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Municipal bond investors are piling into Treasuries as state and local government finances worsen and the yield advantage for tax-exempt securities evaporates.

Local government bonds due in three years with AAA ratings yielded 66 percent of similar maturity Treasuries last month, about the lowest level since Bloomberg began compiling the data in 2001. If the ratio moves closer to 60 percent, investors in the 38.3 percent federal tax bracket would lose all the benefits of sheltering income that comes from municipal debt.

Muni bonds are losing favor as state and local governments raise taxes to fund the record $18.5 billion in budget gaps estimated in a National Governor’s Association survey. Increased buying by tax-exempt investors would sustain a rally in short- term Treasuries, already benefiting from demand for a refuge from sovereign credit concerns and rising purchases by banks.

“Treasuries are safer and more liquid investments, especially given the quality issues with many municipalities of late,” said Jeffrey Schoenfeld, partner and chief investment officer in New York at Brown Brothers Harriman & Co., which manages $33 billion in assets. “In this low-rate environment Treasuries can be huge pickup and very good value on an after- tax basis in the shorter-end.”

The Build America Bond program, an Obama Administration plan that subsidizes 35 percent of interest expense for state and local issuers when they sell taxable debt, is also making municipal securities less attractive relative to Treasuries.

Build America Bonds

Almost $80 billion in Build America Bonds have been sold since the program began in April 2009, and taxable bond sales totaled $97 billion, or about 28 percent of long-term, fixed- rate municipal issuance during the last 11 months, data compiled by Bloomberg show. During the six years through 2008, taxable sales made up an average 5 percent of issuance.

More tax-exempt bonds may be replaced with Build America debt, because the federal budget for the fiscal year starting in October calls for an expansion of the program to allow refunding. It also calls for making the stimulus initiative permanent with a lower interest subsidy of 28 percent for new issues beginning Jan. 1, 2011.

Treasuries due in one to three years have returned 0.78 percent since December, after gaining 0.79 percent in 2009, according to Bank of America Merrill Lynch index data. Similar maturity state and local securities returned 0.57 percent this year, extending 2009’s 4.2 percent gain.

Relative Returns

Government securities fell last week after a Labor Department report showed payrolls dropped by less-than-forecast 36,000 in February. Two-year note yields increased 4 basis points to 0.85 percent.

Municipal debt became more expensive as investors bought longer-maturity debt with money stored in short-term tax free money market accounts that yielded as little as 0.02 percent. Assets in the funds dropped by $148.76 billion from the record $528.36 billion in August 2008, according to iMoneyNet of Westborough, Massachusetts.

“Demand for munis is mostly coming from retail investors who have been sitting on a mountain of cash and wondering what to do with it,” said Christine Todd, a managing director and head of the group that oversees $26 billion in tax-sensitive fixed-income portfolios at Standish Mellon Asset Management Co. in Boston. “AAA munis are rich versus Treasuries.”

Baltimore County, Maryland’s AAA rated general obligation bond due in three years yielded as little as 58 percent of comparable Treasuries last week, according to Bloomberg data. The ratio of AAA rated Arlington County, Virginia, debt due in three years dipped as low as 50.7 percent last week, according to Bloomberg data. That means that buyers would be better off buying Treasuries even if they’re in the highest tax bracket.

‘Great Opportunity’

“Most people with wealthy clients think about taxes first, and that usually means munis, even when munis are overvalued,” said Jonathan Lewis, founding principal of New York-based Samson Capital Advisors LLC, which manages more than $4 billion. “Right now there is a great opportunity to go up in quality and increase liquidity by building allocation in Treasuries.”

Municipal bonds may get even more expensive with a proposal in Congress by Oregon Democrat Ron Wyden and New Hampshire Republican Judd Gregg seeking to replace the tax exemption for state and local bonds with a more limited tax credit.

