Heard in the news: $6 gas a possibility?

Before we get too carried away, let me give some context:

On Thursday morning, New Jersey Governor Chris Christie was on MSNBC’s Morning Joe to talk about the presidential election, when he brought up the issue of rising gas prices and how it would play as the primary season heats up. Christie’s argument was that if gas hits $6 a gallon, it would have a huge effect on the general election because gas prices affect consumers and businesses at all levels.

Granted, one can never be sure about the validity of a statement that’s political in nature. But, adding credibility to the fear of rising gas prices, a AAA spokesperson recently told the Los Angeles Times isolated parts of the country could be seeing $5-a-gallon gas “by April or May.”

Today, the Reuters/University of Michigan consumer sentiment index for February was just barely higher than the previous month – making it the slowest consumer confidence increase in months. IHS Global Insight economists contributed the minimal gains to rising gas prices:

“Americans are going to feel pain at the pump, since given the current state of affairs it is relatively safe to say that gasoline prices will surpass $4/gallon by Memorial Day. The recent news on the jobs front is cause for some hope that the future will look brighter, but as gasoline prices rise consumer confidence takes a beating,” said IHS economist Chris Christopher in an email.

While several gas stations here in Westchester already feature $4/gallon gas, for the national average to top that bar before Memorial Day weekend would be a significant blow to the economy. Currently, the national average for a gallon of unleaded gas is $3.647 – good for a 13 percent increase compared to exactly a year ago. In New York, the statewide average is even higher, at $3.910/gallon. That’s nearly 6 percent higher than just a month ago and 13.5 percent higher than a year ago.

Corporate giving panel today in Greenwich — Consumer confidence slips — Auto sales up 6%

Happy Tuesday! Florida Republicans will vote in today’s primary, while the Giants and the Patriots will participate in Super Bowl Media Day in Indianapolis – expect the press to vastly over-cover both events.

LEADING OFF: Today, seven panelists from Westchester and Fairfield counties will discuss the state of corporate giving and how not-for-profits are faring in these uncertain and difficult economic times. The panel is being hosted at L’Escale restaurant by Westfair Communications Inc., the parent company of the Westchester County Business Journal and the Fairfield County Business Journal, and will feature speakers from the United Way of Putnam/Westchester, ShopRite, PepsiCo, ArtsWestchester, and more. If businesses are still struggling to expand and still reluctant to invest (which, by and large, they are), then you can be sure that the economic issues are amplified for non-profits, who depend on corporate giving programs to stay alive. Stay tuned for reactions and insight from the speakers.

CONSUMER CONFIDENCE SLIPS IN DECEMBER: The Conference Board said today that its consumer confidence index for the month of December fell to 61.1 from a revised 64.8 in November. (A panel of economists surveyed by Bloomberg News had called for the index to increase to 68). The report noted that fewer Americans expect their incomes to increase over the next six months.

QUICK HITS: U.S. auto sales are expected to show a 6 percent increase when they are unveiled tomorrow, according to published reports; Negative advertisements represented 92 percent of all ads aired in Florida in the lead-up to today’s primary; Gannett reported yesterday that fourth quarter profits fell 33 percent to $116.9 million; Philips Electronics posted a net fourth-quarter loss of $214 million; excitement continues to build on Wall Street as Facebook is expected to announce an IPO date in the next couple of weeks.

Lunch Break: Thursday 9/29 (Union layoffs; ObamaCare; and more)

Here is your lunch-time version of our daily morning report (because sometimes, everyone just has one of those crazy mornings). Without further delay…

Driving the day, Part 1: Gov. Andrew Cuomo has been on a hot streak lately – much unlike the Red Sox (more on that later in this post). So it was inevitable that he was eventually going to get a setback. Well, that setback came on Tuesday evening, just after his announcement that five major tech companies would be investing $4.4 billion in local R&D and manufacturing facilities. On Tuesday, the Public Employees Federation, which is the state’s second-largest public employee union with 56,000 members, rejected its proposed 5-year contract with the state that would have guaranteed members protection from layoffs in exchange for three years of no raises plus paying a higher percentage of healthcare costs. Whether or not you agree with the union’s vote, 3,500 pink slips went out yesterday. This is exactly when we CANNOT afford to cut jobs – particularly at the government level when so many are already being lost.

Driving the day, Part 2: On Wednesday, the Justice Department asked that the Supreme Court –  SCOTUS for short (don’t you love acronyms) – rules on “ObamaCare” ASAP. In other words, look for a ruling in early 2012, which, as all of the networks have hammered home, comes smack in the middle of the campaign. Health care affects jobs, and with small businesses hurting, the consensus is that ObamaCare will add to the pain. Jobs in turn affect the economy, and well, folks, 99.9 percent of the time that is exactly what an election hinges on. So yes, this is a “big f****** deal” (quoting our friend Joe Biden) for the president.

