Tax credit over, new home sales drop 33%

The sales of certain large-ticket items, such as new homes or new cars, are often reported on in the media as indicators of the strength of a consumer-based economy. So this probably is not a good sign:

New-home sales in May fell from April to a seasonally adjusted annual sales pace of 300,000, the government said Wednesday. That was the slowest sales pace on records dating back to 1963. And it’s the largest monthly drop on record. Sales have now sunk 78 percent from their peak in July 2005.

The tax credits, $8,000 for a first-time homeowner or $6,500 for a current homeowner, expired April 30.

On the whole, we have come a long way from the housing-sale crazed days of the first half of the 2000s.

Chicago vs. Wal-Mart: outcome still in doubt

A news story today from the Chicago Tribune detailing Wal-Mart’s latest offer to build a store in Chicago (it currently has 0 within city limits). Some of the players in the long saga:

1. Wal-Mart. Its latest offer is starting all workers at $8.75 an hour, $0.50 above current minimum wage standards in Chicago. Has been exploring several sites on the South Side for years.

2. Unions. Don’t want Wal-Mart as the company does not allow its workers to unionize. Worried about lower wages.

3. The City. Has primarily been against Wal-Mart because of the wage issue.

4. Those who want cheaper and/or accessible groceries. Several of the neighborhoods Wal-Mart has looked at might be considered “food deserts” (neighborhoods where relatively cheap, nutritious food is not available). Many other companies are not willing to move in while Wal-Mart has expressed interest.

There might be a path to resolution soon – several aldermen now seem willing to support the stories in their wards. This may be particularly timely as Wal-Mart says it would add 12,000 jobs to the city for the next five years if they could build where they want.

Stay tuned.

UPDATE 6/23/10 at 11:10 PM

From the Chicago Tribune: Mayor Daley of Chicago makes “an emotional pitch” for Wal-Mart, Wal-Mart releases a list of benefits for the community, and demonstrators who support Wal-Mart add the vuvuzela to their arsenal.

#1 manufacturing nation: soon to be China

Maybe this is a foregone conclusion to many, but this Financial Times article suggests 2011 is the year when China will exceed the manufacturing of the United States.

This would end a 110 year period when the US led world manufacturing. This “American Century” (plus 10 years) contained an impressive display of produced items: steel, early cars, to household appliances, to military weapons, airplanes, personal computers, and more.

Even with a global shift to an “information economy,” many countries would give a lot to have more manufacturing jobs. Manufacturing is not just about raw goods: it involves local communities who then contain factories and working classes. Places like Detroit are infamous for going from economic powerhouses to empty cities within four decades. Other cities, like New York and Chicago, have made the shift from manufacturing to other sectors, primarily finance, insurance, and real estate (FIRE), within the same four decades.

From the article:

“Last year, the US created 19.9 per cent of world manufacturing output, compared with 18.6 per cent for China, with the US staying ahead despite a steep fall in factory production due to the global recession.

That the US is still top comes as a surprise, since in 2008 – before the slump of the past two years took hold – IHS predicted it would lose pole position in 2009.”

Interestingly, the return for China to the top adds to China’s long manufacturing edge before the modern era. Perhaps the “American Century” was just a blip on the screen of history:

“If China does become the world’s biggest manufacturer, it will be a return to the top slot for a nation which – according to economic historians – was the world’s leading country for goods production for more than 1,500 years up until the 1850s, when Britain took over for a brief spell, mainly due to the impetus of the industrial revolution.”

Financial prospects dim, lottery sales up

While the financial markets may be tense, lottery sales in Illinois are expected to go up for the seventh consecutive year. Besides consistent marketing campaigns, another dynamic may be at play:

“Lottery’s a dollar — it’s like buying a lipstick during a recession versus a whole new outfit,” said Jodie Winnett, acting superintendent.”

So it seems like a small outlay – just a dollar or two – but the odds of winning a major prize are astronomically low. Keep adding up those dollars or two, multiple across thousands of people, and the lottery has rising sales.

Best home improvement payoff: a little less junk

A look at the returns sellers can expect from certain home improvements. The best: decluttering. The worst: a family room addition. And deeper in the article: “All this is anathema to retailers like Home Depot, Lowe’s, Bed, Bath & Beyond, Williams-Sonoma and Lumber Liquidators. They all benefit from the myth that pumping money into your house pays off later on the auction block.”

Odds not good for IL and CA finances

From CNNMoney.com:

“How ugly are the state budget problems?

Nasty enough that traders are betting that two big U.S. states, California and Illinois, are just as apt to default on their bonds as Portugal — and almost as likely as Iraq…

The going rates in the CDS market say traders believe there is an equal chance — about 1-in-4 — that California, Illinois, Portgual or Iraq will default on their obligations within five years.”

Banks to cut free checking?

Some of the major banks are looking to end free checking accounts:

“The transformation of checking accounts comes at a time when banks are bouncing back from the steepest financial losses in a generation and are facing new regulations. To accelerate that recovery and recoup losses from new banking rules, financial institutions are increasingly leaning on customers who don’t now generate enough revenue for the bank.

More than half of all checking accounts are currently unprofitable, according to a report issued last month by Celent, a unit of Marsh & McLennan Cos. It costs most banks between $250 and $300 a year to maintain one of the roughly 200 million checking accounts, according to industry estimates. ”

As someone once said, there’s no such thing as a free lunch.

How can you get a job if you are told not to apply?

Interesting trend? Article claims more companies telling applicants that they must be employed to apply.

Kind of like the conundrum for many college graduates: how can you get experience if no one will hire you?

Updated version for 2010: how can you apply for a job if you don’t have one right now?