“Supply concerns will continue to be the major issue, even as quality concerns are not emerging to be real issues,” said George Friedlander, municipal strategist for Morgan Stanley Smith Barney in New York. “Add to that the prospect of the possibility for Congress ending tax exemption and it points to more demand for munis going forward. There is still room for munis to get richer.”

Economic Outlook

Even if municipal yields fall, investors can still benefit by switching into U.S. government debt given the relative low level of interest rates and slow economic recovery, said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth management unit in New York.

Federal Reserve Chairman Ben S. Bernanke, who slashed the central bank’s target rate for overnight loans between banks to a range of zero to 0.25 percent in December 2008, has flooded the economy with more than $1 trillion in the largest monetary expansion in U.S. history.

In his semi-annual testimony to Congress last month, Bernanke reiterated that rates will remain low for “an extended period” because the economy’s “nascent” recovery isn’t strong enough to bear higher borrowing costs.

Market Performance

Shorter-maturity Treasures are outperforming longer-dated debt with the Fed in no hurry to raise rates and investors’ concern increasing that inflation will accelerate because of the record borrowing and stimulus measures. Yields on 10-year notes rose to a record 2.94 percentage points more than two-year notes on Feb. 18, and were 2.79 percentage points higher on March 5.

For all the concern about a record federal budget deficit and the rising supply of Treasury debt, U.S. bonds are the place to be so far in 2010, with returns topping equities and commodities. Bank of America Merrill Lynch’s U.S. Treasury Master Index has increased 1.56 percent, compared with a gain of 0.17 percent for the MSCI World Index of stocks and a 0.33 percent increase in the Standard & Poor’s GSCI Index of 24 raw materials.

“Smart investors are doing the math by buying short-term Treasuries, which are giving more after tax returns and adding quality and liquidity to their portfolio,” said Deutsche Bank’s Pollack. “A combination of extremely low rates, lack of muni supply and the prospect of higher income taxes are making munis look extremely rich. If ratios go lower the after tax return will still be there.”

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Forestview Senior Village, the last phase of Woodlands Residential Village, has been completed and residents are moving into the three-story building.

Forestview, developed by Wheatfield-based Calamar, features 92 independent-living senior apartments. Calamar has developed more than 300 units in the 26-acre Woodlands complex, located off of Forest Parkway in Wheatfield.

Since starting Woodlands Residential Village five years ago, Calamar has seen virtually all of its apartments leased. Some 27 units of the 92 apartments in Forestview have been leased, officials said.

Calamar invested more than $30 million to develop Woodlands Residential Village, including $8.9 million on Forestview. The project was aided by incentives from the Niagara County Industrial Development Agency.

Forestview units offer one- and two-bedroom models, with monthly rents ranging from $1,095 to $1,295 and amenities such as private patios, central air conditioning and kitchen appliances payday loans. The units are smoke-free and pet-friendly. Rents also include heat and a Time Warner package that includes cable, telephone and Internet services.

The complex was designed with a central game room, 15-seat theater/media room, billiards room and fitness center.

The entire Woodlands Residential Village helps anchor the Woodlands Corporate Center East, which features a number of offices.

Woodlands Corporate Center East is expected to see more than 1,500 jobs retained or created, with an annual payroll of more than $28 million.

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Brazil’s average interest rate for consumers and companies fell to the lowest since December 2007 last month as banks stepped up lending amid declining defaults.

The average interest rate on bank loans dropped to 34.9 percent from 35.6 percent in October, the central bank said today in a report issued in Brasilia. It’s the lowest since an average 33.8 percent in December 2007. Rates on consumer loans touched the lowest on record, Altamir Lopes, the head of the central bank’s economic department, told reporters in Brasilia.

“The perception of lower risk is the main reason for that result, but the reduction of reserve requirements and increasing competition among banks are also influencing it,” said Roberto Padovani, senior strategist at WestLB do Brasil in Sao Paulo. “Average interest rates should continue to fall for the next six months before stabilizing.”