They Said It: “We’ve had close to 10% unemployment now for a number of years, and of the people who are unemployed, about 45% have been unemployed for six months or more. This is unheard of,” said Fed Chairman Ben Bernanke in Cleveland yesterday, calling the unemployment levels a “national crisis.”

By the Numbers: 1.3%, as in the level of GDP growth in the second quarter of this year, up from a previous estimate of one percent growth.


> Federal mortgage-aid program to shut its doors with $500 million unspent…(New York Times)

>Web searches cut unemployment duration by 25%…(Wall Street Journal)

>Bloomberg consumer confidence index at second-lowest record ever…(Bloomberg)

>SEQRA, environmental laws hurt New York businesses, developers…(Westchester County Business Journal)

Sports Blink: Last night, the Boston Red Sox completed the biggest regular-season collapse in MLB history for team in playoff contention. The Sox led the AL Wild Card race by 9 games on Sept. 3, but from there they went 7-20 in the month of September. They now have several months to work on their golf games and their excuses between now and spring training.

Good week/bad week

Here’s a quick recap of the week that was, before I have to skiddadle (yes, that is a word) and hurricane-proof the house.

  • Westchester job prospects improving: The county’s unemployment rate dropped to 6.7% in July from 6.8% in June and from 7.3% in July 2010. The reality is that Westchester likely won’t see monthly a decline of more than 0.1 or 0.2 percent in the unemployment rate until at least 2012. However, by all accounts, this month’s jobs report was one of the best signs Westchester has received in some time
  • For the complete story on the county’s employment picture, visit us online!
  • National outlook takes a shellacking, but no panic: New-home sales dropped, consumer confidence fell significantly, and the U.S. revised its initial 2Q GDP growth rate down to a measly 1% from earlier estimates of 1.3% growth (admittedly, pitiful either way).
  • The glass-is-half-full take on everything we witnessed this week: the markets did not panic. Even though Fed Chairman Bernanke didn’t signal a new round of bond-buying as was hoped for by much of Wall Street, the markets still ended the week on a high note. Consumers are looking for anything – any sign – that the economy is recovering. Seeing the market perform well this week despite some discouraging news is in and of itself an encouraging thing for consumers.    

Bernanke masters art of fueling speculation while revealing absolutely nothing

“The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus.”

Fed Chairman Ben Bernanke spoke. Markets, apparently, were listening. As of 12:15 pm, both the Dow and the S&P 500 were up at least 1.39% on the day after opening in the red.

In more “upbeat” news (please note the muted sarcasm here), Bernanke urged that while the recovery “may take some time,” the U.S. economy can “reasonably expect” to see a return to economic growth rates and employment levels that were last seen prior to 2007.

Now, my apologies, but it is time to come back down to Earth.

Consumer confidence for August in the U.S. fell to a 55.7 mark in the Thomson Reuters/University of Michigan monthly index, down from a 63.7 mark in July.

Also announced this morning, the U.S. economy only grew at a 1% rate in the second quarter of 2011, down from initial estimates that put GDP growth at 1.3%. In a recap, the economy grew at a 0.4% rate in the first quarter, and a 1% rate in the second quarter. That, folks, means that the U.S. economy averaged below 1% growth in the first half of this year.

Things Looking Up in Westchester?

In this week’s edition of the Westchester County Business Journal, I reported on the business environment in response to the bubble of economic uncertainty that is currently overwhelming global markets (see here for the article).

Here is my take on where Westchester stands relative to those global concerns:

1) College degrees are abundant in Westchester, giving the county’s workforce a much better outlook than you see on a national scale. The county’s fastest-growth industries include biotech, healthcare, and professional services – all areas that require at least a college degree. That in a nutshell is why the county’s unemployment rate is significantly better than both the statewide and national rates.

2) Fortune 500 companies are thriving for the most part, with revenues much higher than what has been seen over the past several years. The high concentration of such companies that have employees and operations in Westchester puts the county in a strong position going forward.

3) No one has a solution to the real estate market – no one. In all of the conversations that I had leading up to the article mentioned above, not one analyst had a definitive answer on how to jump-start real estate sales in Westchester. The answer lies somewhere in the ability of county businesses to begin hiring and to lift wage freezes and in the county’s ability to attract new businesses, but if there is anything to be scared of, it is the fragility of the county’s real estate market.

4) Small business confidence is decreased, but not entirely diminished in light of the economic developments of the past month. The article makes mention of an informal gathering of local executives who all cited the slow pace of GDP growth as being a major factor in their budgeting process for the next year. The take-away from this is that while confidence is down, no one in the business community fears a second recession. There may be slow growth for the next several quarters, but the overwhelming sentiment was that we are not headed for a double-dip.