Morning Business Memo
Tax-free shopping for online goods may soon become a thing of the past. A bill in Congress would make collection of sales tax a standard practice on the web, something traditional brick and mortar retailers argue is a matter of fairness. Stores do all the work, says a top executive at the National Retail Federation, and then online competitors steal the sale because they don’t have to charge state and local sales taxes. Now there’s growing bipartisan support in Congress for legislation to require big online retailers to collect those taxes no matter where you shop.
The economy remains stuck half-way between recession and solid growth. Friday’s employment report from the Labor Department was the fourth straight month of disappointing news on jobs. Overseas events are only adding to worries about the US economy. But not everyone’s got the gloomies. While Phil Orlando, chief equity market strategist at Federated Investors, calls Friday’s report “terrible,” he does say consumer spending and the jobs market may pick up later this summer.
“We do expect economic trends to improve generally as we get to the back end of the current quarter.” Orlando tells me one reason is the fall in gas prices: “you’ve got energy prices which peaked in March down about 30 percent or so.” Many people with good credit have been refinancing their mortgages. This gives them more money to spend. “Those two factors at a minimum are going to start to improve economic activity domestically,” says Orlando.
Europe’s problems are far from over. Spain’s borrowing costs on its 10-year bond punched past the 7 percent mark. Today’s Wall Street Journal reports senior eurozone finance officials are moving ahead on a plan to create a single top bank supervisor for all 17 countries in the single currency bloc. This official would police the largest banks, says the Journal.
Now there’s China to worry about. Premier Wen Jiabao says China’s economy faces huge pressure to slow further despite stimulus measures. Companies and investors are closely watching the world’s number two economy for signs of a further slowdown which could have global repercussions by hurting Chinese demand for goods from the United States, Europe and other struggling economies. According to China’s state media, Wen promised to “fine-tune”economic policies, but mentioned no details or new initiatives. Chinese growth fell to a nearly three-year low of 8.1 percent in the first quarter. Sounds terrific by our standards, but for China this is bad!
Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com twitter.com/daviesabc