A Stern Glance

Retail sales posted a surprising increase in February as consumers did not let major snowstorms stop them from storming the malls. The advance, the biggest since November, provided hope that the recovery from the Great Recession is gaining momentum.

The Commerce Department reported today that retail sales rose 0.3 percent in February, surpassing expectations that sales would decline by 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, far better than the 0.1 percent rise outside of autos that economists had forecast.

The gains outside of autos were widespread with sales rising 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, possibly an indication that snowbound Americans decided to visit their local eating and drinking establishments to 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 they believe began last summer could falter if consumer 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 soon start rehiring laid off workers. That would give households the incomes they need to support spending growth.

The Commerce report showed that the 0.3 percent February gain followed a 0.1 percent rise in January, which had originally been reported as a stronger increase of 0.5 percent.

The retail sales report Friday showed that sales at general merchanside stores, the category that includes department stores and big discounters such as Wal-Mart Stores Inc., ose 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.

Businesses trimmed inventories at the wholesale level again in January even though sales rose for a 10th consecutive month. The dip in inventories underscored that businesses remain cautious about restocking their depleted shelves.

The Commerce Department reported today that inventories at the wholesale level were reduced 0.2 percent in January following a 1 percent drop in December. Sales were up a solid 1.3 percent, the best showing since a 3.6 percent rise in November.

It would appear as if the stage has been set for a rebound given how lean inventories are at present following a massive inventory liquidation that occurred during the recession. Inventories at the wholesale level for 13 straight months and have been down 15 of the past 17 months. The only gains in wholesale inventories occurred in October and November.

With the January drop in inventories, the ratio of inventories to sales dipped to a record low of 1.10, meaning it would take 1.10 months to deplete inventories at the wholesale level given the January sales pace. That was the lowest point since the data series began in 1992.

The January drop in inventories was a disappointment, as a small increase had been generally expected. The government also revised the December report to show a bigger inventory drop of 1 percent rather than the 0.8 percent fall that was originally reported.

The current recovery can’t be sustained until businesses begin consistently restocking their depleted shelves. That restocking would mean higher orders to factories and growing demand for manufacturing workers.

Wholesalers hold 25 percent of all inventories with factories holding about one-third and retailers holdings the rest.

Businesses slashed inventories by massive amounts during the recession as they struggled to control costs in the face of a deep recession and falling demand for their products.

But the economy got a boost in the final three months of last year from a slowdown in the inventory liquidation process.

The swing from massive inventory reductions contributed two-thirds of the economy’s overall growth of 5.9 percent in the October-December period.

Mar. 08, 2010
Copyright © Las Vegas Review-Journal

Nevada’s jobless rate remains at 13 percent

By JENNIFER ROBISON
LAS VEGAS REVIEW-JOURNAL
As if Nevada’s unemployment rate wasn’t high enough, fresh statistics show even bigger job woes for specific demographic groups.

The Silver State’s jobless rate remained unchanged from December to January, staying at 13 percent, the state Department of Employment, Training and Rehabilitation reported Monday.

But the agency’s latest numbers show that men and minorities have experienced especially tough times during the recession.

Joblessness among Nevada’s male population averaged 13.4 percent in 2009, while female unemployment averaged 9.4 percent in the same period. A year ago, men and women in Nevada shared roughly the same unemployment rates.

Blame the unemployment discrepancy on job distribution.

The male-dominated construction sector ranks among the hardest-hit industries in the downturn, said Bill Anderson, chief economist for the employment department. Health care and educational services, which skew more toward a female labor base, have actually added jobs in the recession, both nationwide and in Nevada.

The jobs picture looks even worse for some ethnic groups. Blacks in Nevada faced a jobless average of 18.2 percent in 2009, while Hispanics here saw unemployment average 17 percent in the year. Joblessness among white Nevadans averaged 11.4 percent in 2009.

The employment department also substantially boosted earlier job-loss estimates. Instead of losing 76,100 jobs from 2008 to 2009, Nevada actually dropped 115,100 jobs, or 9.1 percent of its jobs base.

Officials said the difference came from a U.S. Bureau of Labor Statistics methodology that uses limited feedback from local analysts, weak sample responses to employment surveys and the application of inflated business birth-and-death factors.

Based on the revised numbers, Nevada’s jobs base has dwindled to 2004 levels, said Brian Gordon, a principal in local research firm Applied Analysis. The losses probably won’t reverse and turn into growth anytime soon, he said.

“We’re looking at a period of correction that will likely result in continued job loss through the balance of 2010,” Gordon said. “While those losses will be fewer, it’s unlikely the economy will start to report any material expansion during this year.”

