Category Archives: business

Ohio Retail Business; Federal Reserve Beige Book of Economic Conditions

The Federal Reserve published its recent Beige Book Report covering economic conditions of each banking district. Each day this week, one sector of the Cleveland Federal Reserve report will be posted. Today, the following covers economic activity of Ohio’s retail sector.

Reports from retailers on the holiday shopping season were generally positive. General merchandise stores had the strongest results, while activity at small specialty outlets was mixed. Almost all of our contacts said that sales increased in the low to mid-single digits when compared to year-ago levels. Some retailers noted that consumers are becoming more confident, and it is beginning to show in their buying patterns. Nonetheless, we still heard mixed reports on purchases of discretionary items. Looking forward to the first quarter of 2011, retailers generally expect transactions to rise in the low to mid-single digits on a year-over-year basis, and they believe that rising sales will include more discretionary items. Vendor pricing was generally stable. Most retailers plan a modest increase in capital spending during 2011 for remodeling, expansion, and e-business. Hiring was limited to temporary holiday workers and no pickup is expected in the new year.

Auto dealers reported new vehicle sales during November were steady to up slightly on a month-over-month basis. When compared to year-ago levels, sales were generally higher. A few of our contacts also noted an increase in leasing activity. Looking forward, dealers expect sales to follow seasonal trends through the winter months. However, they anticipate that sales will be slightly higher than the prior year’s level. New car inventories are in line with demand. Reports on used vehicle purchases were mixed. Little change was seen in credit availability. Buyers with high credit scores can readily obtain financing. Dealers’ spending on showroom upgrades to comply with factory mandates remains modest. More aggressive capital outlays are dependent on sustainable demand.

Santa’s Naughty-and Nice-List of American Business

The previous post titled “Poll Shows Most American For Christmas” reported that 80% of Americans either celebrate Christmas as a religious holiday or think it should be. The same Americans also think it Christmas should publicly honored at our public institutions and businesses. Given this level of support for celebrating Christmas as a religious holiday, I suspect most Americans would favor the efforts of the American Family Association’s to pressure retailers and other businesses into treating Christmas as … well as … the birthday humanity’s redeemer as celebrated by Christians.

That is why XCJ again posts the <a href=Naught and Nice list created by the American Family Association. This year, the list includes companies who are FOR Christmas, those Marginalizing Christmas, and those AGAINST Christmas. It is hoped readers who are for Christmas will not patronize business who are attempting to marginalize it or who are flatly against Christmas.

Companies FOR Christmas Marginalizing Companies Companies AGAINST
Amazon.com
Bass Pro Shops
Bed Bath & Beyond
Belk
Best Buy
Big Lots
Books-A-Million
Cabella’s
Collective Brands
Costco
Dick’s Sporting Goods
Dilliards
Family Dollar
Dollar General
H.E.B. Stores
Hallmark
Harris Teeter Stores
Hobby Lobby
JC Penney
JoAnn Fabrics & Crafts Stores
Kmart
Kohl’s
Kroger
Lowe’s
Macy’s
Meijer
Menard’s
Michael’s Stores
Neiman Marcus
Nordstrom
Office Max
Petsmart
Pier One Imports
Publix
QVC
Rite Aid
Sears
Scheels Sporting Goods
Super D Drug Stores
Target
Toys R Us
Wal-Mart/Sam’s Club
Bath & Body Works
Dollar Tree
Hy-Vee Stores
Old Navy
Limited Brands
Safeway
Starbucks
Walgreens
Whole Foods
Banana Republic
Barnes & Noble
CVS Pharmacy
Foot Locker
Gap Stores
Hancock Fabrics
NASCAR
L.L. Bean
Office Depot
Radio Shack
Staples
SUPERVALU
Victoria’s Secret

Reviewing last year’s naughty and nice list, a number businesses have lost the spirit of Christmas while some others lost the spirit of the Grinch. For example, Kroger and Costco must have been visited by the spirit of Christmas because both are on the FOR Christmas list. Old Navy is a tough nut crack. Last year the Old Navy Corporation regarded religious connotations of the season as bad for business. This its retail stores are begrudgingly acknowledging Christmas exists, but the corporate retailer did move up from flat out against to marginalizing the Christian-oriented holiday. A few examples of retailers who acquired the secular bah-hum-bug spirit are Walgreen’s and Office Depot. Walgreen’s went from For to Marginal. This may have been the result of some problem faced during the past year or two. Not everyone handles economic recessions equally well either. The Christmas spirit among corporate leaders at Office Depot have been soured. This is reflected having become oppositional to Christmas as a non-secular holiday. Let’s hope bah-hum-bug soon changes to a merry Christmas perspective.

