4 ways this year’s holiday shopping may be affected by the pandemic, according to a retail economist

Posted on August 4, 2020 by katiecmorgan

Inc. Business Insider, August 1, 2020

As the holiday season slowly approaches, it’s difficult to say for sure how the COVID-19 pandemic will affect shopping.
Jack Kleinhenz, chief economist for trade group the National Retail Federation, estimates that four main trends will emerge in the retail industry this fall and winter.
He says some consumers may not have generous shopping budgets this year, as many are struggling with unemployment and other financial burdens.
Kleinhenz also says brick and mortar stores will likely need to hire more staff to accommodate curbside pickup and delivery requests, and may offer more products catered to the ‘stay-at-home’ lifestyle.
Visit Business Insider’s homepage for more stories.

While Black Friday is still months away, a few predictions are safe to make now. Chief among them: For many households, consumers will be spending for the holidays no matter what.

“There’s always room somehow to find [the budget] for either Christmas or Hanukkah or for the holidays. But it will be a challenging one,” said Jack Kleinhenz, chief economist for the National Retail Federation, a trade group.

Here are four other trends you can expect to see this coming holiday season, according to Kleinhenz.

1. In-and-out floor plans

Optimize your store layout for a quick in-and-out visit. Adapting to consumers’ changing shopping habits is more important than ever. When shoppers venture into stores, they’re on a mission.

Brick-and-mortar stores need to convince shoppers that it is healthy and safe to come in. Have staff readily available to quickly point customers in the right direction.

2. Extra shopping help

You may want to hire plenty of shopping assistants, those employees who run through the store to get items people want for curbside pickup or delivery. Staff up early since competition for this help could be stiff. The hiring surge could be so significant that it could affect temporary employment statistics in the fourth quarter, says Kleinhenz.

3. More for the homebody, less for parties

People will want to buy products that align with social distancing lifestyles, even continuing into November. Kleinhenz expects a big uptick in the home entertainment category, such as remote-learning tools like iPads and laptops, and in other gifts that reflect stay-in-place routines.

In contrast, food spending will be down if people can’t gather for big meals, Kleinhenz predicts. The fewer dollars going to big fancy meals or traveling may mean more going toward gifts, he says.

4. More returns

Prepare for more returns than usual. If customers do buy online, they’ll likely buy more than what they need since they can’t go into the store to try things on or see the product in real life, eventually returning a lot of those items. Plus, you likely have additional sanitization processes to think about. Be prepared to handle those returns in a timely way.

Don’t count the consumer out this holiday shopping season, Kleinhenz says. He still has faith in consumers, all things considered, and that they’ll want to spend money this year, even if their buying patterns look different than last year. It’s up to you to meet those consumers where they are.

Anna Meyer,

Inc

Aug 1, 2020

With Resurgence in COVID Cases, NRF Chief Economist Says Economic Recovery is ‘Being Tested Daily’

Posted on August 4, 2020 by katiecmorgan

August 03, 2020 11:24 AM Eastern Daylight Time

WASHINGTON–(BUSINESS WIRE)–Despite broad indications that the economy has begun to recover as businesses reopen from the coronavirus pandemic, conflicting data makes it difficult to say how steadily the comeback will continue, National Retail Federation Chief Economist Jack Kleinhenz said today.

“A key question is whether the pace of growth and momentum will carry forward over the next few months”

“Optimism about the economy and retail spending is being tested daily with the spread of the coronavirus,” Kleinhenz said. “Big questions are looming, and we are all grappling to discern what incoming data is telling us about the health of the economy and consumers. Depending on the data selected, the answers are not entirely clear.”

“A key question is whether the pace of growth and momentum will carry forward over the next few months,” Kleinhenz said. “Based on quarterly and monthly data, the U.S. economic recovery continues despite elevated COVID-19 cases. But in examining weekly data, the pace of improvement appears to be slowing. Could it be that we are at or heading back to the same spot we were at two months ago?”

Kleinhenz’s remarks came in the August issue of NRF’s Monthly Economic Review, which said monthly indicators showed the economy improving in May and June but that more frequent data showed the pace of recovery flattening by mid-July.

Economists traditionally look at monthly and quarterly numbers to gauge the status of businesses and consumers. But the release of that data lags weeks behind when it is collected. And with the situation changing rapidly since the outbreak of the coronavirus early this year, more frequent information has been needed to keep up. In response, the Federal Reserve and others have begun tracking some indicators as often as weekly.

Consumer spending was up 8.2 percent in May, for example, ending two consecutive months of decline, and up another 5.6 percent in June. Meanwhile, retail spending as calculated by NRF – excluding automobile dealers, gasoline stations and restaurants to focus on core retail – was up 4.9 percent in June. Monthly numbers for July are not available yet. But the Federal Reserve Bank of New York’s Weekly Economic Index – a composite of indicators – worsened from -6.65 percent on July 18 to -7.24 percent as of July 25, with officials citing a decrease in retail sales. The weekly Mobility and Engagement Index from the Federal Reserve Bank of Dallas also showed the economy leveling off in mid-July.

