“Stability” was the word James Campbell executive director of Brownwood Economic Develop-ment used to describe the employment picture in Brown County. Earlier in the year, a similar message was heard by Brownwood Mayor Bert Massey at a meeting of the Brownwood Area Chamber of Commerce. Massey said we are doing better than most of the rest of the state, and the state is doing better than most of the nation. Both men pointed out what has become increasingly obvious. The economic recession has taken a rather uneven toll.
According to a report in USA Today, the nation’s 372 metropolitan areas are experiencing an extraordinary range of jobless rates, from a low of 4 percent in Grand Forks, N.D., to 27.7 percent in El Centro, Calif. It seems the bigger the housing bubble, the worse the job loss. The middle of the country from Texas to North Dakota missed most of the real estate growth and to a large extent, the big comedown. While I was in Washington, D.C., last month, U.S. Sen. Kent Conrad from North Dakota said his state has fared better during the recession because of the energy industry and agriculture. They have shown much more stability than Michigan’s heavy reliance on the auto industry.
Campbell pointed out that the county’s unemployment rate increased slightly to 7.5 percent, but is still running lower than the rate for the entire state. Campbell said that the bulk of those still unemployed are in the retail sector. With half of the City of Brownwood’s fiscal year gone, sales tax revenue is about 4 percent under what had been expected and about 6 percent below last year. Campbell said that’s not a reason to panic, but he is concerned about the situation.
There are some indications nationally that there are reasons for concern for states and municipalities that depend heavily on sales taxes for a significant part of their revenue. It appears that the economic meltdown is causing some behavioral changes in spending habits among consumers and the habits show signs of becoming a trend. The number of penny pinchers among us is growing. Even as the signs start to point to the recession abating somewhat, those shaken by it also appear to have been educated from it. Consumers are buying on need, not desire, and they are trading down, according to NPD Group, a retail market researcher. Their research reports that 53 percent of consumers buy most products on sale, that’s up five percent from only three years earlier. The number of consumers who reported they had shopped in a discount or off-price store in the same three-year period increased by 20 percent.
The recession taught consumers their vulnerability, according to Marshal Cohen, chief industry analyst at NPD Group. Cohen says the economic bad times in a consumer culture has become more than an economic adjustment. It is also an ethical one. Conspicuous consumption has become abnormal. That may seem like a stretch, but up-scale stores are busily trying to reinvent their brand. When same-store sales fell by 5 percent, Whole Foods executives realized they had to change the image of the specialty chain as a budget buster. They launched a series of one-day, three-day and week-long sales and advertised them. They created a magazine, “Whole Deal” that contains coupons shoppers can clip. It’s worked. Coupon use at Whole Foods is up over 325 percent in two years.
The most popular program at CVS, a national pharmacy chain, is its ExtraCare card. Customers receive credit toward CVS purchases each time they shop in the store. The chain has distributed 64 million of the cards, making them one of the world’s largest loyalty-card programs. The chain is now setting up coupon kiosks inside some of their stores that will spit out four or five personalized coupons based on past purchases.
The capability of penny pinching to become a lasting trend is not without detractors. Some argue that frugality has long been a way of life for many folks, but a lot of the belt-tightening will go away relatively quickly when good times return. Others are not so sure. Wells Fargo Bank is one; they have put up billboards in northern California touting saving as the new spending. National statistics might support their view. During the fourth quarter of 2009, the personal savings rate among Americans increased 2.4 percent over the same quarter in 2007.
Campbell may be correct in saying the drop in sales tax rebates is not a reason to panic, but he is also correct in raising the issue of concern for taxing entities on how quickly amounts will return to previous levels.
Robert Brincefield is vice president and publisher of the Brownwood Bulletin. His column appears on Sunday. He may be reached by e-mail at bob.brincefield@brownwood