Kitsap Business and Economy

Steady

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WASHINGTON (AP) — Retail sales posted a surprising increase in February as consumers did not let major snowstorms stop them from racking up purchases. The advance, the biggest since November, provided hope that the recovery from the Great Recession is gaining momentum.
Some economists cautioned, though, that spending increases will remain modest as long as wages stay flat and job creation weak. They also noted that the government revised down the increase in retail sales for January.
For February, sales rose 0.3 percent, the Commerce Department said Friday. That surpassed expectations that sales would decline 0.2 percent.
The overall gain was held back by a 2 percent decline in auto sales, reflecting in part the recall problems at Toyota. Excluding autos, sales rose 0.8 percent. That was far better than the 0.1 percent increase excluding autos that economists had forecast.
But the February sales gain followed a scant rise in January and a slight decline for December. The increase for January was revised down from 0.5 percent to 0.1 percent.
“Weak jobs growth, low wages growth and tight credit mean that any further acceleration in consumption growth is unlikely,” Paul Dales, an economist at Capital Economics, wrote in a research note.
Still, the February gain suggested that consumers are spending more freely than they were a few months ago. The increases were widespread.
Sales surged at department stores, furniture stores, appliance shops and hardware stores. Restaurants and bars enjoyed a 0.9 percent advance, their biggest gain in nearly two years. That suggested that snowbound Americans headed out to eat and get a break from their homes.
Consumer spending is being watched carefully because it accounts for 70 percent of total economic activity. Economists have been worried that the economic recovery could falter if spending begins to lag. The better-than-expected February gain could ease those concerns.
Economists are hoping that businesses, which have shed 8.4 million jobs since the recession began in December 2007, will start rehiring laid off workers. That would give households the incomes they need to support spending growth.
Some analysts had suspected that the February retail sales report could offer a positive surprise, given encouraging news last week from the nation’s big retail chains. The International Council of Shopping Centers had reported that sales jumped 3.7 percent in February compared with a year ago. That marked the third straight increase.
Shoppers shrugged off major snowstorms to visit a broad array of merchants from luxury retailer Nordstrom Inc. to middlebrow Macy’s Inc. to discounter Target Corp. All three chains reported solid sales increases that beat analysts expectations.
“The economy is starting to accelerate,” said Christopher Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York. “The snowstorms couldn’t keep consumers away from the cash registers and neither could the constraints imposed by tightening credit card terms and near double-digit unemployment.”
In a separate report, Commerce said business inventories were basically unchanged in January. Total business sales rose 0.6 percent, the eighth straight monthly increase.
Economists are hoping that the increases in sales will drive businesses to restock their depleted store shelves. The restocking would boost production and provide increased support for the recovery.
The retail sales report Friday showed that sales at general merchandise stores, the category that includes department stores and big discounters such as Wal-Mart Stores Inc., rose by 1 percent in February after a 1.3 percent rise in January.
Sales at appliance stores were up 3.7 percent while sales at hardware stores rose by 0.5 percent. Sales at gasoline stations posed a 0.3 percent rise.

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The owner of Posh Speaker Systems is negotiating to move the 20-year old business into the Port of Bremerton industrial park.

Bill Benson, owner of the Bainbridge Island-based company said the negotiations are going “extremely well” for between 5,000 and 10,000 square feet of space either in the building where General Dynamics Electric Boat is or the blue building near Barney White Road.

Benson started the business at the Day Road Industrial Park on the island when he himself lived there. He now lives on Kitsap Lake and a location at the port would be a 10-minute drive for him.

Posh manufactures and assembles commercial speaker systems that pipe background in stores like Macy’s and Nordstrom. It also has military customers, It sells thousands of speakers a year, and its speakers are in all 50 states and throughout the world. It has a manfacturing plant in Singapore and also does manufacturing in Portland, Ore., and in Kingston.

It’s also in the residential speaker system market.

Most all of its work force is contracted, and Posh only has a core staff of four.

Expect a move sometime before July, as that’s when the lease on Bainbridge expires.

Such a moves would be welcomed at the port. The building where Electric Boat is now stood empty for many months, costing the port quite a bit during a time it’s trying to become less dependent on taxpayer support.

Rachel Pritchett, 475-3783

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Jerry McDonald, who lives in the condominiums on Bremerton’s redeveloped waterfront, told Port of Bremerton commissioners this week his unit has lost $100,000 in value since he purchased it, and is anxious to stop the bleeding.

He suggested commissioner do a couple of things to spur interest in the area, including designating four parking sports for people who want to drive by and look at the condos. Right now, there’s no place for prospective condo buyers to park, he said.

McDonald also suggested the port look to a collective approach to advertise the downtown Bremerton waterfront.

The idea was not lost on port Commissioner Bill Mahan, who suggested to new port marketing person Chris Case to take notice of McDonald’s remarks.

Case, by the way, is now on the job.