Anderson agreed, adding that he expects Nevada’s jobless rate to bounce around in the next half a year, with some months showing declines in the jobless rate and others bringing increases.

“We’re kind of treading water right now, and I think it will stay that way in the near term,” Anderson said. “We certainly aren’t seeing any return to growth and improvement, but at the same time, we are seeing some signs that the rate of decline is beginning to ease.”

For hints at those smaller dropoffs, consider seasonal hiring trends.

Nevada’s employers pared 25,300 jobs from December to January, well below the 40,300 positions they slashed in the same period a year ago and just 450 more than the average December-to-January decline of the past decade. Retail employment fell by 4,600 jobs from December to January, as stores eliminated temporary holiday positions. That was the shallowest rollback in 10 years, though the smaller cuts came at least partly because retailers hired fewer seasonal workers in the first place.

State government fell by 5,100 jobs because of a break between university semesters. The construction sector, which usually dwindles during January because of winter weather, was off by 3,200 jobs.

Officials with the employment department said in a statement that the job losses didn’t exceed pre-recession patterns, but the cuts were significant nonetheless “in light of an already struggling workforce.”

The Las Vegas market lost 17,100 jobs from December to January. Unlike the state’s jobless level, the local market’s unemployment rate jumped noticeably, rising from 13.1 percent in December to 13.8 percent in January. That January total nearly matches the market’s jobless record of 13.9 percent, set in September.

An estimated 187,700 Nevadans are unemployed and actively seeking positions. The vast majority — 135,900 — live in the Las Vegas area.

Randy Garcia, chief executive officer of Las Vegas wealth-management firm Investment Counsel Co., said the newest employment figures point to a protracted economic rebound.

“We believe that the recovery is going to be more prolonged and more moderate than we would like to see,” Garcia said. “The longer it takes for recovery, the more these (jobs) numbers are going to disappoint.”

Garcia added that the state’s hotel-casinos have lost their pricing power in the recession, and economic revival will require not only gains in the numbers of tourists who visit, but also a new resort-operating business model that can restore profitability based on the way consumers spend today.

Nor should Nevadans expect the housing market to rebound and generate growth soon, Garcia said.

Previous real estate downturns resulted from high interest rates, he said. This time around, the bubble burst because values jumped too much. And overpricing issues turn around more slowly than interest rates.

Anderson also predicted a relatively sluggish recovery.

Visitor volumes have risen for four straight months, and sales of existing homes have jumped. But the recession hit Nevada so hard that it’s going to take some time for the state to get back on its feet, Anderson said. Plus, consumers will likely continue to spend cautiously, and that could mean a sustained slump for the state’s spending-reliant economy.

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The unemployment rate held at 9.7 percent in February as employers shed fewer jobs than expected, evidence that the job market may be slowly healing.

The Labor Department reported employers cut 36,000 jobs, below analysts’ expectations of 50,000. Analysts expected the jobless rate to rise to 9.8 percent.

The severe snowstorms that hammered the East Coast last month may have affected job losses, the department said, but it wouldn’t quantify the impact. Other data in the report signaled the storms didn’t have as much impact as feared.

Economists estimated before the report that the storms could inflate job losses by 100,000 or more. That would mean the economy generated a net gain in jobs last month, excluding the impact of the snow, for only the second time since the recession began in December 2007.

The department revised its estimate of job losses for January from 20,000 to 26,000, but said job cuts were fewer in December than originally estimated — 109,000 rather than 150,000.

Hiring for the 2010 Census accounted for 15,000 jobs, the department said. The government anticipates hiring 1 million temporary census workers this year.

But many industries that economists thought might be hardest hit — construction, retail, and hotels and restaurants — didn’t seem to be heavily affected. The construction indusrty lost 64,000 jobs, compared to an average of about 40,000 in the previous three months. Retail employment was flat and the leisure and hospitality industy posted a net gain of 7,000 jobs, the first increase since September.

The unemployment rate, which hasn’t risen since October, could be bottoming out. Still, 14.9 million Americans are unemployed, nearly double the total when the recession began, and the economy has shed 8.4 million jobs during that time.

The economy grew at a 5.9 percent rate in the October-December quarter last year, the fastest pace in six years.

Randy Garci, Founder and Chief Executive Officer of the Investment Counsel Company, Nevada’s oldest and largest investment advisory firm, said, “It is our Firm’s view that while the unemployment rate likely peaked in 2009, it will remain stubbornly high.  U.S. employment should start to grow modestly the first half in 2010.  We would not be surprised to see unemployment no lower than 8% by the end of the year.

“The anticipated economic drivers for this U.S. economic recovery/expansion will initially be: Inventory rebuilding, a modest increase in consumer spending and government stimulus, in the form of increased infrastructure spending.

