Drops in sales tax collections, commercial bank lending activity cause for concern?

Local angle first: today, New York Comptroller Thomas DiNapoli reported that sales tax collections grew at a slower rate on average in 2011 than in 2010, saying that continued caution with respect to the economy is the flavor of the day. In Westchester County, sales tax collections increased just 2% in 2011, marking a sharp contrast compared to 2010, when local sales tax collections increased 6.4%.

Big picture: according to Beata Caranci, Vice President and Deputy Chief Economist for TD Bank, consumer credit, which largely drives consumer spending (and which in turn largely drives economic output) dropped off in the second half of January, signifying the economy may not be as strong as some are perceiving it to be.

Caranci: “…The largest provider of consumer credit is commercial banks. They account for just over half of all private sector credit disbursement. Unfortunately, the weekly tracking of this credit is showing a reversal of fortunes since the economy-wide monthly data was released two weeks ago. Not only did commercial bank lending activity come to an abrupt halt in January, but it practically fell off a cliff…

“Simply put, for those expecting a strong rebound in consumer spending in the first half of the year based on December’s rebound in credit demand and the recent new job hiring activity, think again.”

 

Advertisements

Friday Roundup: U.S. adds 103K jobs; Aureon Biosciences folds; State approves Memorial Sloan-Kettering project

TGIF. It is a beautiful Friday, the weekend is shaping up to be a great one, and Alex Rodriguez made it two consecutive seasons in which he has ended the New York Yankees’ playoff run with a strike-out. On to the news!

Driving the day: The U.S. economy added 103,000 non-farm jobs in September, exceeding nearly every analysts’ projections. That said, the employment rate held steady at a discouraging 9.1 percent. T.D. Bank senior economist James Marple said, “This was definitely a good report and a repudiation of the most strident calls that the U.S. has already slipped into recession. Nonetheless, we should hold off on breaking out the champagne.” Marple also predicted that the U.S. GDP grew at a rate of two to two and a half percent for the third quarter of this year (which would be an improvement over the second quarter, but still far below pre-recession levels).

Some notes of importance:

  • The employment numbers were buoyed by the return to work of approximately 45,000 striking Verizon employees.
  • The Bureau of Labor Statistics revised last month’s job data up by 57,000 (from initial estimates of zero job growth), another positive.
  • Including the above revisions, the last two months have averaged job growth of 80,000 per month.
  • Moody’s chief economist Mark Zandi said on MSNBC this morning that the economy needs to add between 125,000 and 150,000 jobs each month if we are to see the unemployment rate drop.

**New York State will release the state’s unemployment data for September on Oct. 20th.

They Said It: “I think we’re in as much a psychological slump as a real economic slump.” – Eleanor Clift, at Business Council of Westchester’s 2011 Annual Dinner, held last night at the Hilton Rye Town.  

Headlines:

> Yonkers biotech company Aureon Biosciences unexpectedly closed last Tuesday, according to documents filed with the N.Y. Department of Labor. Founded in 2002, Aureon was a founding member of “N.Y. BioHud Valley,” a public-private campaign aimed at promoting the Hudson Valley as a hub for biotechnology research and development. With the closing, the company’s 95 employees were laid off. More on Aureon Biosciences closing coming soon at WestfairOnline.com.

> Memorial Sloan-Kettering’s plan to build a $143 million, 114,000-square-foot cancer treatment center at 500 Westchester Ave. in Harrison was approved yesterday by the N.Y. Public Health and Health Planning Council, clearing the last major hurdle for the project.