Friday Financial Five – April 29, 2016

Friday, April 29, 2016

Dan Forbes, GoLocalWorcester Contributor

GDP has a rough first quarter

First quarters have not been kind for the economy over the past few years. The first three months of 2016 were bumpy for investment markets and for the country’s economy as a whole from a growth perspective. Gross Domestic Product grew only 0.5%, as business investment and weakened manufacturing provided enough headwinds that growth was down almost one percent from the last quarter of 2015. Consumers are also not spending, as evidenced by an increased savings rate. The Fed identified the slowdown as the reason for a cautious approach at their last meeting and left rates unchanged.

Gender gap for college graduate income

For female college graduates, a study by the Economic Policy Institute says they’re well behind male counterparts in salary from the beginning of their working careers. Men make almost $21 per hour on average out of college, while women make $16.58, a gap that the report contends is widening. Young male graduates earned 8.1 percent more in 2016 than in 2000, while women are earning 6.8 percent less, according to EPI. As a whole, unemployment for young graduates still remains slightly higher than pre-recession numbers, coming in at 5.6 percent.

Commercial real estate showing strength

Real estate was one area that showed strength in the first quarter and commercial real estate has continued an upward trend after disaster struck in 2008 and 2009. Overseas investment has risen sharply each year since then, peaking at $45 billion in 2015. It was also announced last year that The Global Industry Classification Standard Committee will add real estate as an eleventh sector in August, which in turn will impact the S&P and MSCI indices.

GOP still fighting the fiduciary rule

The fight to protect consumers and encourage financial professionals to provide “best interest” financial guidance has become another issue that divides across political lines. Republicans in both the House and Senate are lining up to oppose the recently imposed standard. Various business groups are exploring the possibility of a class action suit against the Department of Labor. President Obama has affirmed that he’ll veto any congressional resolution to void the fiduciary rule.

Prince the latest celebrity estate planning cases study

The news of Prince’s passing was almost immediately coupled with an array of estate planning questions. Prince was single, meaning there’s no spouse to pass along the estate tax-free. If there’s no will produced, beneficiaries will jockey for what’s estimated to be a $300 million estate. There will be a question about how to value royalties generated by his vast amount of music. That includes a library of music never released to the public, allegedly enough to put out an album every year for the next century.

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].

Related Slideshow: Massachusetts Business Rankings

See how Massachusetts stacked up.

Prev Next

WalletHub

Massachusetts has 2015's 28th highest insurance premium penalties for high risk drivers, according to a WalletHub report.

Mass is behind Colorado and New Mexico who come in at 26 and 27 spots respectively while Mass is ahead of Tennessee and the District of Columbia who rank 29 and 30 respectively.

Massachusetts ranks 14th overall in the category of DUI conviction annual premium increase with an amount of $756.

Massachusetts ranks 20th overall in the category of speeding over 20 mph annual premium increase with a total of $261 while ranking 21 overall in the category of two accidents annual premium increase with a total of $1,364.

Prev Next

WalletHub

Massachusetts has been ranked as the 5th most eco-friendly state in the country, according to a recent study by WalletHub.

Mass ranks tenth in environmental quality and fourth in Eco-Friendly Behaviors landing them in 8th overall.

Mass is behind Minnesota and New York who are in the fourth and third spots respectively, and in front of Washington and New Hampshire who come in at the six and seven spots.

Prev Next

The Economist

Small Business Friendliness Grade: D+

The Economist grades states on an A+ to F grading scale for its small business climate. Massachusetts ranks near the bottom of the nation, joining New Mexico and New York in receiving D+ grades. 9 states scored worse than a D+ in the Economist rankings.

Overbearing bureaucracy and excessive licensing is stifling small business in America.

Prev Next

CNBC

#25 CNBC

CNBC ranks each state in cost of doing business, economy, technology and innovation.

Massachusetts' unemployment rate as of May 2014 was 5.6 percent. The state added 9,100 jobs in the month of May.

Forbes

#13 Forbes

Forbes ranks each state in business costs, economic climate, and growth prospects.

The most damning in the commentary:

Massachusetts’ business costs, including labor, energy and taxes, are the highest of the 48 contiguous states—only Hawaii is higher—at 20% above the national average.

ChiefExecutive.net

#47 ChiefExecutive.net

ChiefExecutive.net ranks each state in taxations and regulations, workforce quality, and living environment.

The most damning in the commentary:

Taxation and regulation are always the key barometers. Massachusetts and Oregon are the worst.

Prev Next

Tax Foundation

#25 Tax Foundation

Tax Foundation ranks each state in corporate tax rank, sales tax rank, and unemployment insurance tax rank.

Massachusetts ranked #49 in unemployment insurance tax.

Prev Next

Wallet Hub

#10 Wallet Hub

Wallet Hub ranks each state in ROI rank, state tax rank, and overall government services.

Massachusetts ranked #49 in worst roads and bridges, but ranked #7 in overall government services.

ALEC

#41 ALEC

ALEC ranks each state in economic performance and outlook.

Although Massachusetts ranked low in economic performance, a forward-looking forecast is based on the state’s standing in 15 important state policy variables. Some of these variables include top marginal personal income tax rate and sales tax burden.

Kauffman Foundation

#29 Kauffman Foundation

Kauffman Foundation ranks each state in entrepreneurship.

Entrepreneurial activity generally is highest in Western and Southern states
and lowest in Midwestern and Northeastern states.

Prev Next

Free Enterprise

#18 Free Enterprise

Free Enterprise ranks each state in performance, exports, innovation + entrepreneurship, business climate, talent pipeline, infrastructure.

Massachusetts's reputation as a hotspot for science and technology endures in this year's rankings. The commonwealth is a center for STEM jobs and university research and development, ranking 4th and 2nd, respectively, in those two categories. It also ranks 6th as a center for high-tech establishments. Massachusetts is taking aggressive steps to bolster economic activity with high-impact university-industry R&D projects and new tools for tech-based startup companies.