A positive development is the dwindling number of businesses oppositional to Christmas. The Examiner reported 80% of American retailers think being for Christmas is good for business. The National Federation of Retailers agrees. Because 91% of Americans celebrate his birth on Christmas, they believe being pro-Christmas will increase sales by about 2.3 percent.

At least the wise men from the East believed it was a good idea to give gifts to celebrate his birth. Hopefully, AFA’s efforts will inspire Americans and American businesses to advance the cause of the babe born in the manager on Christmas day.

Merry Christmas!

Small Business Lending Fund Update

The U.S. Department of the Treasury (Treasury) is expected to soon release the criteria small banks must meet in order to participate in the $30 billion Small Business Lending Fund (SBLF) created by the NSBA-supported Small Business Jobs and Credit Act.

Meanwhile, Sens. Mary L. Landrieu (D-La..), chair of the U.S. Senate Committee on Small Business and Entrepreneurship, and George LeMieux (R-Fla.) recently sent a letter to Treasury Secretary Timothy Geithner, urging swift implementation of the SBLF and the State Small Business Credit Initiative, which was created by the same legislation.

NSBA echoes this call for immediate implementation. The SBLF has been on the drawing board for long enough. It is high time that it be deployed. America’s small businesses still are struggling through a destructive credit crunch and the realization of the SBLF stands to help the situation.

According to an internal poll conducted by the Independent Community Bankers of America (ICBA), nearly a quarter (24 percent) of their 5,000 community-banks members planned to utilize the SBLF. This means 1200 community banks stand poised to increase their small-business lending.

NSBA joins Landrieu and LeMeiux in urging Treasury to expedite the realization of the SBLF and State Small Business Credit Initiative.

Source: NSBA, December 7, 2010

Ohio, 46th Worst Business Tax Climate : The Tax Foundation’s 2011 State Index

The Tax Foundation released the newest edition of the State Business Tax Climate Index, which ranks from 1 (best) to 50 (worst) the tax systems of the 50 states. South Dakota’s tax system is most welcoming to economic activity while New York’s tax code ranks 50th as the least hospitable. Ohio almost caught up with New York being ranked as 46th least tax friendly state.

The goal of the index is to focus lawmakers’ attention on the importance of good tax fundamentals: enacting low tax rates and granting as few deductions, exemptions and credits as possible. This “broad base, low rate” approach is the antithesis of most efforts by state economic development departments who specialize in designing “packages” of short-term tax abatements, exemptions, and other give-aways for prospective employers who have announced that they would consider relocating. Those packages routinely include such large state and local exemptions that resident businesses must pay higher taxes to make up for the lost revenue. As a result, businesses often move to other regions or states to remain competitive.

States with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth. As we will see, Ohio need more than government generated jobs. Ohio needs a serious tax code revision.

The index ranked states based on five component tax indexes:

• The Corporate Tax Index
• The Individual Income Tax Index
• The Sales Tax Index
• The Unemployment Tax Index
• The Property Tax Index

The Corporate Tax Index assesses both corporate income taxes and/or gross receipts taxes. Ohio taxes business on the latter gross receipts.

The Individual Income Tax Index measures the effect on small businesses and entrepreneurs, on labor costs, and, depending on the type of business, on consumer spending. One reason Ohio ranks among the worst states is it arranges the top income brackets in the middle range of income. Ohio is among the states with the highest marriage tax penalties. Ohio’s local income tax rates also are the third highest in the nation.