In the labor market, 4.8 million jobs were added in June as the unemployment rate ticked down to 11.1 percent from 13 percent in May. The monthly jobs data, however, was collected before the recent resurgence in COVID-19 cases. By contrast, weekly data showed that 1.4 million initial unemployment claims were filed the week of July 18. That was a rise of about 100,000 from the week before and reversed a steady decline in claims since a peak of 6.9 million the last week of March.

While many of the weekly reports initially agreed with the monthly data and “showed the economy on a good start down the recovery runway, they now suggest that the economy is moving sideways,” Kleinhenz said. “Time will tell, but the bottom line is that the economy is far from being out of the woods. The question is whether it is re-entering the woods.”

With many economists saying the timeline of the recovery will be determined by the efforts to control the virus, the Federal Reserve Bank of Cleveland conducted a survey in early July that found 89.9 percent of those polled wear a mask for activities such as shopping in a grocery store. The bank said it conducted the survey because masks “have the potential to help reduce the spread of COVID-19 without greatly disrupting economic activity.”

About NRF

The National Retail Federation, the world’s largest retail trade association, passionately advocates for the people, brands, policies and ideas that help retail thrive. From its headquarters in Washington, D.C., NRF empowers the industry that powers the economy. Retail is the nation’s largest private-sector employer, contributing $3.9 trillion to annual GDP and supporting one in four U.S. jobs — 52 million working Americans. For over a century, NRF has been a voice for every retailer and every retail job, educating, inspiring and communicating the powerful impact retail has on local communities and global economies.

‘Pretty Catastrophic’ Month for Retailers, and Now a Race to Survive

Posted on April 16, 2020 by katiecmorgan

March brought a record sales plunge as the coronavirus outbreak closed stores. A long shutdown could leave lasting changes in the shopping landscape.

Retail sales plunged in March, offering a grim snapshot of the coronavirus outbreak’s effect on consumer spending, as businesses shuttered from coast to coast and wary shoppers restricted their spending.

Total sales, which include retail purchases in stores and online as well as money spent at bars and restaurants, fell 8.7 percent from the previous month, the Commerce Department said Wednesday. The decline was by far the largest in the nearly three decades the government has tracked the data.

Even that bleak figure doesn’t capture the full impact of the sudden economic freeze on the retail industry. Most states didn’t shut down nonessential businesses until late March or early April, meaning data for the current month could be worse still.

“It was a pretty catastrophic drop-off in that back half of the month,” said Sucharita Kodali, a retail analyst at Forrester Research. She said April “may be one of the worst months ever.”

The resulting job losses continue to mount. Best Buy, which has 125,000 employees over all, said Wednesday that it would furlough 51,000 hourly store workers beginning Sunday, including nearly all of its part-time staff.

And in the months ahead, the question is how quickly spending will bounce back once the economy reopens, and how many businesses will survive until then.

People who lose jobs won’t quickly resume spending once businesses reopen. And those willing to spend may be reluctant to congregate in malls, restaurants and other businesses that rely on face-to-face contact.

Michelle Cordeiro Grant, chief executive and founder of Lively, a lingerie brand acquired by Wacoal last year, said it wasn’t clear how customers would want to shop and “what the new culture of shopping in physical retail will be.”

“Do they want to have a different type of fitting-room experience?” she mused. “Do they want our associates to wear masks and to be offered a mask? What is the try-on situation?”

When demand does rebound, it might come too late for some retailers, many of which were struggling even before the pandemic because of changes in mall traffic and a long-term shift to online sales.

The disruptions from the pandemic may ultimately hand more power to retailers able to continue operating stores during the crisis.

“It’s only going to cause a shakeout of a lot of retailers, and I think long term it just means that some of these big guys get less competition,” Ms. Kodali said. “The less competition they have, the worse they can treat everybody, whether it’s a supplier, a customer or an employee.”

Economists often distinguish demand that is deferred because of a crisis from demand that is destroyed. Retail probably has some of each. Someone who needs a new dishwasher might put off the purchase but will probably buy one eventually. But an office worker who puts off a springtime wardrobe refresh might just skip a year, meaning those sales are simply lost.

“Pent-up demand is what drives recoveries, and the good news there is we will come out of this with some degree of pent-up demand,” said Ellen Zentner, chief U.S. economist for Morgan Stanley. She added, however, that there are “a lot of caveats.”

Apparel retailers, in particular, seem to be preparing for a substantial amount of destroyed demand. Deborah Weinswig, founder of Coresight Research, an advisory and research firm that specializes in retail and technology, said she had spoken with retailers who were preparing for holiday sales to be 40 percent lower than last year.

