Archive for the “Business News” Category

If anyone would like to explain this one to me I am all ears.

Consumer Confidence In U.S. Fell In May To Four-Month Low

May 29, 2012 4:13 PM ET

The Conference Board’s index decreased to 64.9 this month from a revised 68.7 in April, figures from the New York-based private research group showed today. The decline in the Conference Board’s measure is in line with readings from the Bloomberg Consumer Comfort Index. The share of Americans expecting fewer job opportunities in the next six months climbed to the highest level since November, raising the risk that consumers will limit spending. A 30-cent decline in gasoline prices since early April failed to brighten spirits, showing that more progress is needed in the job market. Homebuilders are reporting their most-improved spring selling season in seven years, propelled in part by record-low mortgage rates. At the same time, the market faces challenges as mortgage credit is difficult to obtain and slow wage growth is keeping some would-be buyers on the sidelines.

http://www.bloomberg.com/news/2012-05-29/consumer-confidence-in-u-s-fell-in-may-to-four-month-low.html

But wait didn’t I just read the week before the opposite was true?

Consumer Sentiment In U.S. Climbs To Highest Since 2007

May 25, 2012 4:59 PM ET

Consumer confidence rose in May to the highest level since October 2007 as Americans became more upbeat about the prospects for employment.

The Thomson Reuters/University of Michigan final index of sentiment climbed to 79.3, the ninth straight increase, from 76.4 the prior month. The gauge was projected to hold at the preliminary reading of 77.8, according to the median forecast of economists surveyed by Bloomberg News. A record number of households said they’d heard better news on the jobs outlook, which combined with cheaper gasoline and an improving housing market may help sustain consumer spending and shield the economy from Europe’s debt crisis.

http://www.bloomberg.com/news/2012-05-25/consumer-sentiment-in-u-s-climbs-to-highest-since-2007.html

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Novant Healthcare announced they will be laying off roughly 300 employees with 150 of those cuts coming to Winston-Salem. The primary losses will be at Forsyth Medical Center in “non-clinical” positions while around 20% will be in positions that directly interact with patients. Novant cited a drop in healthcare use during the recession as well as declines in reimbursement for services provided. Overall Novant has seen a dramatic cut in it’s income of $45 million in the past year.

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Well actually it’s more to do with William Rodgers the former owner of PACE Airlines if that is even true considering the last I heard the bankruptcy administrator wasn’t sure who owned PACE Airlines. Anyway back to the subject. A hearing was held in Forsyth County Superior Court by Judge Edgar Gregory to postpone the case of William Rodgers until April 16th as he has released his prior attorney Walter Horton Jr. and hired Mark Calloway out of Charlotte.

Rodgers was arrested for failing to pay group health insurance premiums for PACE Airline employees in September of 2009 and has been out on Bond since then.

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The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

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Vitacost.com out of Boca Raton, Florida but with an distribution warehouse here in Lexington, North Carolina seems to not have a very accurate sales tax calculator. In fact it appears that it is so bad that they are routinely charging upwards of 10.9% Sales Tax for items shipped to Charlotte and over 10% for other various North Carolina zip codes.

Background: Vitacost.com is a vitamin and nutrition supplement online retailer out of Boca Raton, Florida. Vitacost sells national label items as well as items made for their own label using a distribution warehouse built in Lexington back in 2007 with expansion made possible in part by both local incentives as well as $450,000 from One North Carolina Fund in 2010. Listed as VITC on NASDAQ the stock is thinly traded and has remained in the $4.50 to $5 range since it was halted back in December of 2010 after disclosure by the company that it’s financial statements dating back to 1994 were unreliable. Legal action was taken by a group of share holders in 2010 claiming that certain Company officers and directors had “breached their fiduciary duties and unjustly enriched themselves.”

In reviewing a purchase I made with Vitacost I noticed the sales tax rate did not seem to add up and in doing the math I came up with a charge of just over 9%. I then pulled up older orders and found the sales tax rate charged had been incorrect on orders dating back for a year. I emailed the company about the errors and was told that yes they agreed the wrong rate had been charged and if I would provide background information on the orders they would take care of it. I did exactly that but I also stated I was not satisfied with the answer as it appeared this was not a single occurrence and that it looked like the company was charging the incorrect sales tax rates for all North Carolina residents. Needless to say I got no response and didn’t pursue the matter as we were talking about $3-4 so it really wasn’t worth my time. With several months of no response I decided to check their website again and not only were the sales tax rates incorrect but they had gone up to 10.2%! I again emailed the company stating I had pulled the computed sales tax rates for multiple counties in North Carolina and had found not only have they not refunded any money to me but continue to charge an incorrect sales tax rate, of course again I got no response.