Sales Tax Index measures the rates and effects of taxes both on business. A form of double taxation exists when a business pays sales tax that increases the cost of goods and services and when the consumer pays sales tax on the same goods or services. The two components of the index consist of the tax rate and tax base, which is the range and types of goods and services taxed.

The Unemployment Insurance Tax Index measures the effects state and federal rate structures and related policies and how potentially damaging to business they may be. Ohio was ranked as among the states with the best unemployment insurance structures.

Finally, the Property Tax Index is comprised of taxes levied on the wealth of individuals and businesses. These include taxes on real and personal property, net worth, and the transfer of assets. Some studies property taxes are a significant factor of business location decisions.

So how did Ohio rank on each of these indexes?

Tax Indexes 2011 2010 2009 2008 2007 2006
Corporate Tax 39 38 33 33 39 47
Income Tax 44 46 47 47 49 50
Sales Tax 35 37 39 39 38 43
Unemployment Tax 11 10 15 15 11 48
Property Tax 39 38 33 33 39 13
Overall Rank 46 47 48 48 47 47

 

Anyone for lower sales, income and property taxes? If you are, you must also be for more efficient government operations and fewer unnecessary government programs.

Texas Doctors Sue ObamaCare

On Wednesday, a court in Tyler, Texas, heard a lawsuit against ObamaCare brought by two Texas-based doctor-owned hospitals. The doctors argue in the case that ObamaCare ends competition between doctor-owned hospitals and non-doctor-owned hospitals by stopping the growth of their facilities and banning any new doctor-owned facilities from opening. This means that the healthcare “reform” legislation pushed through Congress effectively favors one type of business over another, and even punishes doctors who have a financial stake in the success of their facilities. Should the doctors be unsuccessful in their lawsuit, ObamaCare will give patients less choice over their healthcare providers and medical facilities, and the lack of competition will drive up healthcare costs and decrease patient care.

This is just one of around 23 lawsuits against ObamaCare, including the lawsuit filed by 20 states to stop the federal mandate to buy healthcare and the increased cost to the states. The judge presiding over the states’ lawsuit said that he will rule by October 14.

Source: Liberty Watch, October 1, 2010

“Pledge for America” and Small Business

The House GOP leadership released their “Pledge to America” last week, which included various proposals focused on helping small business owners and entrepreneurs.

Specifically, the pledge would stop tax increases on all taxpayers (when the Bush tax cuts expire at the end of this year) and provide small business owners with another significant tax deduction to free up additional resources for investment and hiring. The Pledge also repeals the new health care law, and replaces it with reforms that have long been sought by the small business community. On the regulatory front, the Pledge makes members of Congress accountable for the laws they pass by requiring congressional approval of new federal regulations. It also proposes to start chipping away at out-of-control spending, which must be done for the U.S. to remain competitive, fiscally strong and the land of opportunity.

“Business owners want to get back to growing, investing and creating jobs. They want to stop worrying about the uncertainty of higher taxes and a health care bill that threatens to overtake their businesses with unsustainable costs and a blizzard of new paperwork,” said Karen Kerrigan.* She congratulated Republicans for putting forth a pro-growth, pro-entrepreneur agenda that will help small business owners do just that. To read the Pledge, please visit: http://www.gop.gov/

* Kerrigan is President & CEO of the Small Business & Entrepreneurship Council

SBE Council is a national, nonpartisan advocacy organization dedicated to protecting small business and promoting entrepreneurship. For more information, please visit: www.sbecouncil.org.

Senator Brown Calls on Navistar CEO to Keep Jobs in Springfield

U.S. Sen. Sherrod Brown (D-OH) sent a letter this week to Dan Ustian, CEO of Navistar International Corporation, urging him to maintain operations at the company’s plant in Springfield. In early August, nearly 400 workers received notice that layoffs may begin as early as October 4.

“The workers in Springfield are second to none in work ethic, dedication, and productivity,” Brown wrote to Ustian. “As Navistar continues with its military and commercial sales and further progresses with the development of cutting edge technology, I urge you to consider the Ohio workforce that has played a critical role in the company’s success.”