Gap, which has been trying to rehabilitate its namesake brand in recent years with limited success, said it would continue “aggressively” closing the brand’s stores.

“This crisis will absolutely set a new baseline for what component of the fleet we want to keep,” Katrina O’Connell, Gap’s chief financial officer, said last week on a conference call with analysts and investors.

Clothing stores were especially hard hit in last month’s plunge, with sales falling by more than half. Spending on cars and car parts fell more than 25 percent in March, seasonally adjusted. Sales at gas stations, pushed down by low oil prices as well as reduced commuting, fell 17 percent. The exceptions were grocery stores, pharmacies and other sellers of essential items, which had a surge of demand as consumers stocked up.

Previously, the largest one-month drop in retail sales came in the fall of 2008, when the financial crisis led spending to plunge nearly 4 percent for two straight months. Sales ended up falling more than 12 percent before they began to recover. But as bad as that downturn was, sales never ground to a halt the way they have in recent weeks, said Jack Kleinhenz, chief economist for the National Retail Federation.

“It was a very severe contraction, but the gears of the economy were still working,” he said.

The rebound this time will probably look different as well, Mr. Kleinhenz said. After the last recession, it took a while for consumers to feel that their jobs were secure and that they could resume spending. Now there will be the added hurdle of assuring shoppers of their physical safety.

“The fear can be as damaging to the economy as the disease itself,” he said.

What happens to retail matters to the broader economy. The sector accounts for more than one in 10 U.S. jobs; only health care employs more. Its stores generate billions of dollars in rent for commercial landlords, ad sales for local media outlets, and sales-tax receipts for state and local governments.

If retailers survive and can quickly reopen and rehire workers, the eventual economic recovery could be relatively swift. But the failure of a large share of businesses would lead to prolonged unemployment and a much slower rebound.

Economic policymakers in Washington have been trying to avoid that kind of cascade of business failures. The $2 trillion emergency package passed by Congress and programs announced by the Federal Reserve include government-backed loans and grants to keep businesses afloat.

Those initiatives have gotten off to a rocky start, however, with many businesses reporting difficulty applying for loans.

“They need lifeboats, and the lifeboats aren’t getting out there fast enough,” said Diane Swonk, chief economist at Grant Thornton. “This is a time when speed matters more than bureaucracy.”

John Horrocks closed BlackBird Frame & Art, a custom framing business in Asheville, N.C., because of county orders on March 26 and anticipates it will remain closed through May. Mr. Horrocks, who owns the shop with his wife, is working with a local bank to secure a loan through the federal Paycheck Protection Program, which would help pay the staff until the business reopens.

Mr. Horrocks, 65, said that he expected to make payroll through May “without a problem,” but that “beyond that, it gets very, very difficult.”

A recent survey by a team of academic economists found that two-thirds of small-business owners said they could carry on if the crisis lasted a month, but only a third said they would survive if the disruption dragged on for four months.

“There’s no question that if it goes on for four to six months, it will be catastrophic,” said Edward Glaeser, a Harvard economist who was one of the study’s authors. “For many businesses, almost assuredly the answer will be closure.”

The steep sales drop underscores the huge role that physical stores continue to play within retailing. Even as online businesses at major apparel chains and department stores have gained ground in recent years, they can’t make up for the shuttering of malls and stores.

“We’re going to come out of this having accelerated some of the trends that were already in place,” Ms. Zentner of Morgan Stanley said. “Internet taking share from brick and mortar, that’s going to be accelerated.”

Some chains have recently rolled out contact-free curbside pickup for products. But in the long run, retailers want customers to walk around stores and talk with staff members so that shoppers take “a second bite of the apple” as they browse, said Craig Johnson, president of Customer Growth Partners, a retail consulting firm.

In a sign of the industry’s upheaval, J.C. Penney, which has more than 800 stores, did not make a $12 million interest payment due Wednesday and has 30 days before it is considered in default. A company representative said it was a “strategic decision” to forgo the payment after discussions with lenders since last year to strengthen the chain’s financial position. That has become more important with the closing of its stores, the representative said.

For many of the nation’s nearly 16 million retail workers, the standstill has meant a loss of their livelihood, often overnight.

When Mia Lupo showed up to work at Bloomingdale’s in Norwalk, Conn., on March 16, it was clear that nothing was normal. The few customers were mostly making returns or buying sweatpants to prepare for working from home. Workers were worried about their jobs, but also about their safety.

“None of us had any idea what was going on,” Ms. Lupo, 27, said. “We’re just like panicking because we’re all hourly-wage workers. We need the money, but we also don’t want to get sick and we don’t want our families to get sick.”

