Today in Globe Business
As recession stops splurges, luxury retailers retool
Liz Wyman is done splurging on indulgences like a $300 leather Michael Kors bag and a pair of $575 black suede Cole Haan boots. Instead, the 46-year-old state lawyer in Maine is scrimping however she can, tossing out catalogs from Neiman Marcus and avoiding Saks and Nordstrom at all costs.
With her income eroding, she says, “I have to walk away.’’
Wyman is emblematic of the “aspirational shoppers’’ - middle-class consumers with luxury tastes - who have disappeared during the Great Recession. Their newfound frugality has contributed to an estimated 16 percent plunge in luxury spending over the past year, according to a report by Bain & Co.
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Governor Deval Patrick yesterday unveiled a plan to cut the state’s energy costs by consolidating utility bills for public agencies and facilities throughout Massachusetts and buying power in bulk at a cheaper price.
Patrick’s plan, which will be submitted as part of his fiscal 2011 budget proposal, is to begin with the executive branch of state government, which spends $120 million a year on 15,000 separate energy bills. Currently, state agencies each buy their own energy, including electricity, natural gas, and heating oil, some using a statewide contract.
The governor’s plan would create a single entity responsible for purchasing energy in one large quantity. The idea is that by buying in bulk, the state would be able to negotiate a better price for the energy it uses. State officials estimated Massachusetts could save $6 million in the first year through consolidation of all executive branch energy bills.
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The weak economy is producing an unexpected windfall for Massachusetts officials spending hundreds of millions in federal stimulus money fixing the state’s transportation system: low prices for construction work.
Winning bids on 48 transportation projects have collectively come in $59 million below the $226 million that state originally estimated the work would cost. The average was 22 percent below contract estimates, and state officials plan to use the proceeds from the lower contract prices to do more projects with the same amount of federal money.
“It’s fantastic news,’’ said Massachusetts Secretary of Transportation Jeffrey Mullan.
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Service tallies public spaces' energy usage
Starting today, city and town officials throughout Massachusetts can use a free Web program to monitor just how much energy each of their public buildings uses and what the costs are.
Peregrine Energy Group, a Boston consulting firm, developed the tool for the Department of Energy Resources, and gave municipal officials from across the state a preview at last weekend’s Massachusetts Municipal Association conference. The tool, called MassEnergyInsight, will benchmark the consumption of electricity, natural gas, and heating oil in public facilities, which will help state officials cut energy use and costs, they said.
“We’ve said consistently that it’s very important for municipalities, just like homeowners, to understand how they use their energy,’’ said Mark Sylvia, director of the department’s Green Communities division. MassEnergyInsight is being funded with $1.3 million in federal stimulus money and revenue the state collects from the auction of so-called carbon credits, which are bought by polluters to cover their emissions of greenhouse gases.
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Elkinson on slow trip north to stand trial
Alleged Ponzi swindler Richard Elkinson is making a long, slow trip back to Massachusetts to stand trial. Since last Friday, the 76-year-old Framingham man has been in transit, in the custody of US Marshals, riding a van from Mississippi, where he was arrested on Jan. 5 and charged with stealing $29 million from 130 investors.
Officials at the Marshals Service won’t comment on Elkinson’s transportation, but he apparently is on a guarded prison van with other shackled prisoners weaving its way to various lockups to fetch others in federal custody.
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BOSTON CAPITAL: What about the jobless?
President Obama will lavish lots of attention on middle-class voters and their financial anxieties in his State of the Union message tomorrow. You might have a hard time counting all the new tax and benefit plans on one hand. But I don’t think you’ll hear anything new about the Americans who are in danger of losing their homes because they’ve lost their jobs.
This is a large group of people, and they pose one of the most serious threats to anything resembling a real estate recovery this year. Finding a way to help those people in a time of double-digit unemployment would be good politics and even better economics. Perhaps the president will mention the government’s current mortgage plan, known as the Home Affordable Modification Program. O
Officials say that program is picking up steam after a slow start and point to a total of 850,000 mortgages they say have been modified to cut payments by a median of $500 per month.
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