Navistar International Corp. produces commercial trucks and diesel engines. The company recently made a commitment to expand operations in Illinois. Brown urged Navistar to make a similar commitment to the Springfield community. In his letter, Brown urged Navistar to continue working with local, state, and federal officials to keep employees working.

Increase in Unemployment Numbers for August

Unemployment numbers released last week by the Department of Labor show an increase in unemployment from 9.5 percent to 9.6 percent. This means a net loss of 54,000 U.S. jobs in August. Despite the net loss, private-sector employers added 67,000 jobs in August, however that wasn’t enough to counter balance the 114,000 temporary Census workers that are no longer employed by the Census Bureau.

Prior to the formal announcement, many economists were expecting growth in the unemployment rate. During his speech to bankers and economists in Jackson Hole, Wyo. on Aug. 27, Federal Reserve Chairman Ben Bernanke eluded to the negative numbers and the need for strong responses from both lawmakers and private-sector leaders as well.

Unfortunately, despite modest gains throughout the year, manufacturers in August cut 27,000 jobs, while struggling state government cut 14,000 jobs. There were a few bright spots: 28,000 new jobs were created in the health care sector, and 19,000 jobs were added in the construction industry. Temporary staffing companies also added jobs to the tune of 17,000 in August.

This data is in-line with the NSBA Mid-Year Economic Report which showed only 11 percent of small businesses hired new employees while the majority—53 percent—made no changes whatsoever to their employment.

Source: NSBA, September 7, 2010.

Six Month Check-Up of the New Health Care Law: A SBE Council Evaluation

SBE Council issued a “check up” regarding the success, to date, of the Patient Protection and Affordable Care Act (PPACA). According to SBE Council President & CEO Karen Kerrigan, ObamaCare has already broken many promises and left small business owners more vulnerable than ever in terms of losing coverage for themselves and their workforce.

“After six-months of ObamaCare, small business owners are getting hit with higher premiums. And, if the regulatory process continues to move forward on grandfathering, most small business owners will lose the coverage they currently offer or be forced to buy more expensive plans,” said SBE Council President & CEO Karen Kerrigan.

SBE Council highlighted the following problems with PPACA at six months:

• The miniscule tax credits for small business are not working. Many report that the value of the tax credit is too low, and its tight restrictions disqualify many small firms from accessing it.

• Premium costs continue their upward trajectory. Small business owners are reporting premium rate hikes in the 10%-20% range, and higher. PPACA is not helping to lower the cost of health insurance for small businesses – in fact, the new mandates are driving costs higher.

• “Grandfathering” is a joke. Rules issued by Health and Human Services (HHS), if they become final, will force many small firms to purchase more costly plans if they wish to remain “grandfathered” once PPACA fully kicks in. Even the HHS reports that 80% of small firms will lose the plans they currently offer. What happened to the promise of being able to keep the health coverage you currently have?

• Paperwork Nightmare. A massive paperwork burden awaits small business owners in 2012 when they will be required to file a 1099-MISC form for all vendor transactions that total $600 or more on an annual basis. What does this have to do with health care?

• Higher health spending and more bureaucracy. The Center for Medicare and Medicaid Services (CMS) reported that PPACA will increase health care spending by 6.3% annually, consuming nearly 20% of the national’s health care bill. The Congressional Research Service described the size and scope of PPACA’s bureaucracy as “currently unknowable.” More cost to taxpayers – higher taxes for small business owners.

• The high-risk pools are a failure. In Iowa, 32 people have enrolled in the state’s high-risk pool, which beats Kansas where only 17 people have enrolled.

• Uncertainty in the marketplace. Small business owners remain uncertain about scores of other regulations being developed by the federal government as to their impact on health savings accounts (HSAs) and other consumer-directed health plans. Will these plans survive once HHS decides what “qualifies” as health care? Will a government-designed “essential benefits package” drive HSAs out of the marketplace?

“ObamaCare has increased costs, uncertainty, and the size and scope of government. Unfortunately, this is only the beginning and we have to hope that more rational heads will prevail in the new Congress so this mess can be fixed,” concluded Kerrigan.