Brazil emerged from its first recession since 2003 in the second quarter after central bank policy makers made five straight cuts in the benchmark interest rate to a record low of 8.75 percent. President Luiz Inacio Lula da Silva has publicly pressed state and private banks to expand credit to consumers and companies to sustain demand, keep investment in public works and help meet the government’s target of building 1 million homes.

Personal Defaults

The personal default rate in Brazil fell to 8.1 percent in November, from 8.2 percent in the previous month, the bank said, the lowest level since last year.

Total outstanding loans expanded 1.5 percent in November to 1.39 trillion reais ($800 billion) from a revised 1.37 trillion reais the previous month, the central bank said. That figure expanded 1.5 percent in the December 1-15 period, Lopes said.

Total outstanding credit will reach 48 percent of gross domestic product by the end of next year, after touching 45.3 percent this month, the central bank’s director of economic policy, Mario Mesquita, said Dec. 22.

After pumping 100 billion reais into the state development bank, the Brazilian government pledged another injection of 80 billion reais into the bank, known as BNDES, to ease credit conditions for infrastructure projects and other investment.

The economy will expand as much as 5.8 percent next year, fueling inflation above the government’s target of 4.5 percent, the central bank said in a report earlier this month.

Brazil’s non-state banks will be able to issue domestic debt as a way to raise funds, Finance Minister Guido Mantega said Dec. 9. The new paper, which needs to be approved by the central bank’s monetary council, will reduce costs and allow private lenders to compete for long term loans, Mantega said.

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India’s policy makers can’t ignore the link between higher food costs and inflation, central bank Deputy Governor Subir Gokarn said, signaling the monetary authority may quicken measures to curb the increase in prices.

Gokarn is the second official in as many days to flag concerns over accelerating inflation after Prime Minister Manmohan Singh’s economic adviser on Dec. 3 said rising food prices may “require monetary policy action.” The wholesale food-price index climbed to an 11-month high in November, a government report showed this week.

“Persistently rising food prices may spill over into inflation expectation” and “do have an expectation impact,” Gokarn told reporters in New Delhi today. “We can’t ignore that linkage.”

India’s gross domestic product expanded 7.9 percent in the three months to Sept. 30 from a year earlier, the fastest pace in six quarters, as a $130 billion cash injection through monetary stimulus shielded the $1.2 trillion economy from a global recession. China grew at a faster pace of 8.9 percent last quarter, while U.S. GDP rose 2.8 percent, Europe contracted 4.1 percent and South Korea increased 0.9 percent.

“With strong GDP growth and rising inflation, we think the pressure is rising on the Reserve Bank of India to partially pull back the monetary stimulus,” said Rahul Bajoria, an economist at Barclays Capital in Singapore no faxing 1 hour payday loans. Accelerating inflation will likely “trigger action in the form of hikes in the cash-reserve ratio.”

Bonds Drop

Benchmark 10-year Indian government bonds posted their worst week since June as Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council said higher food prices may push up wages and manufacturing costs. The Reserve Bank may start raising interest rates as early as January, increasing borrowing costs by 3 percentage points in 2010, Goldman Sachs Group Inc. said in a research report dated Dec. 3.

The index of wholesale primary articles, comprising mainly of food items such as pulses, fruits, vegetables and cereals, rose 12.53 percent in the week to Nov. 21, the highest since November 2008, a government report showed Dec. 3. The central bank forecasts wholesale-price inflation at 6.5 percent by March 31 from 1.34 percent in October and 0.5 percent in September.

India needs to ensure that the economic recovery isn’t hurt while keeping inflationary pressures under control, Gokarn said today.

“There’s nothing off the table but all options have to be considered with the information that is available to us,” Gokarn said when asked if the central bank may consider raising the cash-reserve ratio.

