ECONOMY "DOING WELL": TAX REVENUE DOWN, BUT BUSINESS IS BOOMING?

Another post from the HA forum that involved a bit of research...

Mississippi IS a recession...

OK, wait a second.

Yesterday, we were informed that:
"Hattiesburg residents haven't been spending as much money as they once did..."

And today, we're informed that:
"...representatives at most Hattiesburg businesses that rely on disposable income say it is too early to see a drastic change in the habits of consumers."

Something isn't adding up.

For one thing, today's story has one caveat, which is that businesses "that rely on disposable income" supposedly aren't hurting. That could be taken as an implication that businesses that don't rely on disposable income are seeing "a drastic change in the habits of consumers." This flies in the face of generally accepted notions of economic behavior, i.e., that when people have less money (which we know is true across the country), they have to cut back spending on the types of goods and services mentioned in today's article in order to be able to cover the expenses they must pay, such as rent, mortgage, insurance, daycare, health care, etc.

I'm not sure that the statement of the headline of today's story--"Hub City economy doing well so far"--can be validated on the basis of comments from five representatives of small businesses in Hattiesburg. After all, it is in the best interests of those representatives to put a positive spin on their supposed success and resilience even if in reality, they are not especially successful or resilient. In fact, the comment from McLelland along with the copy in the story regarding his business comes off like an advertisement rather than as an actual inquest regarding the strength of his sales.

In other words, to accurately say "Hub City economy doing well so far," one would not ask for an assessment of the how good or bad sales are from a representative of any given business (who will almost invariably feel obligated to paint as rosy a picture of the situation as possible), one would have to view current sales numbers versus sales numbers from a comparable period of time. And that data is surely not going to made available to a reporter for analysis.

On the other hand, it may be true that "businesses that rely on disposable income" might not be experiencing hard times despite the negative savings rate and decline in wages that plagues the entire country--we also know that a majority of the country is in massive credit card debt. So it could very well be that the businesses mentioned in this piece are doing just fine, but that does not necessarily mean that the economy of the Hub City is doing well, because people are racking up even more credit card debt.

Whatever the case may be, these two stories seem to paint completely different pictures of the state of the economy in Hattiesburg.

SOURCES:

Negative personal savings (2006 figures):

"People are saving at the lowest level since the Great Depression, and that could be a problem for the millions of baby boomers getting ready to retire. In fact, the Commerce Department reported Thursday that the nation’s personal savings rate for all of 2006 was a negative 1 percent, the worst showing in 73 years."


Decline in wages (inflation-adjusted):

"Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the fourth decline in the past five years. The lagging wage gains are cited as a chief reason many workers have growing anxiety about their economic futures."


Record credit card debt ($915 billion):

"While the fallout of the subprime loan industry collapse continues to play out, momentum is gaining on another potential economic calamity: Americans now owe a record $915 billion in credit card debt, according to a new report by Moody's Investors Service.
Credit card companies wrote off 4.58 percent in payments between January and May, almost a third more than in the same period in 2006, Moody's said.
As a result, lenders such as Citigroup, Bank of America, and American Express, already reeling from the subprime mortgage collapse, are being further weakened, according to a new report at MoneyNews.com."