The next day, Bloomingdale’s parent company, Macy’s, announced it was closing its stores — news that Ms. Lupo learned on Twitter — and it later furloughed nearly all its workers. She is now awaiting her first unemployment payment.

By Sapna Maheshwari and Ben Casselman

NY TIMES

Nearly 1 in 8 Jobs Added in November in Retail, Says Report

Posted on December 16, 2018December 16, 2018 by katiecmorgan

A good chunk of the jobs created in November were in retail — likely to keep up with holiday sales — says the National Retail Federation.

Employment in retail was up by 18,600 jobs in November, seasonally adjusted from October, said the Federation. That means that of 155,000 jobs created in the overall economy last month, nearly one in eight were in retail.

Calling the retail jobs numbers “satisfying,” the federation’s chief economist, Jack Kleinhenz, said in a statement that the boost came during and after the wildfires in California and bad weather in other areas of nation, all of which likely dragged on the sector.

The numbers were a good sign, given the context of the overall economic and national picture, he said.

“In retail, the tight labor market has created sizable challenges in hiring – there are actually more retail jobs available than there are people to fill them. Retailers would hire more workers if they could find them,” said Kleinhenz, in a statement.

Still, compared to last year at the same time, unadjusted retail employment dipped by 16,300 jobs, said the group.

And, the Department of Labor, in its job report, noted that “retail trade employment changed little” in November, noting that most of the jobs created were in health care, manufacturing, transportation and warehousing.

The total employment numbers across all sectors released Friday by the Labor Department were considered a disappointment by many, as projections were for a bigger boost.

The jobless rate for retail was 4.2 percent; the unemployment rate overall remained unchanged at 3.7 percent.

Of the total positions in retail in November, most were at department stores, warehouse clubs and other general merchandise shops, while the rest were at a variety of merchants and in online sales. Many jobs were lost at sporting goods, hobby, electronics and appliances stores, according to the federation.

The group predicts up to $721 billion in retail sales over this holiday season.

Kusama “Infinity Mirrors” and FRONT International helped art museum break attendance, membership records

Posted on October 18, 2018 by katiecmorgan

CLEVELAND, Ohio – Attendance boosted by the popular Yayoi Kusama “Infinity Mirrors” exhibition and the FRONT International: Cleveland Triennial for Contemporary Art this year helped the Cleveland Museum of Art break a 26-year record for the number of visitors attracted in any single summer.

Between July 1 and September 30, the museum said it attracted 305,692 visitors, the largest summer total in the institution’s 102-year history, and the largest since the same period in 1992, when the exhibition “Egypt’s Dazzling Sun: Amenhotep III,” helped the museum pull in 290,000 visitors.

Visitors this summer came from all 50 states and 23 foreign countries, generating $6.9 million in museum revenues, including $2.3 million in new memberships, the museum announced Thursday.

“We were really thrilled to see so many people come from so far away as well as close to home to celebrate the summer with us,” said Elizabeth Bolander, director of audience insights and services at the museum, who described the new information in an interview Wednesday.

The Amenhotep exhibition, organized to celebrate the museum’s 75^thanniversary, drew 186,139 visitors, far more than the 120,000 attendees for the Kusama show, which surveyed the artist’s 65-year career.

The museum had to limit the number of attendees for “Infinity Mirrors,” which involved circulating small numbers of viewers in and out of specially constructed mirror rooms in 30-second shifts.

But with FRONT and other exhibitions and a full calendar of events and programs, the museum cruised past its 1992 summer attendance record.

The museum reported that it topped 30,000 memberships this summer for the first time in its history, exceeding the total of 29,491 membership households reached on June 30, 2016, the middle of the museum’s centennial year.

Shows during that period included “Painting the Modern Garden: Monet to Matisse,” and “Pharaoh: King of Ancient Egypt.”

The museum said it created 120 temporary jobs to support the Kusama exhibition, and recruited 100 volunteers.

Data crunched by Cleveland economist Jack Kleinhenz show that the Kusama exhibition contributed $5.5 million in economic impact in Cuyahoga County.

The figure includes $3.2 million in direct spending by visitors from outside Cuyahoga County, plus additional sums calculated for the ripple of indirect and induced spending triggered by the new dollars flowing into the local economy. The increased spending created 58 new jobs in the county, according to the analysis.

Kleinhenz said the data were calculated from 732 visitor surveys, which represented a 33 percent response rate among those polled by the institution.

Figures extrapolated from the survey indicate that 44,522 visitors came to see the Kusama show from outside Cuyahoga County.

“It goes beyond pure economics,” Kleinhenz said of the museum’s impact on Cleveland and Northeast Ohio. “It’s such a unique brand, like the Cleveland Orchestra, the Cleveland Browns and the Cleveland Clinic.”

Bolander said the summer of 2018 helped the museum understand how its recently expanded and renovated complex could accommodate a million visitors a year – a major goal of a new strategic plan unveiled in 2017.