“The Nation’s growing challenge is that the likelihood of re-building our country’s manufacturing industries is remote due to the mature status of the U.S. economy versus cheaper labor in emerging countries. Although we could develop dynamic new industries in the U.S., such as energy alternatives and clean technology, it will be difficult to avoid these jobs ultimately moving off-shore.

“To put our Nation’s economic/employment challenges in perspective, if the economy creates 150,000 jobs per month, which it more than it did during the previous expansion from November 2001 to December 2007, the unemployment rate would still exceed 7 percent ten years from now.  If the economy creates 200,000 jobs per month (which exceeds what it generated during the expansion from March 1991 to March 2001, the unemployment rate wouldn’t fall below 6 percent until first quarter 2016.

“Therefore, it will likely require a much longer time for full employment recovery than we would like.”

Contract activity for pending home sales fell after a surge of activity in preceding months to beat the original deadline for the first-time home buyer tax credit but remains above a year ago, according to the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in November, fell 16.0 percent to 96.0 from an upwardly revised 114.3 in October, but is 15.5 percent higher than November 2008 when it was 83.1.

Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for the tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

The PHSI in the Northeast dropped 25.7 percent to 74.4 in November but is 14.7 percent above a year ago. In the Midwest the index fell 25.7 percent to 82.0 but is 9.2 percent higher than November 2008. Pending home sales in the South fell 15.0 percent to an index of 97.8, but are 14.7 percent higher than a year ago. In the West the index declined 2.7 percent to 124.6 but is 21.4 percent above November 2008.

New orders for manufactured goods in January increased 1.7 percent to $378.4 billion.  Shipments rose 0.3 percent , unfilled orders increased by $0.1 billion following fifteen consecutive monthly increases and inventories increased 0.2 percent from December 2009.

Stern And Company
Strategic Communications
http://www.sdsternpr.com
info @ sdsternpr.com

Howard Hill, often regarded as the world’s greatest bowhunter, was once quoted as saying “Unless you know your game’s feeding, sleeping and daily habits; unless you plan your hunt in great detail and follow your plan with precision, you are not hunting at all. You are merely walking in the woods.”

That’s what audience analysis is all about. Effective communications relates the organization’s objectives to the interests and concerns of its key publics. And your company’s publics don’t care about your objectives unless they can identify them with their interests and concerns.

Though it sounds elemental, most public relations agencies don’t understand the nature of a “key public.” Before we move forward, keep in mind that Stern And Company defines a “key public” as a group with common interests who are affected by the acts of a company, or whose acts affect that company.

By that definition, Stern And Company helps its clients define their “key publics” through this process:

First, we avoid the “general public,” as it’s virtually impossible  to define the interests and concerns of the broad and amorphous “general public” and were we to use it, our campaign would be “merely  walking in the woods.”

Second, we define the broad audience categories that affect our clients or are affected by our client.

Third, we break the broad audience categories into smaller, more definable groups.

Fourth, we set priorities. Who is most important. This is a crucial, if not the crucial step in the audience selection process, as no matter how many resources are available, it is virtually impossible to address each identified audience.

Fifth, we identify the gatekeepers. These are the opinion leaders; people others follow.

After defining and prioritizing our client’s key publics, we begin the process of targeting media. Too often public relations agencies focus only on external broadcast or print media. We see it differently and take a broader, more strategic approach.

While media, of course, includes newspapers, magazines, television and radio, it can equally include a letter, a conversation, a payroll stuffer, a speech or an audio visual presentation. Continue Reading »

 Productivity in the final three months of last year surged at a faster pace than previously thought as labor costs fell more rapidly.

The Labor Department reported today that productivity jumped at an annual rate of 6.9 percent in the fourth quarter, even better than an initial estimate of a 6.2 percent growth rate. Unit labor costs fell at a rate of 5.9 percent, a bigger drop than the 4.4 percent decline initially estimated.

The combination of rising productivity and falling labor costs bolsters company profits and helps keep inflation at bay. But it also puts American households under stress, leaving them with less income to increase consumer spending, the key ingredient to economic growth.

Productivity has posted sizable increases for three straight quarters as companies squeezed more output from their reduced work forces. Companies, struggling with the deepest recession in decades, have cut 8.4 million jobs over the past two years.

Those job losses and fears of even more layoffs have kept a lid on wage increases and overall inflation. That has given the Federal Reserve the leeway to push a key interest rate to a record low and keep it there for more than a year in an effort to jump-start economic growth.

The productivity growth rate of 6.9 percent surpassed expectations for only a modest 0.1 percentage point rise from last month’s initial estimate of a 6.2 percent growth rate. Productivity is the amount of output per hour of work.

