Economy Watch: Snowmageddon Gets One More Mention
March 4, 2010
By Dees Stribling, Contributing Editor
The Federal Reserve released its latest “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” otherwise known as the Beige Book, on Wednesday. The economy is growing, according to the report, but modestly. And the East Coast snowstorms received a mention as one factor in holding back economic activity in February in those districts buried by snow a few times.
As for real estate, the Beige Book summarized things this way, again with a mention of snowy February, which did indeed put a damper on househunting: “Residential real estate markets improved in a number of Districts, although several Districts noted that activity softened or remained weak partly due to extreme winter weather.”
Commercial real estate mostly continued to be its glum self, though here and there the Fed sensed some positive movement. “Most Districts characterized commercial real estate and construction activity as weak or having declined further, but some Districts noted slight stabilization and a few signs of modest improvement,” the report said.
As for jobs, the linchpin of any further real estate recovery, the central bank noted that “the pace of layoffs slowed in most Districts, but hiring plans still remained generally soft.”
Retail Sales Tick Upward
Despite the snowpocalypses and snowmageddons of February, most U.S. retail sectors saw increased sales in February 2010 compared with a year ago, according to MasterCard Advisors’ SpendingPulse. Good news for retail, but then again early 2009 was one of the worst times ever for retail, thus setting the bar pretty low.
Luxury goods were the big winner, chalking up a 15.2 percent increase compared with a year ago, perhaps because relatively wealthy consumers have realized that they’re unlikely to experience a catastrophic loss of wealth (such a scenario seemed more plausible a year ago). Consumer electronics was up 5.8 percent compared with February 2009.
Even men’s clothes was a winner: up 5.7 percent. But clothing as a whole was one of the few loser categories, down 1.8 percent, dragged down by a drop in women’s clothes sale of 1.6 percent.
GGP Gets Mid-Summer Deadline
U.S. Bankruptcy Judge Allan Gropper gave General Growth Properties a good talking to on Wednesday, or at least told the company that it has control of its reorganization until July 15, when it has to file a statement outlining its plan. GGP had asked for an August 26 deadline.
“I do think it is in everyone’s interest that we proceed with an aggressive timetable, one that gets us out of this case as soon as possible, so there is less risk to the creditors,” Gropper told the GGP and everyone else in his courtroom in Manhattan.
In fact, GGP has already restructured much of its secured debt–some $12.1 billion, with $1.5 billion more to be restructured shortly. After that, the company needs to deal with $1.3 billion more in secured debt, plus $7 billion in more in unsecured debt.
Wall Street ended Wednesday mixed. The Dow Jones Industrial Average lost a scant 9.22 points, or 0.09 percent, while the S&P 500 gained a microscopic 0.04 percent. The Nasdaq broke exactly even, moving neither up nor down.