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Costco Wholesale Corp is hoping that consumers are becoming more comfortable making purchases as the No. 1 U.S. warehouse club operator heads into the year-end holiday shopping season.

“We still are cautious but are keeping our fingers crossed that people are buying a little bit,” said Chief Financial Officer Richard Galanti on Wednesday.

He made the comments at the retailer’s investor day, which was held in its new store in Manhattan.

Costco’s monthly same-store sales fell through much of this year as shoppers shunned purchases of its discretionary merchandise, like jewelry and clothes. Unlike a year ago, when gasoline prices rose to record levels, Costco received no recent sales boost from the price of gas.

But same-store sales returned to positive territory in September and October, marking an improvement from August, when same-store sales fell 2 percent. The retailer has also said it is seeing demand return for products besides food, like sporting goods, clothes and cameras.

Costco also said at the meeting that it plans to ramp up store openings in the next five years. While the majority of those new stores will be opened in the United States, it said it sees potential to expand its store base in Japan, Taiwan, Korea and Australia.

R.J. Hottovy, an analyst with Morningstar, said he was pleased with what he heard at the meeting, and it reinforced his view that Costco has a strong business model.

“In the downward economic cycle that we’re in, I think the value proposition that Costco provides, it really sells itself,” Hottovy said payday cash advance loans.

OPENING PLANS ACROSS THE GLOBE

Costco operated 559 warehouses as of August 30, the end of its fiscal year. That including 406 clubs in the United States and Puerto Rico; 77 in Canada, 21 in the United Kingdom, seven in Korea, six in Taiwan, nine in Japan, 32 in Mexico and one in Australia.

It expects to open 15 to 20 stores this current 2010 fiscal year, up to 20 stores in each of its fiscal years 2011 and 2012, and more than 25 in fiscal years 2013 and 2014.

In Japan, Taiwan and Korea, where business is performing well, Costco said it has the capacity to operate 100 stores. In Australia, where it recently opened its first location, it has the capacity to operate roughly 20 stores, it said.

CEO Jim Sinegal said Costco does not plan to raise prices to boost margins. Instead, he said Costco will be smarter about the products it stocks on shelves to reduce costs — like making round jars square so that more can fit on a shelf or reducing the size of packaging.

“We prefer to make our additional margin by being smarter, by buying better and being more efficient in our business,” Sinegal said.

He also said a reasonable goal for Costco’s operating profit margin would be about 3.5 percent. While that is slimmer than the 4 percent margin he discussed during the boom years, it is still fatter than some analysts have expected. 

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Ford Motor reported a surprise profit for the third quarter Monday, helped by a bump in sales from the Cash for Clunkers program, a reduced cost structure and problems at its U.S. rivals.

The company also announced plans late Monday to raise $3 billion in order to further boost its balance sheet.

The only major U.S. automaker not to file for bankruptcy this year earned $997 million, or 29 cents a share, compared to a loss of $161 million, or 7 cents a share on that basis a year earlier.

Excluding special items, Ford reported a profit of $873 million, or 26 cents a share, in the period. Analysts had been forecasting a loss of 12 cents a share for the quarter on this basis. Ford said it was the first pre-tax operating profit since the start of 2008.

In a separate announcement, Ford said it will issue $1 billion in common stock and $2 billion of debt that will be convertible to common shares. The company said it will start issuing them beginning next month. The automaker also said it hopes to extend the maturity of its revolving credit facility by two years to 2013.

"We expect the moves will enhance Ford’s automotive liquidity and over time reduce the company’s debt burden, providing an additional cushion given the still uncertain state of the economy," said Ford President and CEO Alan Mulally in a statement.

The company said cost cutting during the past year and an improved outlook for sales leads it to believe Ford will be "solidly profitable" in 2011, excluding special items.

That’s the most bullish outlook Ford has offered investors since it started losing money in 2005. The company had previously said it was looking for break-even or better results that year.

Turning the corner. The guidance raised hopes that the company may have turned the corner on nearly five years of losses for its key North American auto operations.