The revision reflected the fact that the government last week revised up its initial estimate for total economic output, as measured by the gross domestic product, to show a rise of 5.9 percent in the fourth quarter. That was up from an initial estimate that GDP was growing at an annual rate of 5.7 percent in the fourth quarter.

While the 5.9 percent GDP increase was the fastest growth pace in six years, two-thirds of that strength reflected a slowdown in the pace at which businesses are cutting inventories. That inventory swing is expected to be temporary.

For all of 2009, productivity among nonfarm workers rose by 3.8 percent, nearly double the 2 percent increase in 2008. It was the fastest annual increase in productivity since a 4.6 percent increase in 2002, another year when the country was struggling to emerge from a recession.

Stern And Company
Strategic Communications
http://www.sdsternpr.com
info @ sdsternpr.com

Mar. 03, 2010
Copyright © Las Vegas Review-Journal

Nevada bankruptcy filings in January higher than in January 2009

By ARNOLD M. KNIGHTLY
LAS VEGAS REVIEW-JOURNAL
Nevada bankruptcy filings dropped sharply in January, falling 20.4 percent in January to 1,825 filings, according to numbers released by the U.S. Bankruptcy Court of Nevada.

That compares to 2,294 filings in December, although court officials noted that January is traditionally the slowest month of the year for bankruptcy filings.

And the 1,825 filings in January were 14.4 percent higher than the 1,596 filings in January 2009, suggesting state businesses and residents may be looking at another year of struggling inancially.

Greg Garman, managing partner focusing at the law firm of Gordon Silver, said one month of numbers is not enough to tell how 2010 will compare to the 2009, when a record number of bankruptcies were filed.

“The bankruptcy courts are busier than they’ve ever been,” Garman said. “The dockets are full and the judges are hearing, literally, thousands of cases a week. I think you can read from it that there still is a record pace of people filing for bankruptcy.”

The state had 29,170 filings last year, 22.3 percent more than in 2005, the year the Bankruptcy Abuse Prevention and Consumer Protection Act took effect. Nevada led the nation in 2009 in individuals filing bankruptcy with 11.2 filings per 1,000 people.

Tisha Black-Chernine, founding partner of the law firm Black & LoBello, said bankruptcies could top last year’s number unless banks become more responsive in assisting businesses and individuals.

“Most people want to work their debt problems out without having to file bankruptcy,” Black-Chernine said. “Negotiation, however, is a near impossibility as the banks are either uncooperative or nonresponsive. The return to being productive — as soon as possible — is the goal. The threat of a collector looming for years is not an option. For a number of debtors, be it credit cards, deficiencies or negative equity, the only manner in which they can cauterize their situation in short order is to file a bankruptcy.”

Chapter 7 liquidations accounted for the bulk of the filings in January with 1,290 Chapter 7 filings statewide. That is a 25.7 percent drop from December but a 16.6 percent increase from January 2009.

Chapter 7 cases are filed by individuals, married couples and businesses.

Chapter 13 cases, which require court ordered repayments under plans as long as five years, were down to 508 in January from 528 in December. There were 465 filed in January 2009.

Chapter 11 bankruptcies decreased slightly in January from December, falling to 27 from 30. There were 25 filings in January 2009.

The Southern Division of the court in Las Vegas received 1,541 filings in January.

Nancy Rapoport, a bankruptcy law professor at the University of Nevada, Las Vegas, said bankruptcy filing numbers are traditionally “quirky” after the holidays.

“Perhaps people were distracted in December by the holidays and didn’t file and are filing now because credit cards are coming due,” she said. “But it’s really hard to tell because the data sets before the recession just don’t predict what is happening now.”

Robert Lawless, a bankruptcy law professor at the University of Illinois, said February and March filings will offer clues about whether bankruptcy filings will continue to increase in Nevada and the nation for the rest of the year.

“February and March are going to be very important in determining where we’re going for the rest of the year,” Lawless said.

Nationally, bankruptcies reached 1.4 million, well below the all-time high of approximately 2 million in 2005.
 
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Boyd Gaming (NYSE:BYD) reported a net loss of $1.0 million, or $0.01 per share, compared to a net loss of $220.8 million, or $2.51 per share, in the same period last year.  Adjusted Earnings for the fourth quarter 2009 were $0.2 million, or less than $0.01 per share, compared to $11.4 million, or $0.13 per share, for the same period in 2008.  

Net revenues were $384.9 million for the fourth quarter 2009, compared to $422.6 million for the same quarter in 2008, a decrease of 8.9 percent. Click here for the full news release.