NYTimes: Hard Times Hitting Students and Schools

Before we get into the story, I find it strange that as gasoline has plummeted from $4.29 to $3.79 that consumers are not abandoning Walmart (WMT) in droves to go back to their old haunts. I mean that extra $15 a week has been the nexis for rallies in housing, autos, retailers, financials - it fixes everything. Yet Walmart still is showing strong same store sales despite the "relief" from high energy prices... imagine that. Remember, if the thesis is wrong does not matter in this new era of market - as long as enough people "believe" the stocks can be run up, and then when proven wrong by evidence the hot money will be long gone and onto their "next hot thesis".

• Many of the nation's retailers struggled with a sluggish start to the back-to-school season, though Wal-Mart posted higher August sales Thursday as shoppers focused on buying essentials amid persistent worries about high gas and food prices. (hmm this sounds very similar to May & June when prices were far higher?)
• "Consumers are spending on necessities and looking for value and the lowest-price possible. And it's reflective again in the results that we are seeing," said Ken Perkins, president of research company RetailMetrics LLC.
• Wal-Mart said that sales of groceries and back-to-school products helped its August same-store sales rise 3 percent. Analysts surveyed by Thomson Reuters had expected a 1.6 percent increase. Including fuel, the retailer's total same-store sales rose 3.5 percent.

Oh well, that's ok - just wait until NEXT month when clearly these trends will reverse. Because if gasoline $3.79 doesn't change the trend, just you wait for gasoline $3.49. THAT will be the thing that drives home sales, auto sales, clothing, etc etc. Just because the evidence doesn't point to it yet, doesn't mean "we" are not correct - Sincerely, HAL9000 & Friends.

We've long discussed how the state budget problems will be hitting schools [Jul 25: States Slammed by Tax Shortfalls] [Apr 25: Shoes Beginning to Fall in the States] [Dec 16: California in a State of Emergency - Coming to a Theater Near You],; the troubling thing is this year will seem benign compared to next year (remember budget years for states are mid year to mid year). But I said the problems would begin showing this school year - evidence is starting to roll in.

• LOUISVILLE, Ky. — With mortgage foreclosures throwing hundreds of families out of their homes here each month, dismayed school officials say they are feeling the upheaval: record numbers of students turning up for classes this fall are homeless or poor enough to qualify for free meals. “We’re seeing a lot more children in poverty,” said Lauren Roberts, spokeswoman for the Jefferson County school system, a 98,000-student district that includes Louisville and its suburbs.
• At the same time, the district is struggling with its own financial problems. Responding to a cut of $43 million by the state in education spending and to higher energy and other costs, school officials in Jefferson County have raised lunch prices, eliminated 17 buses by reorganizing routes, ordered drivers to turn off vehicles rather than letting them idle and increased property taxes.
• The Jefferson County system is typical this school year.
• As 50 million children return to classes across the nation, crippling increases in the price of fuel and food, coupled with the economic downturn, have left schools from California to Florida to Maine cutting costs. Some are trimming bus service, others are restricting travel, and a few are shortening the school week. And as many districts are forced to cut back, the number of poor and homeless students is rising.
• “The big national picture is that food and fuel costs are going up and school revenues are not,” said Anne L. Bryant, executive director of the National School Boards Association. “We’re in a recession, and it’s having a dramatic impact on schools.” (shhh, we are NOT in a recession.... at least not until after the election)
• Louisville’s pain is minor compared with the woes of some cities. Detroit has laid off at least 700 teachers, Los Angeles 500 administrators and Miami-Dade County hundreds of school psychologists, maintenance workers and custodians.
• Schools in many states have cut bus stops to save diesel. Districts in California and Ohio have gone further and eliminated bus service either completely or for high schools, leaving thousands of students to find their own way to school.
• In Maine, officials worried about the cost of heating their classrooms this winter have restricted travel for field trips to save money. Districts in Louisiana, Minnesota and elsewhere have taken a more radical measure and adopted four-day school weeks. Hundreds of districts, responding to higher food prices, are charging more for cafeteria meals.
• In interviews, educators in many states said they were seeing more needy families than at any time in memory. (Pooring of America 101) “We’re seeing a lot of desperate people.” In Mobile, Ala., the number of homeless students tripled to about 2,500 at the end of the last year. “And our numbers are going to be a whole lot higher this year,” said Larissa Dickinson, a school social worker there. “We’ve had phone call after phone call from families evicted over the summer.”
• In Louisville, 7,600 homeless students were enrolled when the term ended in June, up from 7,300 the year before. But Anne Malone, who coordinates efforts to help homeless students, said the figure would be “way up over that this year.”
• “People are saying, ‘I don’t want my taxes to go higher; I need the money to pay my bills,’ ” said Mr. Comeau, adding that one worry is that heating costs will soar this winter.
• 31 states had budget gaps totaling $40 billion, and many had cut school financing.

So cutting back on services, cutting back jobs, and increasing fees. This is basically the canary in the coal mine - as states* continue to falter on their budget expect this to just be the precursor for many other parts of the economy. Get your wallet out folks - the tax man will be coming for you; eventually the buck will need to stop as people just say enough... but we apparently have not reached that point.

I continue to believe there is a great disconnect between the what the have nots are experiencing in this country (and their numbers are growing by the day) and the have's. Many of the have not's have now been finally pushed over the edge. Sadly, many of our state budgets could be qualifed as "have nots" and if our Federal Government were not a printing & borrowing machine it also would be.... the chickens from years of bad decisions, are finally coming home to roost. But we still are in denial, helped my faulty government reports. [Q2 Gross Domestic Product (GDP) is a Fraud]

*Note: I believe we are in a regional recession, not a national recession - there are pockets of strength. If you are in a state full of natural resources, which cannot be outsourced you are fine - i.e. oil, natural gas, corn, myriad crops. If you are in other states that rely on "the service economy and/or homebuilding" to goose your economy - you are much more likely to relate to what is going on.