Ushering in a New Era in Ohio Manufacturing

By Senator Sherrod Brown

Today, when the sun rises in Youngstown, a third-shift worker driving home may well be sitting in a seat built in Warren. There is a pretty good chance that the brake system was manufactured in Findlay. An added safety feature – the folding air bag – may have been made in Dayton. The car engine and windshield glass were also probably manufactured in the Buckeye State. Ohio is ushering in a new era of auto manufacturing.

The first Chevy Cruze rolled off the assembly line in Northeast Ohio this past week. To build this new, fuel-efficient car, the GM plant in Lordstown added a third shift which created hundreds of new jobs in Ohio –a far cry from a year and a half ago when the company’s future was in doubt.

Ohio is home to more parts suppliers, materials industries, and technology companies that support America’s auto manufacturing base than almost any other state. More than 440,000 Ohio jobs directly or indirectly depend on the auto industry. It is the engine that drives American manufacturing and provides an entrance to the middle class.

A year and a half ago, the Obama Administration made the tough – and yes, unpopular – decision to save the auto industry from collapse. In the process, it helped prevent Ohio workers from losing their livelihood and helped maintain manufacturing jobs that keep our economy strong. While we still have a long way to go, the U.S. auto industry today enjoys the most job growth in a decade.

There were some naysayers who thought we should do nothing and let the U.S. auto industry crash and burn. If they had their way, we’d be looking at padlocked plant gates instead of watching new cars come off the line this week. Instead, it is a new day for the industry in Ohio.

Ohio workers – in small towns, rural areas, and big cities in 78 out of 88 counties – contribute to the U.S. automotive industry. The U.S. auto industry is one of four manufacturing industries that make up 56 percent of private sector research and development.

But as we continue to work our way toward economic recovery, one thing is clear: we’re not going back to business as usual. The Cruze – with its assembly in Lordstown and its components coming from across our state – shows that clean energy and fuel efficiency represent the future of our state’s manufacturing base.

Ohio is at the forefront of some impressive changes, quickly becoming a national hub for clean energy manufacturing. But this won’t happen without the right federal policies in place. I have been working to pass my Investment for Manufacturing Progress and Clean Technology Act – legislation that would create a revolving loan fund to help auto suppliers and other small- and mid-sized manufacturers retool their operations so they can participate in the clean energy supply chain. The IMPACT Act could create more than 52,000 jobs in our state while helping to revitalize Ohio’s manufacturing base.

We also need to ensure that our state’s most important asset – our skilled workforce – is prepared for the clean energy jobs of the 21st century. That’s why I am fighting for the Strengthening Employment Clusters to Organize Regional Success (SECTORS) Act. The SECTORS Act provides grants for sector partnerships among institutions of higher education, industry, organized labor, and workforce boards to stop the shortage of skilled workers for many emerging industries that can open doors in Ohio.

And to keep moving forward, we need to make the business climate more fertile for development by creating policies that encourage research and development. When President Obama visited the Cleveland area, he called for a permanent extension of the research and development (R&D) tax credit. R&D tax credits incentivize investment in emerging manufacturing industries like clean energy development.

The R&D tax credit promotes innovation by encouraging the domestic production of new clean energy technologies. Many important clean energy projects are under development in our state. At Hocking College Energy Institute in Logan, students are learning about automotive hybrids and advanced energy fuel cells that will continue to reshape the automotive industry. CODA Automotive – an electric vehicle manufacturer – recently announced plans to build a battery manufacturing plant in Franklin County. Building a lithium-ion battery to fuel electric cars creates clean energy jobs right here in Ohio, staves off an unhealthy addiction to foreign oil, strengthens America’s economic stability, and enhances our national security. This progress means that the late shift worker does not have to pay gas prices that fluctuate at the whim of a foreign government.

President Obama made a decision that saved the U.S. auto industry from collapse. Ohio’s steelworkers, plastics producers, and stamping plant workers were able to keep their jobs. Ohio auto parts suppliers were able to hire more people and build capacity. We owe it to our children and we owe it to Ohio workers who come home from the late shift to create a climate that fosters Ohio innovation and creates Ohio jobs.