"Our third quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy," said Mulally.

The company said it lowered its structural costs by $1 billion compared to a year earlier, with about half of that improvement coming in North America.

While Ford did not need federal assistance or a bankruptcy reorganization as rivals General Motors and Chrysler did, it was able to win concessions from its unions that resulted in a $300 million structural cost reduction. Ford also said it paid about $200 million less for materials and commodities in the quarter.

Ford still faces some potential problems in the near term. In a vote announced Monday afternoon, the United Auto Workers union rank and file rejected additional contract concessions sought by Ford management, including a freeze on entry level wages.

And Ford said it expects sharp declines in European sales in the next year partly because an even larger Cash for Clunkers there this year will steal demand from future months.

Still, Mulally told investors that the company remains hopeful it could be profitable in 2010, not just by 2011, and that the longer time frame in the new guidance is a way of being cautious.

"The reason we couched it that way is we’re just not sure about the strength of the recovery," Mulally said. Ford will detail further guidance on 2010 profits when it reports fourth-quarter results in January.

Digesting the details. Results in North America were helped by much stronger sales than a year earlier, particularly in the United States, where the company was one of the prime beneficiaries of the Cash for Clunkers program that gave buyers up to $4,500 if they traded in a gas guzzler for a more fuel efficient vehicle.

Even without the Cash for Clunkers program, which lifted the whole industry out of the doldrums, Ford made gains on many of its rivals during the quarter.

During the quarter, Ford’s U.S. market share rose by 2.2 percentage points to 14.6%. Ford benefited from steep market share declines at GM and Chrysler in the wake of their bankruptcies, but it also posted bigger market share gains than Japanese rivals such as Toyota Motor (TM) and Honda Motor (HMC).

Shares of Ford (F, Fortune 500) gained more than 8% Monday.

The company reported overall revenue of $30.9 billion in the quarter, down $800 million from the same period a year ago due to a decrease in revenue at its Ford Credit unit.

Ford said that global auto sales rose $100 million from the third quarter of 2008, to $27.9 billion. It sold 1.23 million vehicles worldwide, up 5% from a year earlier, and its average net pricing also improved along with its sales volume. Auto revenue in North America soared by $2.9 billion, or 27%, to $13.7 billion.

Ford also said it made money on its auto operations, and that it reported positive cash flow of $1.3 billion from its auto businesses. The company had been burning through significant amounts of cash every quarter since the second quarter of 2007 as it suffered from years of ongoing losses.

"While we still face a challenging road ahead, our [company] transformation plan is working and our underlying business continues to grow stronger," Mulally added.

Ford’s automotive unit earned $446 million in the quarter, compared to a loss of $2.9 billion in the year-earlier period, as the company’s core auto operations in North America returned to profitability for the first time since the first half of 2005. 

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Baidu’s hasty move to a new Internet ad system marks a rare stumble for China’s dominant search engine, opening a window of opportunity for others salivating for a piece of the country’s fast-growing online market.

Baidu, whose name is practically synonymous with Internet search in China, surprised investors when it revealed transition to its new Phoenix Nest system will lead to softer revenues into next year as customers adjust, sending its stock down sharply.

The news was music to others, such as Sina Corp and global search leader Google, looking for a bigger piece of the pie in the world’s biggest Internet market with 235 million search users in June, up about a third from a year ago.

“In the short term Baidu could possibly lose market share to Google,” said JP Morgan analyst Dick Wei.

“From the end user perspective, they aren’t going to see much of a difference, but from the advertisers perspective, if you look at monetization market share, it (Baidu’s market share) could be a bit lower in the next few months,” he said.

Baidu expects to lose some customers and have lower revenue in the near term after the system is fully rolled out.

Baidu shares, which shed 0.5 percent to close at $432.97 during regular trading hours in New York, fell more than 13 percent in after-hours trade to $375.99 after the company gave its revenue forecast that was well below Wall Street estimates.