Attendance has averaged 630,000 in recent years. Attendance this summer – if annualized – would nearly double that number.

“It was actually very exciting this summer,” Bolander said. “We were able to test if, you will, what it meant to be at that level of attendance for a sustained period.”

By Steven Litt, The Plain Dealer

CNBC FED SURVEY: FED EXPECTED TO HIKE RATES TWICE MORE THIS YEAR AND THEN RISK A ‘POLICY MISTAKE

Posted on September 26, 2018September 26, 2018 by katiecmorgan

Fed expected to hike rates twice more this year and then risk a ‘policy mistake’: CNBC survey

Nearly all respondents to the CNBC Fed Survey see the Fed hiking rates a quarter point this week to a new range of 2 to 2¼ percent.
In addition, 96 percent believe another quarter-point hike is coming in December.
About 60 percent see the Fed eventually raising rates above neutral to slow the economy.

Steve Liesman | @steveliesman

Look out for two more rate hikes this year from the Federal Reserve to go along with economic growth nearing 3 percent and a central bank that eventually raises rates explicitly to slow growth, according to respondents to the latest CNBC Fed Survey.

A full 98 percent of the 46 respondents, who include economists, fund managers and strategists, see the Fed hiking rates a quarter point this week to a new range of 2 to 2¼ percent. And 96 percent believe another quarter-point hike is coming in December.

“Fed funds increases in September and December are as certain as certain can be,” John Donaldson, director of fixed income at Haverford Trust, wrote in his response to the survey. “Their real challenge starts after the first increase in 2019, which will bring the rate to 2.75 percent, or finally back to even to inflation.”

Respondents see the funds rate rising by two more quarter points (50 basis points) in 2019, which would bring it to a range of 2.75 to 3 percent. After that, divisions set in, with about half the group seeing a third hike in 2019.

About 60 percent of the group see the Fed raising rates above neutral to slow the economy. The average that respondents see the funds rate eventually ending this hiking cycle is 3.3 percent.

“This means that the U.S. bond market will reach a decision point sometime in the next year, when market participants will have to decide whether the Fed will go beyond current market pricing,” said Tony Crescenzi, executive vice president at Pimco. “If and when it does, U.S. Treasuries will move higher.”

A fifth of the group say a “fed policy mistake” is one of the biggest threats facing the expansion, second only to trade protectionism.

“We are in jeopardy of watching trade and monetary policy plunge into a head-on collision, with no one wearing seat-belts, and the airbags have been disabled,” wrote Art Hogan, chief market strategist at B. Riley FBR. “The biggest risk in the market is a policy mistake, and we are working on a two-for-one special.”

Respondents support President Donald Trump‘s handling of the economy by a 61 percent to 30 percent margin, unchanged from the July survey. But 59 percent say his trade policies will reduce growth, and 52 percent say they will lower employment in the U.S.

A slight 53 percent majority also say the president’s negotiating tactics will lead to better trade agreements for the U.S., while 20 percent say they will be worse and 22 percent expect them not to change much.

Overall, the tariff effects on the economy are seen as modest. Among those who see negative effects, the average is just a 0.2 percent decline for GDP in 2019 and a 0.2 percent higher inflation.

But some see more substantial effects.

“The president should be remembered for his cuts in regulations that served the economy so poorly for years but instead will be remembered for his illogical, un-economically justifiable support for trade protection and tariffs. How sad is that?” wrote Dennis Gartman, editor and publisher of The Gartman Letter.

Strong economic growth ahead

But forecasts suggest the president has some room for his trade policies to subtract from growth without doing enormous economic damage. Respondents look for GDP year over year to be up 2.8 percent in 2018, versus 2.2 percent in 2017, and up 3 percent in 2019, defying the general belief in a slowdown next year predicted by many economists.

Inflation is seen ticking up to around 2.5 percent this year and next, while the unemployment rate is forecast to fall to 3.7 percent by 2019.

“Rarely are so many economic gauges of the U.S. economy so strong — including employment, income, retail sales, business spending, manufacturing and small business,” wrote Jack Kleinhenz, chief economist for the National Retail Federation. “The near-term outlook appears to be steady as she goes.”

Respondents see a low 14 percent probability of a recession in the next 12 months.

Stocks are seen growing, but slowly. The average forecast predicts the S&P 500 will rise to 2,956 this year and end 2019 at 3,038. While it would break the 3,000 level, it would represent just a 4 percent gain over the next 15 months.

Treasury yields are seen ending this year at 3.15 percent and 3.45 percent in 2019, suggesting much of the Fed tightening is priced into the bond.

The price of rising employment: Slow wage growth, trade risks

Posted on August 5, 2018August 5, 2018 by katiecmorgan

If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained.

