Business news briefs for September 29, 2005

Thursday, Sept. 29, 2005 | 11:10 a.m.

County taxable sales climb

CARSON CITY -- Car sales and big bar-and-restaurant business helped push July taxable sales in Clark County to $2.7 billion, up 11.5 percent, the 19th straight month with a double digit increase.

The Nevada Taxation Department reported today that statewide taxable sales, one indicator of the strength of the economy, rose to $3.8 billion, up 12.6 percent compared to a year ago. July, the first month of the new fiscal year, was the sixth consecutive month of double digit increases statewide.

Gov. Kenny Guinn said the figures in July "certainly gets us off to a great start" this fiscal year.

"The latest statistics show continued double digit growth for the third year in a row; growth which is exceeding the Economic Forum's projections." The collections from sales taxes were $1.59 million above the forecast for the first month of the fiscal year.

Business in Clark County's eating and drinking places in Clark County accounted for $579.1 million in taxable sales, an increase of 13.1 percent from a year ago and the second straight month of a double-digit increase. The increase is due in part to the April opening of Wynn Las Vegas.

Car sales continued strong in Clark County, up 14.5 percent to $464.8 million. It was also the second straight month of double-digit sales of vehicles.

But the sale of building materials slumped to $187.7 million, an increase of only 0.6 percent. Taxable sales for building materials posted 13 straight months of double-digit increases until June when they rose 7 percent.

The department said sales in Clark County general merchandise stores rose 7.3 percent to $195.2 million in Clark County; clothing stores posted $146.7 million in taxable sales, up 20.9 percent; wholesale trade in durable goods jumped 17.2 percent to $170.9 million and home furniture sales increased 6.4 percent to $151.8 million in taxable sales.

The department said taxable sales in Washoe County jumped 12.7 percent to $612.8 million, the second straight month of a double-digit increase. This was the first time since June 2003 that Washoe County has recorded a higher percentage increase than Clark County.

Taxable sales in Douglas County increased 6.9 percent to $74.6 million; Carson City sales were up 6.2 percent to $84.9 million and Elko County posted a 13.9 percent increase to $75.6 million.

In tiny Storey County, the taxable sales jumped 328 percent to $24 million and Lander County recorded a 116.9 percent increase to $20.2 million. These big jumps are usually due to a sale of a major item, such as mining equipment.

Statewide, auto sales rose 16.1 percent; clothing stores were up 19.4 percent; bars and restaurants jumped 11.1 percent; building materials increased 6.6 percent in taxable sales and general merchandise stores rose 8 percent.

The department said the state collected $79.2 million from the state's share of the sales tax, up 11.6 percent. The cigarette tax yielded $9.4 million, up 12.2 percent compared to July 2004; liquor tax collections rose 4.6 percent to $3.2 million and the live entertainment tax produced $535,298, down 40.9 percent from a year ago. The Legislature this year changed the way the entertainment tax is levied.

Walker elected to board

The director of the Clark County Department of Aviation -- and the man who runs McCarran International Airport -- has been elected secretary-treasurer of the Airports Council International's North American executive board.

Randy Walker's election to the board represents a four-year commitment to the executive board of the organization that represents airport interests on issues of regulation, congestion and airport policies in the United States and Canada.

Walker is slated to eventually become chairman of that organization, an opportunity expected to provide close access to airlines considering service to Las Vegas.

Walker also serves as a member of the 29-member ACI World Governing Board, which has a similar role on airport policies on a global basis. He was appointed to a three-year term in January, one of eight representing North America on the board.

Growth good before hurricanes, expected to slow in second half

WASHINGTON -- The economy was growing solidly before hurricanes Katrina and Rita, whose double blow is expected to make for rocky business activity in the months ahead.

A Commerce Department report released today showed that gross domestic product grew at a 3.3 percent annual rate in the second quarter -- confirming that economic activity was humming along at a respectable pace before the disasters struck.

GDP measures the value of all goods and services produced within the United States and is the best barometer of the nation's economic fitness.

The 3.3 percent growth rate for the April-to-June quarter was unchanged from an estimate made a month ago. That performance met analysts' expectations. In the first three months of the year, the economy grew at a healthy 3.8 percent pace.

