You are here
WASHINGTON -- President Bush proposed a temporary, broad-based tax relief package, totaling 1 percent of the U.S.'s gross domestic product, to spur the nation’s slowing economy, CNN reported.
He also stated the nation's economy is at risk or a downturn, and Congress must act to prevent problems, the report stated.
"This growth package must be big enough to make a difference in an economy as large and dynamic as ours," Bush said. The package would total $140 billion.
"By passing a growth package quickly, we can provide a shot in the arm to keep a fundamentally strong economy healthy, and it will help keep economic sectors that are going through adjustments, such as the housing market, from adversely affecting other parts of our economy."
While offering no specific details of the proposal, he suggested that it should include tax incentives for businesses, "including small businesses, to make major investments in their enterprises this year," along with "rapid income tax relief" for consumers to "lift our economy at a time when people otherwise might spend less."
Existing income tax cuts are due to expire in 2010, and the president asked Congress to make them permanent, CNN reported.
"Unless Congress acts, the American people will face massive tax increases in less than three years," Bush said on Friday. "This tax increase would put jobs and economic growth at risk."
The apprehension of a downturn is already being seen in the retail sector. An article in Friday's Wall Street Journal looked at the possibility of the retail industry "skidding toward its first big wreck in 17 years."
While data on December spending won't be released until later this month, chains are already slamming the brakes on store openings, cutting back on inventory and girding for leaner times, said the article. Retailers haven't faced so many difficulties since the deep economic downturn of 1990-1991.
Comparable store sales for the November-December holiday period came in one percentage point below the National Retail Federation's (NRF) modest 4 percent prediction -- the smallest increase since 2002. And, most of the gains were driven by inflated prices for food, fuel and drugs. Apparel, jewelry and home-products chains reported same-store sales declines, said the Journal.
Economists warned of a discouraging first half of the year. "It will feel like a recession to many people even if we technically avoid one," Frank Badillo, senior economist at market researcher TNS Retail Forward told the Journal. "Financial stress from high energy costs, the fallout from the housing slump and sluggish employment and income growth" will weigh on shoppers, added Rosalind Wells, chief economist of the NRF.
The article noted that Wall Street sentiment is at the lowest level in decades. For example, the forward price-to-earnings ratios of affordable luxury goods maker Coach Inc. and department-store chain Kohl's Corp. recently touched historic lows, and discount department-store chain Target Corp. is near a 12-year low.
In hopes of averting a recession, Democrats and Republicans in Washington have called for tax rebates and interest-rate cuts to stimulate the economy. Such measures helped contain the recession of 2001, which lasted just eight months, less than half the usual duration of modern recessions, said the paper.
What about the impact of a recession on the c-store industry? Convenience Store News explored the subject in its first Industry Forecast Webcast last week. According to Maureen Maguire, president of ThinkResearch and partner with CSNews on its Industry Forecast Study, "Consumers were wary [last year], but certainly not as wary as they are now."
Maguire updated her likelihood of a recession at the Webcast from 30 percent to 40 percent, and a poll taken during the session found that more than 60 percent of attendees thought a recession was likely in 2008.
Maguire also explained the impact a variety of factors will have on consumer spending and the convenience industry -- including rising inflation, high oil prices, the bursting housing bubble and the sub-prime mortgage crisis.
"The implication of high oil prices hitting consumers has yet to be seen," said Maguire. "Consumers have not given up driving and filling up their tanks."
The Webcast, a combined effort by Convenience Store News and ThinkResearch, also offered in-depth product category forecasts for important categories, including motor fuel, packaged beverages, tobacco, malt beverages and snacks. Top line information on categories is available in the Jan. 14 issue of Convenience Store News, while an in-depth look at the segments making up each category is available for purchase online at the following link:
CSNews' 2008 Convenience Retailing Forecast
To register to view the Webcast in its entirety, click the link below:
CSNews Industry Forecast Webcast
The Webcast was sponsored by Just Born, makers of Peeps, Mike & Ike, Hot Tamales and other popular candies.