Friday Financial Five – July 4th, 2014
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Friday, July 04, 2014
Dan Forbes, GoLocalWorcester MINDSETTER™
Jobs continue to impress
The positivity continues in employment, as the magic number of 200,000 added jobs was eclipsed again in June. The past six months has seen the biggest collective increase in jobs since 2006. The unemployment rate of 6.1 percent now stands at the lowest level in nearly six years. There is now real anticipation that this employment stability could lead the Fed to accelerate the timetable on interest rate increases.
1st quarter GDP contracted
Confirming what most expected, the U.S. indeed had a very tough first quarter this year. Instead of the originally estimated small measure of positive growth, the revised Gross Domestic Product was negative by almost 3 percent. While weather did play a role, there was also a sizeable decrease in healthcare spending as the industry continues to sort through all of the changes. While a negative revision is something to keep an eye on, the second quarter numbers will be more telling. Most economists expect a big positive number, so anything tepid or negative could be a problem.
IRS ruling on retirement annuities
A longevity annuity allows the purchaser to buy an income stream later in life, such as age 80 or 85. The basic premise is to prevent people from running out of income as they get older. According to an IRS ruling, 401(k) participants and IRA holders can use up to 25 percent of their accounts, up to $125,000, to purchase longevity annuities, and this money apparently won’t be subject to the Required Minimum Distribution at age 70 ½. There primary risk here lies with the payment structure and the strength of the insurer. There is also the risk that the annuitant dies before the income stream starts, though buyers can ensure there is a return of premium component.
Super-wealthy people hoarding cash
According to a CapGemini/RBC survey, as reported by Reuters, rich investors are holding over one quarter of their liquid assets in cash. This is twice the amount of cash held prior to 2008. Yes, this is yet another survey relating to income equality, but that’s a surprising bit of information. We’ve seen companies take this conservative approach in response to the financial crisis and the survey confirms a similarly dramatic course of action for the wealthiest of individuals.
CFPB looks to assist in bitcoin oversight
The Consumer Financial Protection Bureau (CFPB), tasked with protecting consumers in all areas financial, is looking to add bitcoin to its regulatory oversight. The agency was prompted by a recent report from the Government Accountability Office (GAO). The reality is that virtual currency presents a new set of regulatory and enforcement challenges, as there have already been several instances of bitcoin hacking, laundering, and use for illegal purposes.
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected].
Related Slideshow: Massachusetts Business Rankings
See how Massachusetts stacked up.
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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.
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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.
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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.
Read More About The Economist Grade Here
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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.
Read More About CNBC Ranking Here
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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.
Read More About Forbes Ranking Here
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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.
Read More About ChiefExecutive.net Ranking Here
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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.
Read More About Wallet Hub Ranking Here
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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.
Read More About ALEC Ranking Here
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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.
Read More About Kauffman Foundation Ranking Here
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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.
Read More About Free Enterprise Ranking Here
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