Randomly Noted

You normally wouldn’t think it’s good news that consumers are taking on more debt, especially when that debt comes in the form of credit cards, which can be very costly debt. But today’s report from the Federal Reserve that showed the first increase in credit-card debt since the month before Lehman Brothers failed is being viewed as just that – a positive sign about the economy.

In December,  credit-card debt rose $2.3 billion to $800.5 billion – the first monthly increase since August 2008. This, combined with a recent Fed survey that found banks were becoming more willing to make installment loans, has some wondering: Has the consumer stopped de-leveraging?

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A good indicator of whether the economy is really recovering is the cruise industry. There aren’t too many more discretionary spend items than a ticket for a ride on a cruise ship. Carnival Cruise today reported that third quarter earnings rose 22%. The gains were partly fueled by lower costs but much of the gains came on revenue gains – the company’s North American boats saw a 10% increase in the latest quarter versus a year ago. And Europe saw a 1% rise.

Clearly, the company s seeing a rebound from a vicious pounding it took during the recession. But it is also clear that it needs promotions like the one above to convince people to pack their bags and head out for a cruise.

It’s been nearly a decade since Pepsico bought Quaker Oats. So, Dow Jones Newswires reporter Anjali Cordeiro decided to take a look back at how successful the acquisition has been. Her verdict – the oat cereal business for Pepsi has been soggy at best.

Part of what has hurt the business, she reports, is that during the recession, consumers went for lower costing brands. But also, the company has acknowledged that it has under-invested in the business.

I have a simple solution for Pepsi – buy the rights to the recipe for Post Fortified  Oak Flakes from Post Foods LLC, the company that is the latest iteration of original Postum Foods. Somewhere along the line, a decision was made to discontinue the Post Fortified Oat Flakes. In this bloggers view, that was a huge mistake. These oat flakes were the tastiest cereal ever made. And healthy at that. So, Pepsi, an easy way to get a hit back on your hands is to resurrect this wonderful, old cereal!

And apparently others feel the same way about Post Fortified Oat Flakes. It comes in number 9 in a survey of the top 100 all-time favorite cereals. Click here to see the other cereals on that list.

The Jean Talon Marche in Montreal seemed less crowded than in years gone by over the July 4 weekend.

The headlines in the French language press one morning were screaming about the sad state of tourism affairs in Quebec this year. Tourism remained well below historical levels, raising questions about the health of the local economy. But local business people tell another story. They acknowledge that tourism from the U.S. is down. But the Quebecois always seem to fight back and see things in a more positive light. They argue that this region was the last in Canada to go into a recession and was the first to come out. No housing bubble. And not a lot of leverage. One business owner who owned a clothing shop in the town of Knowlton in fact just two months ago opened up another shop about 20 miles away in the town of Magog. You don’t do that unless you have confidence in the economy.

Some of my friends in the foreign exchange world read, read, and read all they can to get a sense of where economies are headed. And one of the writers many of these friends watch very closely is John Mauldin. This closely watched analyst is raising questions about whether the U.S. economy is headed into another recession. To read his full reports, go to his website here. Here’s what he says about the economy:

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We get reminders each day how far the economy and corporate Americas has snapped back – at least part of the way – from the depths of our great recession. Starbucks, which not long ago was going through a soul-searching to re-identify itself and cut costs (it closed many stores), announced today it was paying its first ever dividend. It is a modest 10 cent a share dividend, which will end up costing the company about $75 million. But the steps it took to improve profitability over the past year have allowed it to amass enough cash to not only pay out a dividend but authorize a new stock buyback program. It has grown its cash position pretty impressively. It had $1.35 billion of cash and short-term securities on its books at the end of December. That was up from $666 million in the quarter that ended September. Look for more companies to do the same thing.

The above chart illustrates very nicely what happens to municipal tax receipts when there is high unemployment. It’s from the most recent mid-year budget update from the City of Los Angeles and helps explain why the city has a projected $208 million budget deficit it needs to close.

So, one creative thinker on the LA city council has decided the city should take aim at two of the more derogatory words of our time: swaps and Wall Street. It’s hard to imagine how his proposal could possibly go through. But here it is:

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First, it was Wall Street that got hit hard. Then it moved to corporate America. Unemployment rose and recession set in. The last to get hit in these economic downturns are state and local governments. And there are indications that more is to come on that front.

The U.S. Census Bureau was out with a report today that showed just awful state and local government tax revenues. Click here for the summary report. Individual income tax receipts were down 11.7% in the third quarter from a year ago. General sales tax receipts were down 9%. Corporate income tax receipts were down 18%. Somewhat surprisingly, property tax revenue, the big driver of local government revenues, was up 3.5%. One has to believe, though, that as residential home foreclosures work their way through the system and more commercial real estate problems surface, this revenue source comes under pressure as well.

All of which is to say: we may have avoided a financial meltdown and we may be on our way out of a recession. But state and local governments have some very hard decisions to make. They can’t raise taxes and wil have to cut costs. And that means elimination of popular programs and perhaps even jobs.

Kids, both those young and old, feel a certain excitement about snow. Sledding and snowmen made with carrot noses. Cross-country skiing down the center of a street rather than a trail made just for that. Snowballs flying and rarely hitting their targets. The prospect of an ever-so-rare White Christmas. But for retailers, this storm of 2009 that will cripple the Northeast the last weekend before Dec. 25, it has more of a Grinch that stole Christmas feel. Retailers have already been hobbled by an economy that is slowly emerging from recession, one in which consumers are buying less and when they do, it’s lower cost items. Now, along comes a storm of historic proportions – one that could affect 50 million people and could dump more snow on the region then has been seen for 100 years. Retailers were hoping this holiday season wouldn’t set other kind of records for them. Monday through Thursday will provide the answer to that question.

But for retailers, the storm hitting the Northeast this weekend

Today’s WSJ reports that people are clinging to a recession mindset, pinching pennies and generally spelling bad news for retailers and consumer-goods manufacturers. This is significant because it comes as various economic data point to a tangible if gradual recovery; if people stay cocooned in money-saving mode for a long time, this will ensure the economic downturn lasts longer than it might otherwise. Some of us, however, are inveterate lifelong savers. The daughter of refugees who came to the U.S. with a pittance, I’m most certainly in the perennial penny-pinching camp. Which is why excessive spending of the sort that characterized the boom years baffles me. Saving for one’s kids’ higher education and one’s own retirement – not to mention dire health emergencies – is nothing less than Job One when it comes to managing one’s finances. If you live in a smallish apartment or house as a result, so be it. If you shop at Target rather than Banana Republic, fine. I’m in Neal Templin’s camp. He’s the Journal’s “Cheapskate” columnist, and just about everything he writes resonates with me and my husband, from cheap-and-cheerful business attire to push mowers. I’ve long felt that if the economic crisis turns move Americans into something akin to the Cheapskate, we’ll all be better off for it – even if it prolongs the advent of the next economic boom.