The glitch isn’t the first for Baidu, which was previously accused by some of the world’s biggest music companies of allowing illegal trading of copyrighted songs over its system.

But the stumble could have more serious implications as it relates directly to the company’s revenue generation model.

ONLINE PLAYERS

Baidu, whose name comes from an ancient Chinese poem, is just one of a growing field of upstart firms seeking to cash in on China’s rapidly growing Internet, home to a search market valued at 1.8 billion yuan ($264 million) in the second quarter.

Online game companies such as Shanda Games and NetEase vie for dominance in the country’s Internet gaming market worth nearly $1 billion in the second quarter, while portal operators such as Sina and Sohu.com also spar for dominance in the portal space.

In an Internet market where two or three names usually control each space, Baidu stands out because of its single-handed dominance of China Internet search.

Several Chinese Internet firms such as NetEase, Perfect World and Baidu, have seen their share prices skyrocket this year. However, softer-than-expected fourth quarter guidance from two other companies may further dampen investor sentiment.

Sohu and its recently listed gaming unit Changyou.com warned on Monday that current-quarter revenue would come in below Wall Street estimates, sending their shares down. 

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The U.S. government’s “pay czar” played a critical role in Citigroup’s decision to sell off its lucrative commodities trading business, Phibro, a source familiar with the matter said Friday.

The sale of the unit to Occidental Petroleum Corp relieves beleaguered Citigroup of a massive political headache– what to do with Phibro trader Andrew Hall and his paycheck of up to $100 million.

Hall has become the poster child of Wall Street’s top earners; and while pay czar Kenneth Feinberg would have limited power over his pay this year, he would undoubtedly have dramatically restructured Hall’s pay in future years.

Feinberg made it clear to Citigroup that Hall would not be able to keep earning his eye-popping paychecks, leaving Citigroup with the decision of selling off Phibro and parting with Hall or keeping Phibro but losing the unit’s moneymaker, according to the source.

The source spoke anonymously because the negotiations between Citigroup and the pay czar have not been made public.

Citigroup’s decision to offload both Phibro, and so Hall, demonstrates the extent of Feinberg’s power over the seven firms that have received “exceptional assistance” from the government.

The other firms are Bank of America Corp, American International Group Inc, Chrysler Group LLC, General Motors Co, Chrysler Financial and GMAC.

Alan Johnson, a Wall Street compensation consultant, said the deal helped Citigroup unload what was becoming “an embarrassment on line pay day loans.”

Occidental did not disclose the terms of the deal but said that its net investment would be about $250 million and that it was paying roughly the net asset value of the business.

Citigroup has received multiple bailouts from the government, including $45 billion from the U.S. Treasury’s Troubled Asset Relief Program.

POWER PLAY

Feinberg is in the thick of a 60-day intensive review of the pay contracts for the top 25 earners at the seven firms, in which he has the power to approve or renegotiate their compensation packages.

Citigroup’s announcement that it is shedding Phibro comes just three weeks before Feinberg’s rulings are due.

Feinberg did not have explicit authority to approve or reject Hall’s pay for this year because the contract was signed before a cut-off date of February 11, 2009.

But in a demonstration of the reach of Feinberg’s powers, he would still have a say over Hall’s future pay. He would have likely forced much more of it to be in equity that vested over a longer time horizon, crimping Hall’s ability to take home cash. 

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Senate Banking Committee Chairman Christopher Dodd told Reuters Television on Thursday he sees no obstacles in the way of the Senate reconfirming Ben Bernanke as Federal Reserve chairman.

Asked in an interview if he saw any roadblocks to the reconfirmation, Dodd said, “No, I don’t think so.”

“I’ve indicated I want to be supportive. I think Ben Bernanke’s done a very good job, particularly in the last year or so. I think that view is embraced by a lot of people,” said Dodd, a Democrat.