A slowing rate of job growth in July nonetheless managed to pull some workers off the sidelines, but wage growth mired at 2.7 percent began to elicit concerns that wages will fail to keep up with inflation as the economy picks up steam.

At 157,000, the number of jobs created last month fell short of expectations, but upward revisions of the previous two months and a broad base of new jobs across industries left economists relatively sanguine about the miss.

The labor market sectors with the most notable growth in July were professional and business services, which added 51,000 jobs; and manufacturing and healthcare/social assistance, which added 37,000 and 34,000 jobs, respectively.

If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained in the recovery so far.

“I don’t think we’ve seen the brunt of the tariffs yet,” said Arne Kalleberg, professor of sociology at the University of North Carolina at Chapel Hill. Manufacturing and agriculture-related jobs would be especially at risk if China or the European Union enact retaliatory sanctions, he said.

Derailing the current labor market expansion could hurt the most at-risk members of the workforce the most and slow mediocre wage growth even further, even as rising inflation erodes the value of Americans’ pay.

“We have to think about the fact that inflation’s running at a 2 percent rate,” Hamrick said. “We’re on this rising interest rate trajectory.” If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained in the recovery so far.

Economists say demographics are one factor behind wage growth that trails what most experts consider the low end of healthy wage growth by nearly a full percentage point. As baby boomers leave the workforce, the younger and generally less-experienced workers taking their place don’t earn as much.

A yawning skills gap is another. Economists say a robust economy is drawing people back into the workforce, but this could be one of the factors holding down wage growth. “What businesses are having to do is they can’t find people with skills, so they have to hire them at unskilled wages and then train them,” said Dan North, chief economist at Euler Hermes North America.

The data bears this out: Compared to the topline unemployment rate of 3.9 percent, the broader U-6 measure of unemployment fell three-tenths of a percentage point to 7.5 percent in July, a percentage point lower than it was a year ago.

“Of course, the people hired without skills have lower productivity,” North added. The upshot is that unskilled workers aren’t being paid as much, which economists theorize could be holding down wage gains.

by Martha C. White / Aug.03.2018 / 2:23 PM ET

NBC News

Retailers are hiring more people. One reason: Home renovations.

Posted on March 20, 2018June 27, 2018 by katiecmorgan

The nation’s unemployment rate remained unchanged in February, but there was one bright spot many economists weren’t expecting: an influx of retail jobs.

In all, retailers added 50,300 jobs in February — four times the number from the month before — even as the U.S. unemployment rate stayed steady at 4.1 percent.

One reason for the gains, economists said: Americans are increasingly renovating their homes instead of buying new ones, helping create thousands of retail jobs at companies like Home Depot and Lowe’s.

Building-material stores hired more than 10,000 workers in February to keep up with booming demand, according to data from the Bureau of Labor Statistics. Those positions accounted for more than one-fifth of the total retail jobs added last month.

The gains are part of a larger trend. Building-material and garden supply stores have added roughly 49,000 jobs in the past year.

“This is a housing repair and remodeling story — and not just because of the recent hurricanes and fires,” said Diane Swonk, chief economist at professional-services firm Grant Thornton. “In many cases, people are realizing it’s cheaper and easier to add on to their homes than to buy new ones.”

Low housing supply and high costs, particularly in larger cities, are prompting prospective buyers to think twice before buying a house, Swonk said. Other factors, such as rising interest rates and changes to mortgage-related tax credits, are also contributing to their decisions.

“Add to that the housing stock is older and more decrepit than it used to be, and you’re seeing a boom in remodeling,” Swonk said, adding that she is in the process of replacing the roof on her Chicago-area home.

Homeowners are projected to spend $340 billion on home improvements and repairs this year, up 8 percent from last year, marking the highest increase since before the Great Recession, according to Harvard University’s Joint Center for Housing Studies.

Increased demand is also helping create new jobs, albeit low-wage positions that are often seasonal. Home Depot announced plans to hire 80,000 workers last month, while Lowe’s said it would hire more than 53,000 seasonal employees to prepare for spring.

“What’s striking about these numbers is that they are unaffected by online retail,” said Jed Kolko, chief economist at the online jobs site Indeed. “Most people aren’t buying their lumber or potting soil online.”

But wages remain low: The median pay for retail workers is about $11.01 per hour, or $22,900 a year, according to BLS data.

The jump in employment is a departure from recent months: The retail sector lost 25,900 jobs in December but added 14,800 in January. (Warehouse jobs, which are not counted in the retail figures, grew by about 400 positions in February.)

“I did not expect a large increase in February, in all honesty,” said Jack Kleinhenz, chief economist for the National Retail Federation, a trade group that lobbies on behalf of the industry. “This was a substantial increase at the industry level.”

