Some Americans May Get Stranded On The ‘Mexican Side’ Of Trump’s ‘Beautiful’ Border Wall

While happy campaign rhetoric made it sound like building a 2,000 foot wall along the U.S. southern border would be a walk in the park, in reality, much like repealing and replacing Obamacare and/or passing meaningful tax reform, various regulatory and other hurdles could tie up the project for years.

One such issue that threatens the viability of Trump’s ‘beautiful’ border wall stems from the fact that most of the southern border of Texas is owned by private individuals which means the U.S. government will have to take 100s landowners to court to exert its power of eminent domain.  Moreover, as NBC points out, some folks live so close to the Rio Grand River that they may end up on the ‘Mexican side’ of the wall.  Of course, these landowner fights could provide all the leverage needed for liberal lawyers to hold up the border wall construction forever, or at least until Trump gets voted out of office.

When the U.S. government built the fence, it had to take hundreds of landowners to court to use its power of eminent domain. That’s because unlike in other southern border states, most Texas border land is privately owned, and tough terrain and water use agreements with Mexico meant some fence was built a mile or more north of the river.

 

With court fights also expected over Trump’s wall, the Texas Civil Rights Project has begun signing up landowners and identifying people who might be affected.

 

Under the U.S. Constitution, the government must prove it wants to seize land for public use and must offer a landowner “just compensation.” While challenging the wall’s “public use” would be difficult, those who believe they’re not getting the full value of their land could take the case to court, setting up trials that could take years.

 

Even if they don’t win, lawyers hope to tie up the wall in court long enough that politics could effectively stop it, either in Congress or after another election.

“That’s a fight that we’ve been ready to fight,” said Efren Olivares, a lawyer with the Texas Civil Rights Project.

Border Wall

 

Of course, when it comes to conservatives in Texas, almost nothing draws more ire from voters than the idea of stripping them of their private property rights through the assertion of eminent domain.  Moreover, in this specific instance, those voters will find unlikely support from any number of liberal organizations who will be all too willing to fund their legal costs to fight Trump and his wall.

In San Benito, Eloisa Tamez spent seven years trying to stop the government from running the fence through her property, which had been in her family since the 1700s. The government eventually won, but only after agreeing to pay about $56,000, many times what it initially offered. She uses a gate to access the part of her property that’s on the other side of the fence.

 

Now, she’s preparing for the possibility of another court battle.

 

“I probably have one more decade to live, and I had one decade of torture,” said Tamez, 82. “I think if they start that business again, I don’t know how much fight I’ll have left in me, but I’m going to fight it until the end.”

Something tells us that yet another Trump initiative just got demoted from a ‘near certainty’ to a ‘maybe’…right along with healthcare and tax reform.

US Restaurant Industry Suffers Worst Collapse Since 2009

What tentative hope had emerged for a rebound for the U.S. restaurant industry at the start of the year, was doused last month when in its February Restaurant Industry Snapshot, TDn2K found that “Restaurant Sales and Traffic Tumble in February” and reported that same-store sales fell -3.7% in February, with traffic declining -5.0% . It did however leave a possibility that things may turn around as a result of the prompt disbursement of withheld tax refunds in the month, which it suggested may have adversely affected sales and traffic.

Alas, that did not happen, and restaurant struggles continued in March as sales and traffic again declined year-over-year: same-store sales were down 1.1% while traffic dropped 3.4%. March results were disappointing for an industry desperately trying to reverse performance trends; with sales now negative in 11 out of the last 12 months, the longest stretch since the financial crisis. There was a modest improvement sequentially, however, and while still negative, sales improved by 2.5% points compared to February as traffic rose marginally by 1.6%.

Source: TDn2K

Explaining the sequential “improvement”, Victor Fernandez, executive director of insights and knowledge for TDn2K, said “March sales were expected to be somewhat better than February due in part to the catch-up of tax refunds that were initially delayed in February. In addition, the industry likely benefited from the shift in the Easter holiday, which fell in March in 2016. For the largest segments (quick service and casual dining), this holiday represents a potential loss of sales.”