In the aftermath of the two hurricanes, however, economists are predicting that production and hiring will take a hit, slowing overall economic activity in the second half of this year to a pace of around 3 percent. Before the hurricanes, second-half growth was expected to top 4 percent.

The Labor Department, in a separate report issued today, said the number of Americans thrown out of work by Katrina climbed by another 60,000 last week, pushing the total number of unemployed workers seeking jobless benefits because of the storm to 279,000.

Federal Reserve Chairman Alan Greenspan earlier this week said the central bank will be closely monitoring the economy to assess the impact of the two deadly hurricanes, which slammed into the Gulf Coast over the last month. The disasters destroyed businesses, homes and hobbled essential oil and gas facilities, which has led to elevated energy prices rising even higher.

Economists expect economic growth in the second half of this year will be reduced by as much as 1 percentage point as high energy prices crimp consumer and business spending, vital ingredients for healthy economic activity.

Hiring is expected to slow. The nation's payrolls for September will probably show a loss of several hundred thousand jobs; the unemployment rate -- now at a four-year low of 4.9 percent -- is expected to rise. The employment report for September is released by the government next week.

Rebuilding, once under way, should help energize overall economic activity and the jobs climate, though probably not until next year.

Greenspan and his Fed colleagues last week said fallout from Katrina doesn't pose a "persistent threat" to the nation's economic health. But the disaster does raise more concerns about a pickup in inflation. Thus, the Fed decided last week to boost short-term interest rates for an 11th time since June 2004.

An inflation gauge tied to the GDP report that is closely watched by the Fed showed that prices -- excluding food and energy -- rose at a rate of 1.7 percent in the second quarter. While this was slightly higher than a previous estimate, the figure suggested the Fed can stick with its course of gradual rate increases.

Ben Bernanke, the president's top economist, on Tuesday said fallout from Katrina and Rita will have a "palpable effect" on the economy. But he expected that to be short-lived, citing the economy's resilience in the past to shocks.

The GDP report showed that consumers -- the lifeblood of the economy -- were spending at a good clip -- despite high energy prices.

Consumer spending in the second quarter grew at a rate of 3.4 percent. That was up from the previous estimate of a 3 percent pace made by the government last month, and followed a 3.5 percent growth rate registered in the first quarter.

Business investment in equipment and software also was stronger in the second quarter than previously thought. This spending rose at a 10.9 percent rate, versus the 10.4 percent pace previously estimated for the quarter. In the first quarter, this investment grew at a 8.3 percent rate.

The overall GDP figure stayed the same at a 3.3 percent growth rate because the bigger increases in consumer and business spending were blunted by other factors, including the fact that export growth in the second quarter turned out to be less brisk than previously estimated.

A measure of corporate profits tied to the GDP report showed after-tax profits rising by 5.3 percent in the second quarter. That was less than previously estimated for the period, but marked an improvement from the 0.1 percent dip in the first quarter.

Fast-food chain to be sold

IRVINE, Calif. -- Trimarin Capital Partners, a New York-based investment company, has agreed to purchase the El Pollo Loco fast-food chain from American Securities Capital Partners L.P., a move that will allow the chain to expand nationwide.

Terms of the deal between the closely held companies were not disclosed.

The chain, which serves flame-grilled chicken and Mexican-inspired specialties, has 328 restaurants located in California, Arizona, Nevada and Texas. It is based in Irvine.

The infusion of capital from Trimarin will allow the chain to open company-owned and franchise stores in Colorado, Illinois, New England, New Jersey, New York, Oregon and Washington, D.C.

The chain, whose name means "the crazy chicken," will open a Chicago location in October.

The members of the restaurant company's management team, headed by president and CEO Stephen E. Carley, will remain in their present positions and increase their ownership stake in the company as part of the transaction.

Carley said the company plans to open an additional 150 locations around the country within the next five years.

"Mexican and Hispanic food is the largest selling ethnic food in the country now," Carley said. "Americans are looking for bolder, spicier, more flavorful food."

El Pollo Loco was founded in Mexico in 1975 and opened its first restaurant in the United States in 1980.

Trimarin already owns Charlie Brown's, a steak restaurant chain in the Northeast.

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