 1/16/2009
- FUNDING SOURCE: Dept. of Education
- ELIGIBILITY: LEAs and nonprofits
- $ AVAILABLE: No appropriation yet - last year was
$33,850,000
- GRANTS AVAILABLE: 95
- MAX GRANT SIZE: $500,000
- DEADLINE: 3/6/09
- CONTACT INFORMATION:
http://edocket.access.gpo.gov/2009/E9-956.htm
- DESCRIPTION: Funds to initiate, expand, or
enhance physical education programs, including after-
school programs, for students in kindergarten through
12th grade.
Improve Apprenticeship Programs!
Advancing Registered Apprenticeship into the
21st Century: Collaborating For Success
- POSTED: 1/15/2009
- FUNDING SOURCE: Dept. of Labor (DOL)
- ELIGIBILITY: Industry, employer, labor-
management, and other national organizations
- $ AVAILABLE: $6,500,000
- GRANTS AVAILABLE: 20
- MAX GRANT SIZE: $650,000
- DEADLINE: 3/15/09
- CONTACT INFORMATION:
http://edocket.access.gpo.gov/2009/E9-653.htm
- DESCRIPTION: Grants to promote the adoption of
the 21st century Registered Apprenticeship framework
through the development and/or adaptation of national
guideline standards that incorporate competency-
based progression; hybrid-style progression; and/or
interim credentials. .
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Working with clients to make good things happen! |
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BONNEVILLE RESEARCH
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If we can help, please call or email us at:
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