Friday Financial Five – May 27, 2016

Friday, May 27, 2016

Dan Forbes, GoLocal Contributor

Home prices increase across the country

Across the United States, hot real estate markets are causing elation and some concern as areas that suffered heavily in the financial crisis have rebounded and then some. There are bidding wars in several areas, from Boston to San Francisco. A housing bubble shouldn’t sneak up on anyone given how recent the last one was, but there are signs of one brewing. According to growth detailed by the Federal Housing Finance Agency, prices are up almost 6 percent from the first three months of this year versus 2015. This includes 1.3 percent growth in the first quarter of 2016, despite twelve states experiencing declines.

CEO pay on the rise

Last week, the income story was President Obama changing the landscape for overtime pay. This week, Equilar and the Associated Press released a study on CEO compensation. According to their analysis, the CEOs at the largest companies received a raise last year of 4.5 percent and a median income almost touching $11 million. Less than fifty percent of the typical CEO pay comes in salaried cash, meaning the rest comes in the form of stock and/or options. The highest paid CEO on the list was Expedia’s Dara Khosrowshahi at nearly $95 million.

Plan for Puerto Rico’s debt

After months of negotiations, there may be an actionable plan in place to address the $70 billion Puerto Rico debt crisis. Overseen by House speaker, Paul Ryan, the Puerto Rico pact may be palatable for both sides of the political aisle. While some Republicans look at the bill as another bailout for leaders that haven’t shown the proper amount of fiscal oversight, some Democrats worry the terms may be too punitive for the territory’s residents. With both sides giving in a bit, the deal should have the backing to get passed this summer.

Senate votes down the DOL rule

In another anticipated move, Senate Republicans and a few Democrats approved a resolution to overturn the Department of Labor’s new fiduciary rule. The resolution will get vetoed by the president, and there aren’t enough votes in either the House or the Senate to override the veto. The rationale behind the rule’s opposition is that increased compliance costs will lead to higher investment fees and the inability to effectively serve those with more modest means. More likely, it means financial companies will have to implement a viable workforce that operates in clients’ best interest in a cost effective manner. That could mean a reduction in the number of advisors.

Prince’s death prompts estate planning awareness

Acknowledging estate planning holes and taking action is one of the biggest financial weaknesses people face. A silver lining to Prince’s passing might be the wave of people getting their estate planning situated, according to Reuters. After Prince’s passing on April 21st, some legal websites saw activity increase by fifty to sixty percent, including huge numbers looking to meet with an estate planning attorney.

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.

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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.

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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.

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.

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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.

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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.

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.

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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.