General-merchandise stores such as Walmart, Target and Costco added 17,700 jobs, while clothing and accessories stores hired 14,900. A number of those newly created positions, economists said, were probably focused on retailers’ growing online and mobile businesses.

Walmart, for example, has hired more than 18,000 personal shoppers in recent years as it builds up its shop-online, pick-up-in-store service, executives said on a Tuesday call with reporters.

“Companies are putting more people on the floor,” Swonk said. “We don’t have a handle on whether they’re hiring for online operations vs. in-store, but we know they’re hiring.”

By Abha Bhattarai

The Washington Post

Year-over-year October jobs drop 0.4% in region

Posted on December 9, 2017December 9, 2017 by katiecmorgan

Although the uptick shouldn’t be seen as part of a long-term trend, the increase of an estimated 1,250 jobs in the goods-producing sector of the Northeast Ohio economy in October largely offset a decline in service-sector payrolls for the month, resulting in a net regional loss of 57 jobs from September, according to the latest Crain’s Employment Report (CER).

That’s a barely measurable percentage of the total October payrolls, which were 1,168,796 on a seasonally adjusted basis.

Meanwhile, service-providing firms appear to have decreased payrolls by 1,306 during October. Importantly, though, Jack Kleinhenz, the Cleveland Heights economist who developed the CER model, reports that the service sector is showing a gain of 972 jobs over the level in October 2016.

Overall, estimated October payrolls were down 5,255 from a year ago, a 0.4% loss. The larger service sector employed an estimated 963,241 people in October; the goods-producing sector had 205,555 workers on payrolls.

“The recent gain in the manufacturing sector is being helped by strong foreign demand and a softer dollar,” Kleinhenz said. “The global economy has shifted into higher gear, and foreign demand for U.S. goods has accelerated, reaching their highest level since December 2014.”

Kleinhenz noted that new factory orders were up 1.4% in September, the latest month available, and that new orders for manufactured goods jumped nearly 7% since September 2016, “a healthy pickup that is consistent with recent business optimism.”

The one-month increase in jobs in the goods-producing sector — largely comprising the manufacturing and construction industries — comes on the heels of a month-to-month loss of 3,544 between August and September. In addition, the sector has lost about 6,228 jobs since October 2016, according to CER data.

The year-over-year loss is part of an expected long-term decline in manufacturing jobs, according to a recent report from Team Northeast Ohio.

The business development nonprofit forecasts that the number of jobs in the manufacturing sector in the 18-county region of Northeast Ohio it surveys will decline from 265,437 in 2017 to 236,179 by 2027, a drop of 11%.

The flat employment seen in the seven-county region compares unfavorably to a statewide survey taken by ADP LLC. ADP’s report estimates that Ohio added 8,280 jobs in October. ADP is a national business outsourcing firm that surveys 406,000 U.S. companies monthly and breaks down the data to the state level for its report.

SEASONALLY ADJUSTED DATA

Month	Non-Farm	Small (1-49)	Mid-Sized (50+)	Goods-producing	Service Producing
March 2017 Actual	1,176,199	478,968	697,231	211,385	964,814
April (est)	1,173,870	478,121	695,749	209,521	964,349
May (est)	1,170,995	477,036	693,959	207,776	963,219
June(est)	1,167,608	475,681	691,927	206,819	960,789
July(est)	1,172,637	477,722	694,915	207,818	964,819
August (est)	1,173,201	477,957	695,244	207,849	965,352
Sept (est)	1,168,852	476,378	692,474	204,305	964,547
Oct (est)	1,168,796	476,268	692,528	205,555	963,241


Recent Month’s Estimated Change
Sept ’17 to Oct ’17	(57)	(110.91)	54	1,250	(1,306)
Diff from Oct 2016	(5,255)	(1,772)	(3,484)	(6,228)	972

Trend
3-month	1,170,283	476,868	693,415	205,903	964,380
6-month	1,170,348	476,840	693,508	206,687	963,661

Retailers’ wish lists feature early holiday shopping

Posted on November 13, 2017 by katiecmorgan

Most consumers haven’t bought their Thanksgiving turkey yet, but it’s already the holiday shopping season in the minds of many retailers.

Wal-Mart Stores Inc., Target Corp. and others are aggressively advertising holiday specials online and in stores to get a jump on the spending spree that remains a k.

“Black Friday has become black November,” quipped Steve Barr, head of the U.S. retail and consumer sector at PwC, the accounting and advisory firm. That’s because so many retailers are rolling out their holiday price cuts well in advance of Black Friday, once the traditional start of holiday buying.

Although Black Friday remains a big shopping day, its import has been eroded by ever-earlier bargains, the growing clout of online shopping and retailers’ fear that the other guy is getting a jump on them. That competition anxiety was behind the push five years ago to open stores on Thanksgiving Day, and merchants are proving again this year that they can’t open their physical stores early enough to launch the season.