Rachel Pritchett, 475-3783

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WASHINGTON (AP) — Americans are recovering their shrunken wealth — gradually.
Household net worth rose last quarter, mainly because the healing economy boosted stock portfolios. But the gain was slight. And it was less than in the previous two quarters.
The Federal Reserve said Thursday that net worth rose 1.3 percent in the fourth quarter to $54.2 trillion. It marked the third straight quarter of gains. Net worth had risen by a more robust 4.5 percent in the second quarter of 2009 and an even faster 5.5 percent in the third quarter.
Net worth is the value of assets such as homes, checking accounts and investments minus debts like mortgages and credit cards.
Even with the gain, Americans’ net worth would have to rise an additional 21 percent just to get back to its pre-recession peak of $65.9 trillion. That illustrates Americans’ vast loss of wealth from the worst downturn since the 1930s.
Growth in stock portfolios delivered the biggest lift to net worth in the October-to-December period. The value of stocks rose by nearly 4 percent to $7.7 trillion. Higher home prices helped a bit. The value of real-estate holdings edged up 0.2 percent.
During the recession, which began in December 2007, household net worth had plunged as low as $48.5 trillion in the first quarter of 2009. Stock holdings and home values nose-dived. As their net worth evaporated, Americans felt less inclined to spend.
For all of last year, consumer spending dropped 0.6 percent. This year, as wealth, the economy and financial conditions slowly recover, consumer spending is projected to grow around a modest 2.2 percent, according to the National Association for Business Economics.
By contrast, in 1983, when the economy was recovering from the 1981-82 recession, consumer spending surged 5.7 percent. Unlike past rebounds led by ordinary shoppers, this one so far has been driven more by spending from businesses, foreigners and — until it runs out — government stimulus. Consumers have been spending more lately. But they remain cautious.
Consumers would need a prolonged pickup in their net worth to persuade them to ratchet up their spending, said Scott Hoyt, senior director of consumer economics at Moody’s Economy.com.
“It would take a string of increases of a size that they believe can continue and that they can have faith it for consumers to really boost their spending,” he said.
Each dollar increase in household wealth translates into roughly three to four cents of consumer spending over two years, Hoyt said.
That isn’t much.
Just ask Marcia Karon, 55, of Atlanta. She’s felt little benefit from the economic rebound or the stock market. Her family’s finances are being crimped in other ways. Her husband has taken two pay cuts in the past year, their property taxes remain high and “everything else is going up,” she says.
“Things are tight,” says Karon, who works at home as a calligrapher and bookkeeper. “Over the last year we’ve had to go through what little savings we had set aside just to get by.”
Not until 2012 does Hoyt think household wealth will return to its pre-recession levels. A severe setback to the economy could delay it further, he added.
Concern about their diminished net worth also led many Americans to reduce their borrowing last year. Household debt — including mortgages, credit cards, auto and student loans — contracted at an annual rate of 1.75 percent in 2009, the Fed report said. It was the first annual decline on record.
Benefiting most in the fourth quarter were those invested in the stock market. The Standard & Poor’s 500, a broad barometer of stocks, climbed 5 percent in the quarter. The Dow Jones industrial average gained 7 percent.
But the gains have slowed this year. The two indexes have risen just 2 percent and 1 percent, respectively. Even with the market’s rally, the S&P 500 is still 27 percent off its October 2007 peak.
Holders of 401(k) retirement accounts have recovered somewhat from the walloping they took in the meltdown. But even with continued contributions to those accounts, many are still struggling. Average account balances for 401(k) contributors ages 45 and older remained 2 to 3 percent lower at the end of December than at the end of 2007, according to the Employee Benefit Research Institute.
Some have fared better.
Julie Arnheim, 43, of Los Altos Hills, Calif., returned to work a year ago because the economy had beaten down her and her husband’s finances. Now, thanks to the stock market’s rebound, their net worth has come all the way back from a 30 to 35 percent drop.
“We’ve lost a year and a half of growth, but it’s easy to be upbeat,” says Arnheim, an entrepreneur. “There’s a lot of retired people I know who were hurt, and they don’t have the longevity for the market to come back and keep growing.”

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With negligible movement this so far today.

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Dow Jones Industrials
High: 10,601.79
Low: 10,526.52
Close: 10,567.33
Change: +2.95
Other Indexes
Standard&Poors 500 Index: 1145.61 +5.16
NYSE Index: 7327.67 +33.65
Nasdaq Composite Index: 2358.95 +18.27
AMEX Composite Index: 1881.91 —20.77
Russell 2000 Index: 674.93 +5.30
DJ U.S. TotalStkMkt: 11,936.21 +61.52
Volume
NYSE floor volume: 1,162,731,691
NYSE consolidated volume: 5,434,640,707
Total number of issues traded: 3,194
Issues higher in price: 2,064
Issues lower in price: 1,001
Issues unchanged: 129

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If you’re a defense contractor, read this and call me. Rachel Pritchett, 475-3783

http://www.businessweek.com/news/2010-03-10/house-democrats-announce-ban-on-funneling-earmarks-to-companies.html

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Hi Bloggers,

Work soon will resume on the so-called cross-SKIA connector road, which eventually will run from Highway 3 around the north end of the Bremerton National Airport, then south to Lake Flora and Old Clifton Roads.

A pause on the work was taken over the winter, but Port of Bremerton staff are out today installing signs thanking stimulus funds.

Speaking of stimulus funds, port commission President Bill Mahan, the port’s own version of Norm Dicks when it comes to securing federal funds, says there’s a good chance the port will receive more funds in a second round of stimulus funds. That would enable the port to build the next portion of the road.

He’s thinking about an additional $5 million.

Stay tuned; Mahan thinks he’ll hear in the next 30 days.

Once completed, the road would open up the expansive South Kitsap Industrial Area to development, but of course would eventually squeeze out Bremerton MotorParks Speedway.

They should come up with a better name.

Rachel Pritchett, reporter, 475-3783

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at 10,561.

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