So this time I decided to waste a little time and pull some information together for future reference and since I had that info I might as well post it here as well. Using zip codes pulled from Areaconnect.com and Sales Tax Rates from Zip2Tax.com I attempted to checkout using an address based in each of the following zip codes and found the corresponding tax rates being charged by Vitacost.com on a $10 item.

City/Zip Code Sales Tax Rate Vitacost Computed Rate
Charlotte, NC 28209 7.25% 10.9%
Winston-Salem, NC 28607 6.75% 10.2%
Raleigh, NC 27601 6.75% 10.2%
Wilmington, NC 28401 7% 10.5%

To show I am not just making this up below you will find the checkout form for each of the above zip codes. Does this look like a “math” error to you?

28209286072760128401

TwitThis

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Two reports are out and cited in the Winston-Salem Journal this week state it will be three to four years before unemployment in the Triad area returns to pre-recession levels. I won’t repeat the quoted findings The Journal quotes, you can read them here, but I do question any such report. There is a clear exodus from the Winston-Salem area. This exodus may help lower unemployment rates by simple adjusting the numbers of employable workers but it is a major drain on the pool of skilled employees. This in turn reduces the area’s outlook for generating new jobs as businesses look elsewhere with lower taxes as well as a better educated and trained work force. If you don’t think that is what happens then look at this quote I will take from the paper by a senior economist at Wells Fargo Securities.

"We believe a large proportion of today’s high unemployment is structural in nature, resulting from a huge skill mismatch between the jobs being created and the existing skill sets of jobseekers," said Mark Vitner, a senior economist with Wells Fargo Securities.

Winston-Salem Journal, July 15, 2011

As I have stated in the past with a shrinking business climate and fewer worker bees you will see a general drop in revenue generated for the local governments. This will result in those governments being required to drastically cut budgets and that means laying off more workers, granted we could do with some trimming of public employees around here. Those cuts however won’t be enough to meet deferred cost on expenses the city of Winston-Salem has taken on such as the Baseball stadium and surrounding obligations or plans for a downtown rail line. As the city will have to meet those obligations the only way to do it in a generally smaller and smaller revenue pool is to raise tax rates. Raising taxes on a workforce that is already leaving the area due to high unemployment will just exacerbate the situation in my opinion and in general delay but not solve the problem. As people are taxed more, see fewer opportunities there is a delay in the ultimate leaving of those workers for other areas of the state or country but it is only a delay as they make those plans, it does not stop the migration or the ultimate result.

Maybe it’s time for The Chamber, The Mayor, Winston-Salem Business Inc., Winston-Salem Alliance to stop chasing “Boys of summer” dreams and start wondering why small business after small business is moving outside of the Winston-Salem area or how a almost 43,000 square foot building set empty for TWO YEARS in a prime retail location? By the way I am speaking of the old Circuit City building on Hanes Mall which finally sold in May to a developer who plans to repartition the location into a multi-tenant space.

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Looks like a group is trying to repeat the game plan of PACE Airlines in applying to bring a charter jet service to Greensboro. Interestingly enough several PACE executives have signed on with the new company called Victory Jet LLC. The primary’s of the new company are Jeff Erickson and Christopher Barnes however word is a number of former PACE employees have joined on. Those listed were Eric Winberg, Herman Gillis III, Tom Cartwright, Michele Burdick, Ellis Nelson, Barry Blumquist, and James Brown.

The company objective is to take various jets, and outfit them for VIP charter services. The current jet listed is a single 737 outfitted with 64 First Class seats and plans to add a second 737.

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By now everyone should have heard something about Wachovia admitting they allowed Mexican drug cartels to launder almost FOUR BILLION dollars through their bank. What amazes me is how little this story was covered especially locally and what’s worse is it appears it takes a U.K. paper to tear down the story and present it in a clear timeline of events. Now even more interesting is this video from The Keiser Report. In this video they draw a clear line to the Mexican Drug Money pullout to the banks needing to go to the Feds for cash and thus the beginnings of the financial crises.

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