Monica Mehta

Employers added 113,000 jobs in Jan, far below the 182,000 expected.  Economists were hoping to see a snap back from Dec which also disappointed and a sign the economy is atleast generating as many jobs as it has been the past 2 years, roughly 182,000 monthly.    The vast majority of the hiring taking place is by companies with less than 500 employees.  While business owners with significant assets and robust growth can get financing, many entrepreneurs continue to struggle with financing creating a key set back for growth. Monica discussed this and more CNN’s Carol Costello and Brookings Institute’s David Wessel.

CVS announced today that is will stop selling cigarettes, which generate $2B in annual sales. The company says the product is misaligned with its mission as a health care company, but then how do they justify the sale of chips, sodas, cookies and candy that cover half the aisles of the store?  69% of Americans are overweight or obese and arguably many more people are dying for related illness than that of cigarette smoke.  Whether this annoucement is step one CVS’s larger plan to style itself as a european style pharmacy or just a PR move, it’s unclear if wall street will reward their move. Monica discussed this and more with Al Jazeera America’s Tony Harris.

Turns out the Target hack is much bigger than expected — 70MM more cards affected than initially disclosed. Reuters also reports three more major retailers to report comprise in coming days. Going rate for stolen data is $80 per card making this a huge payday for criminals Target hack alone worth $8.8B.  The US will continue to a major target in cyber fraud because a far more secure credit card technology (EMV/pin) that is already widespread in Europe has yet to be implemented here.   EMV uses an encrypted chip that is embedded in a card and requires a personal identification number to access the data it stores to complete a payment. In the United States, the less-secure magnetic strip on cards is still used. While consumers are likely to pull back from compromised retailers, they will likely continue to spend elsewhere in the economy. But the security costs for banks, credit card companies, retailers cannot be ignored and the concern becomes how will they potentially pass on those costs to consumers.  Monica discussed this and more with Fox’s Neil Cavuto.

Today there are more people out of work for six months or longer than anytime since WWII, signaling we haven’t rejuvinated the economy in the most meaningful way —- creating good jobs.  Helping the long term unemployed to sustain and find work should be a bipartisan priority.  While extending benefits comes at $25B annual cost, surely we should be able to find the money in a system that routinely wastes  billions (GAO Finds Billions in Wasteful Duplicative Spending in 2013).  But the problem with Washington is that every dollar in the budget is sacred because there is always a politician who will point to the pork as evidence he is doing his job.  Monica discussed this and more with CNN’s Carol Costello and WSJ’s David Wessel.

1) Exhaust flexible spending accounts or other tax advantaged workplace health benefit plans.  Most of us let hundreds go unused each year in accounts that are use it or loose it.  Using remaining funds can be as easy getting new glasses, prescription sunglasses or working in one last trip get your teeth cleaned before year end.

2) Pay college tuition costs early to maximize the American Opportunity Tax Credit,  a 100% refund on the first $2000 you spend toward college each year and 25% of your next $2000 in expenses.  This is one of the few deductions comes as a refund even if you don’t owe any taxes, making it very popular with students. The credit is phased out for taxpayers whose adjusted gross income exceeds the $90,000 and $180,000 thresholds.

3) Make big purchases now. If you’re planning to buy a new car or engagement ring speed up that purchase before year end before the sales tax deduction goes away in Jan 2014. IRS allows you to deduct either state income tax or sales tax. This deduction is very popular used by 57 million Americans living in primarily low or no income tax states (AK, FL, NV, NH, SD, TN, TX, WA, WY).  Congress could reinstate but better to assume they won’t

4) Harvest tax losses.  With stock market at all time highs and a host of new taxes/increases kick in on investment income, now is the time to manage your capital gains to reduce tax bite.  Smart strategies include (1) selling off stocks with losses now to offset gains and (2) post-poning sale of profitable investments until January to push the tax bill to 2014.  

5) Make charitable donations to reduce taxable income.  Year end is a good time to donate clothing and furniture; you’ll not only help those in need but yourself with a nice deduction. And by donating highly appreciated stock instead of cash, you’ll skip paying taxes on the capital gains and get a deduction worth the market value of the securities.

