Top of the News: With the markets closed for Good Friday, it’s time to take stock (pun intended). It’s important to remember that five of the most recent bear-market rallies fizzled. J. Clinton Hill, chief investment adviser of HM Advisers in Los Angeles writes on RGE Monitor that the current uptick on Wall Street will be difficult to sustain given how much wealth has been destroyed, how many jobs have been cut (5 million) and the resulting consumer pullback.
“A nation whose economic growth is 70% dependent upon consumer spending will find it hard to improve its morale when jobs are scarce,” Hill says. For now, people will focus on paying down debt and rebuilding their savings.
Locally, beneficiaries of the recent rally include Microsoft, Nordstrom, Amazon, Alaska Air, Weyerhaeuser and even Boeing. Failing to get traction: Starbucks and Costco.
The Back Story: The Legislature is likely to ask voters to approve a sales-tax hike. Nine other states, facing major shortfalls, are considering some kind of tax increase. The problems with the sales tax: It’s very regressive, meaning lower-income people pay much more proportionately than higher-income folks; Washington state already has a high sales tax, and raising sales taxes might well dampen already struggling retail sales. I’ll be writing a column on the broader tax issues in this Sunday’s Seattle Times.
Today’s Econ Haiku:
More honest about their aims
Than some on Wall Street