However, it was not enough: “The fact that sales were still negative in March given these tailwinds highlights the challenge chains have faced since the recession. Factors like restaurant oversupply and additional competition for dining occasions continue to take their toll on chain traffic.

As TDn2K further adds, with a same-store sales decline of 1.6%, the first quarter of 2017 was the fifth consecutive quarter of negative results. The last time the industry experienced a similar period was in 2009 and the first half of 2010, as the economy began recovery following the recession. Only this time the move is in the opposite direction. 

Furthermore, the first quarter of 2017 followed a very disappointing 2.4 percent sales drop in the fourth quarter of 2016, highlighting the difficult operating environment currently facing many operators.

Worse, same-store traffic dropped even more, or -3.6% in Q1, consistent with the average -3.4% quarterly declines experienced since the beginning of 2016.

The growth rate in check average continues to trend down slowly. For the first quarter of 2017, the average check was up 1.9%, somewhat lower than the average 2.3%growth reported for 2016. This is likely the result of brands relying more on promotions and conservative menu price increases in response to continual declines in traffic. It confirms that restaurants don’t have even the most modest pricing power to offset volume declines.

On the other side of the spectrum, as has been the case in recent quarters, segments with the highest and lowest average check experienced better results. The strongest performance in the first quarter came from upscale casual, followed by fine dining and quick service. It is important to mention that fine dining and upscale casual are among the segments most negatively impacted by the shift in Easter.

Meanwhile, the worst segments in the first quarter were family dining and fast casual. Family dining concepts were also among the most negatively affected by the Easter shift.

A separate report from the National Restaurant Association found that its proprietary Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 98.8 in February – up 0.2 percent from a level of 98.6 in January, however this was the fifth consecutive month in which the Current Situation Index contracted (below 100), as  operators continued to report dampened same-store sales and customer traffic levels.

Furthermore, the NRA found that restaurant operators overall continued to report soft same-store sales in February, with results that were similar to January’s levels. 33% of restaurant operators reported a same-store sales increase between February 2016 and February 2017, while 51% reported a sales decline, a deterioration from January. Restaurant operators also reported dampened customer traffic levels in February.

Only 27% of restaurant operators reported an increase in customer traffic between February 2016 and February 2017, while 57% reported a decline in customer traffic. In January, 26  percent of operators reported higher customer traffic levels, while 54% said their traffic declined.

One notable finding in the TDn2k report was that despite waiters and bartenders being the fastest growing job category under the Obama “recovery”, restaurant operators list finding enough qualified employees to keep restaurants fully staffed as a primary concern. This is mainly due to skyrocketing restaurant churn rates as current restaurant workers believe they can find better options elsewhere, only to return disappointed. Turnover for restaurant hourly employees as well as managers increased again during February according to TDn2K’s People Report. These rates are currently higher than they have been in over ten years and rising.

Making matters worse for restaurants, some are finding that only by  offering higher compensation can they retain workers. So even if wages have been increasing slowly in recent years, this is expected to change soon as the labor market continues to tighten. In fact, according to a recent survey by People Report, about 80% of restaurant companies reported having to offer additional financial incentives to attract candidates in tough recruiting markets. In most almost all cases, those incentives take the form of higher base pay. Who would have though that there is a shortage of line cooks and waiters in the US.

While many continue to seek answers in the pernicious tailspin in the US restaurant industry within the supply side – pricing, competition, layout – the reality is that the key variable may remain with demand.  As some have speculated, it could simply be the reluctance or inability to eat out when money is being inflated elsewhere, to cover higher cost-of-living increases in other areas, such as rent or healthcare, even as wages for large parts of the population remain frozen.

To be sure, restaurant spending is a thermometer for discretionary spending, which varies with how well consumers are doing, and it’s the first to react as Wolf Richter correctly points out. When consumers hit their limits, the first things they cut are discretionary items, such as eating out.

As such, the worst tailspin in the US restaurant industry since 2009 remains the biggest flashing red alert suggesting that when it comes to that invincible dynamo behind the US economy, the American consumer, things have not been this bad in a long time.