Wal-Mart, Kohl’s Corp., Toys R Us Inc. and several others plan to open on Thanksgiving again this year — some even earlier than in 2016 — a move that in past seasons drew grumbling from some consumers and retail employees unhappy with retail’s “Christmas creep.”

Brick-and-mortar stores are expected to lose more ground this year to the convenience of shopping by phone or computer.

E-commerce has become so pervasive that U.S. online retail sales this holiday season are expected to reach $107.4 billion this year, a 13.8% jump from last year and the first time they’ll top the $100-billion mark, the research firm Adobe Analytics forecasts.

Altogether, U.S. holiday retail sales (those for November and December) should climb between 3.6% and 4% this year, to as much as $682 billion, the National Retail Federation forecasts.

The economy is helping.

“The combination of job creation, improved wages, tame inflation and an increase in net worth all provide the capacity and the confidence [for consumers] to spend,” Jack Kleinhenz, the NRF’s chief economist, said in a statement.

And retailers are trying to cover every shopping preference and garner every possible sales dollar as they launch the holiday spending season, which can account for about 40% of a retailer’s annual revenue.

Indeed, it would be a mistake to confuse the woes of the retailers’ physical stores — which partly reflects that too many locations were built to survive the shift to online — with the notion that Americans no longer care as much to step foot in stores for “doorbusters” and other deeply discounted goods, analysts said.

After all, if online shopping is all the rage, why bother opening stores on Thanksgiving Day?

Because “a website can’t give you goosebumps” like those experienced in touching, buying and taking home the electronics, apparel and other goods bought during the holidays, Barr said.

“Let’s say you and I both want to buy a TV on Thanksgiving Day,” he said. “You go online and it’s going to be delivered in two to three days. I go to the store, get my TV and I’m home in an hour and watching it. It’s an emotional interaction, and that’s what they’re appealing to on Thanksgiving Day.”

The International Council of Shopping Centers, a trade group, said its latest survey indicated that 84% of shoppers on Thanksgiving weekend expect to head to stores. And 85% of the respondents said they expect that when they get there, their purchases will depend on deals or promotions.

That expectation of seeing tantalizing price cuts is partly the fallout from the surge in internet shopping, a segment in which the likes of Amazon.com have put huge downward pressure on prices.

Americans’ online purchases on Cyber Monday alone will climb 16.5% from last year to $6.6 billion, making it the largest online-shopping day in history, Adobe estimates.

The term “Cyber Monday” was coined by staffers at the National Retail Federation in 2005 when they noticed a jump in online sales following the Black Friday weekend.

Many consumers at the time had relatively slow internet connections at home. It became apparent that when they returned to work or school Monday, where they had computers with faster internet speeds, they shopped online.

Retailers seized on the trend and began heavily promoting Cyber Monday as another day for major holiday discounts. And now, of course, fast internet connections are ubiquitous on smartphones, tablets and desktop computers.

This year, Adobe Analytics expects that purchases made on mobile devices such as smartphones and tablets will account for 54% of all e-commerce holiday sales — the first time they’ll surpass online sales made on desktop machines.

Target Corp. and Best Buy Co. were among the retailers that released Black Friday promotional prices on hundreds of items last week — sale prices that will return on Thanksgiving Day and Black Friday.

Best Buy, for instance, was selling a 43-inch LG television at its “Black Friday price” of $279.99, which it claimed was a $150 savings.

Target and other retailers also heavily promoted “sneak peeks” of their Black Friday advertising fliers on their websites in hopes of luring consumers when Black Friday arrives.

Not every retailer will be open Thanksgiving Day, however.

Chains such as Home Depot Inc, Costco Wholesale Corp., Nordstrom Inc. and Marshalls are among those expected to stay closed Thanksgiving Day, according to BestBlackFriday.com, which tracks the industry.

Outdoor retailer REI Co-op also will close its 151 stores for the third consecutive year on Thanksgiving and Black Friday, a span in which it urges its customers and 12,000 employees to “opt outside.” REI said its website also would not process any online orders those days.

That doesn’t surprise Pam Danziger, who runs the retail consulting firm Unity Marketing. “Many consumers want Thanksgiving to be a pure holiday,” she said.

But Danziger said many chains still opt to open Thanksgiving Day “because they’re desperate to squeeze every last dollar out of their customers,” she said. “They feel like they have to, because the pressure is so high right now to avoid letting their competitors get an inch on them.”

Barr said there’s another reason why retailers open Thanksgiving Day: It’s a way for them to persuade customers to return before Dec. 25.

“If you make that experience as enjoyable as possible in stores on Thanksgiving or Black Friday, they’ll be back later in the holiday season,” he said. “Shoppers never forget how you made them feel.”

James F. Peltz Contact Reporter

L.A. Times