You are viewing the New Jersey category archive.

Hurricane Earl is churning in the Atlantic and retailers are getting ready as well as offering advice to customers on how to prepare for the storm. The storm is threatening the entire Mid-Atlantic and Northeast portions of the United States as well as Nova Scotia. Residents in these areas should be going to their local stores and stocking up on the recommended supplies.

As expected, residents in North Carolina are getting ready for the storm and retailers are seeing a surge in customers. From the article:

“We have just definitely seen an increase in customer traffic it started yesterday a little bit but over today they’ve been moving with the batteries and tarps and flashlights and things like that,” said store manager Robert Evans.

The storm is only about 24 hours from impacting the Outer Banks and I hope that anyone who hasn’t evacuated is just about finished hunkering down for the next few days.

Almost two years ago, I noted how well Home Depot was using Twitter to communicate advice and store opening/closing information during Hurricane Gustav. This season has not been any different as they are offering great tips for residents who are preparing for the storm through their Twitter feed and their blog. The retailer has an entire section of their site dedicated to hurricane preparation with helpful videos and articles. Of course this drives traffic back to the retailer, but it also provides good information and knowledge to shoppers.

Having a disaster plan is important for any small business and Office Depot has offered advice to small businesses who are in the path of the storm.

Shortly, I’m going to follow this post up with a second post sharing some more, localized information about how businesses are preparing for the storm. I’m not very far from the Atlantic Ocean, along the coast of New Jersey, and I have a few notes that I’d like to share.

The next 24 hours are going to be a crucial time to watch this storm. Depending on the exact path that it takes, this could become a very bad Labor Day weekend along the East Coast.

On Thursday, the New Jersey Legislature is being convened in order to discuss ways that the state can deal with the current economic crisis. Today, in advance of that meeting, New Jersey Republican leaders have proposed an unprecedented 5 week sales tax holiday, right through the heart of the Holiday spending season. From the Star Ledger:

The proposal would cut the sales tax in half — to 3.5 percent — during the busiest retail buying season, Thanksgiving through Jan. 4. The sales tax in the state’s 32 Urban Enterprise Zones — areas where economic incentives, such as reduced sales taxes, are offered to encourage development — would also be cut in half, to 1.75 percent, to stimulate buying in cities.

The proposal would affect any item subject to New Jersey’s sales tax, from restaurant meals to automobiles.

Two Republican officials said it would jump-start the economy by allowing customers to pay less for merchandise and increasing retail sales.

Both parties are going to come out with ideas, some grandiose and some small, in order to deal with the economic crisis. While I am not economist, an idea like this seems like it could spur consumer spending. While it may not stop the hemorrhaging that some national retailers are going to experience this season, it may slow down losses enough, on a localized level, to help some small businesses and niche retailers get through this tough time.

That’s not to say that it is a plan without flaws. The article above estimates the loss of tax revenue to be at $500 million, which is a huge financial hit to a state that is already strapped and proposing many alternative ideas for how to raise money. Residents here have seen many ideas floated around – from tax increases, new surcharges on gasoline, and toll hikes. With decreased spending and already lower tax revenues, is now really the time to take half a billion dollars more from state revenue? Can the lower tax rate really increase consumer spending to overcome the decrease in state revenue?

My gut feeling is that the tax cut, on it’s own, will increase consumer spending on large ticket items and increase traffic to stores on the borders with other states. Businesses that will see a boost from this proposal will be car dealers and the Best Buy on Route 17 (right across the border from New York). I don’t know if, overall, the spending increase is going to be large enough to offset the decreases we are already going to see.

A sales tax decrease is only going to work if one of two things happens. First, it requires that people have money to spend. The family who isn’t making their mortgage payment probably is going to spend more now that the sales tax is reduced. The second requirement is that people want to spend the money. People may be making their bills and have money to spend, but that doesn’t mean they are going to want to spend more money just because the sales tax is slashed. They may want to take that money and put it towards other debit or savings rather than spend.

I can very well see an economic proposal coming out of New Jersey on Thursday that includes a sales tax reduction as one part of a multi-prong economic package. What else will be included, I’m not sure, but I can very realistically see the sales tax reduction as one facet of the package.

I previously talked about the economic impact of the sales tax rising from 6% to 7% in New Jersey.