Facing the most competitive climate in five years, retailers are pulling out all the stops to lure consumers to stores. Holiday sales are critical for retailers, with Nov and Dec representing 60% for full year sales for most stores and as of a week ago 32MM Americans hadn’t even started their shopping.

The Nat’l Retail Federation predicts 2013 sales will grow by 3.9%, driven primarily by a growing population; the average family is pulling back spending 8-10% less.   Consumers pulling back are not a surprise for anyone.  Confidence numbers have fallen like a knife since Oct as consumers express concern over the future of the economy, stagnant wages and jobs.

Today 65% of Americans are living paycheck to paycheck, a four point increase from 2012.  This year, they are spending on electronics and home goods, but pulling back from apparel and general merchandise purchases.  They are making the most of their shopping budgets by planning purchases and carefully seeking promotional pricing. Monica discussed this and more with Stuart Varney filling in for Neil Cavuto.

As DC debates doubling the federal tax on gas (a 15 cent hike per gallon), Monica discusses the impact of rising fuel costs for consumers with Fox’s Neil Cavuto.

Gas purchases represent 3% of GDP and prices offer a key barometer of how consumers view the economy.  The average consumer drives past a dozen fuel retailers in his daily commute making it easy for them to keep stock on prices as well as increases.   As gas prices increase, the cost of goods for just about every consumer staple rises from fruit, milk, bread, clothes to mouthwash and sneakers — basically anything that must be transported by vehicle from factory or port to store will be impacted.

In an NACS survey that asked how much do gas prices impact your feelings of economy: 38% said great impact, 50% said some impact (10% little, 3% no impact) rate gas price.  NACS surveys also shows consumer go out of their way to save on gas: they take left hand turns at busy intersections, drive 5 minutes out of their way to save 5 cents per gallon — that’s roughly 60 cents per tank. Studies also show consumers don’t reduce gas consumption significantly if prices rise across the board; after all they still have to drive to work, pick up kids from school.  But spending more of the consumer wallet on gas leaves less disposable income for other purchases.

Fuel retailers make pennies on each gallon sold. That coupled with lack of elasticity of consumer purchasing suggests that most of the burden of fuel tax increases will be shouldered by the consumer and the economy at large.  

More shoppers are flocking online with cyber monday sales expected to surpass 2012 levels, despite weak in store results from the holiday weekend.  Since Nov 1, shoppers have spent almost $20.6B online (not including cyber monday). That’s a 3% increase from last year.  Increased online sales activity is driven by aggressive web promotions from retailers and increasing consumer confidence in retailer ability to ship gifts in time for Christmas.  Many of the season’s must have gifts include smart phones, tablets and game systems which are often purchased online.  Monica discussed this and more with Fox’s Neil Cavuto.

Fifty five federal tax breaks for consumers and small business are set to expire at year end.  The list includes (1) deducting sales tax — used by 57MM americans living in no income tax states, (2) $4000 college tuition credit, (3) deducting private mortgage insurance (4) deduction of energy efficient improvements to your home and (5) deducting the purchase of upto $500K of equipment, furniture or software for your small business. Monica discussed this and more with Fox & Friend’s Tucker Carlson. A list of the expiring deductions is available on at WSJ.com

Consumer confidence took a beating in November, dropping to a 7 month low as consumers worry about the future of the economy, rising costs, the stability of their jobs and future wages. The latest confidence numbers are a reversal for a consumer that was feeling more optimistic just 2 months back, but DC turmoil from the shutdown to the chaotic launch of the Affordable Care Act (millions seeing premiums rise, loss of coverage and a website that just doesn’t function) have Americans on edge.  All of these trends make the National Retail Federation predict that shoppers will curb holiday spending in 2013 by 10%.  Holiday spending accounts for 40% of sales for many retailers and a significant portion of GDP.  Monica discussed this and more with Fox’s Neil Cavuto and Melissa Francis.