President Barack Obama nominated Bernanke to a second term as Fed chairman in August quick pay day loan. His four-year term expires in January.

“The chairman’s not going anywhere,” Dodd said.

“We’re so preoccupied now with trying to pull together the modernization of the financial structure, which is taking a lot of time, as it should.”

(Reporting by Kevin Drawbaugh and Corbett Daly; editing by Jeffrey Benkoe)

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Recession-pounded consumers who find Target, Kohl’s and even Wal-Mart a bit pricey are moving down to the dollar stores.

As many retailers suffer — quarterly profits dipped this summer at mighty Wal-Mart, for example — dollar stores are opening by the hundreds. And some locate in well-to-do suburbs that once seemed out of reach for chains near the bottom of the retail barrel.

Growth by Dollar Tree, Family Dollar and Dollar General — the Big Three of discount retailing — has become a lifeline to commercial property owners struggling against rising vacancy rates.

"It’s a fascinating trend consistent with neoclassic economic theory," said Bob Lewis, president of Development Strategies, an economic development consultant in St. Louis. "It relates to marginal utility and inferior goods concepts. And the need for commercial real estate owners to fill up space."

Dollar Tree, with nearly two dozen stores in the St. Louis area, is about to open another store at the Heritage Place shopping center on Olive Boulevard in Creve Coeur. The latest Dollar Tree, scheduled to open Thursday, is taking space formerly occupied by Famous Footwear, which moved in July to a smaller spot.

Marginal utility? Inferior goods? Lewis doesn’t equate inferior with poor quality. He means inexpensive items.

"You can survive on ramen noodles if you’re poor," Lewis said. "You don’t buy more of them after you get a good job. But if you’re poor, inferior goods go up in demand."

Marginal utility relates to shopping "ambience," he said. While many shoppers prefer the surroundings of upscale stores, some find that dollar-store shopping for staple items bestows smart-shopper status, Lewis said.

"It’s a fascinating little situation we have going on here," he added. "If you’re buying the things you might normally pick up at Target or Wal-Mart for a few pennies more, why not use the dollar place?"

Shopping center owners benefit by getting occupants for millions of square feet of retail space payday loans.

"Otherwise, it would probably stay vacant or be rented out to a dance studio, or something, just so that the owners can generate a bit of income and keep the lights on," Lewis said.

Mike Swearngin, vice president of Pace Properties, said Dollar Tree’s presence at Heritage Place helps boost the center’s occupancy to 90 percent, up from 80 percent a year ago. He said Dollar Tree will add stability to Heritage Place and draw the same women who already shop at the center’s Marshalls and TJ Maxx stores.

"It’s the type of retailer that seems to be relatively recession-proof," Swearngin said.

In August, Dollar Tree, based in Chesapeake, Va., reported a 50 percent jump in per-share quarterly earnings. Sales rose 12 percent, to $1.22 billion. Dollar Tree had 3,717 stores, 200 more than a year earlier. Spokeswoman Shelley Davis said the company knows the recession is sending shoppers its way from more upscale places.

"We have a sense we are benefiting from trade downs," she said. "But we also feel our regular loyal customers are shopping us more. We do feel that Dollar Tree can operate in a booming or recovering economy."

She said the 9,600-square-foot Creve Coeur outlet is within the company’s ideal size.

Dollar Tree isn’t alone in enjoying growth. Dollar General Co.’s latest quarterly profit tripled, to $93.6 million, from $27.7 million a year earlier. Sales rose 11 percent, to $2.91 billion. The Goodlettsville, Tenn., company has said it will open 500 stores in addition to the 8,577 it had at the end of July.

Dollar General already has more than 600 stores in Missouri and Illinois, including about 20 in the St. Louis area. Family Dollar has about 30 area stores. The region’s next Family Dollar will open in January at 9070 West Florissant Avenue in Ferguson.

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