Friday Financial Five – March 27, 2015

Friday, March 27, 2015
Dan Forbes, GoLocalWorcester MINDSETTER™

CBO updates budget projections through 2025

If a household examined projected cash flow for the next ten years and forecast a deficit every year, it might be disconcerting. The recent revisions for the Congressional Budget Office do show a slightly lower deficit as a percentage of GDP this year, thanks to increased output for the country. However, if taxation laws remain in place, the nation is still looking at a nearly $500 billion deficit for the year. The country hasn’t run a surplus since the beginning of the century, and the CBO estimates a continued deficit through 2025 thanks to increased expenditures for Medicare and Medicaid.

Head of SEC backs fiduciary standard

There is continued momentum behind implementing the fiduciary standard across the landscape of financial advice. The latest to weigh in is Mary Jo White, chairwoman of the Securities and Exchange Commission. The White House has pushed for the standard’s application when advice is provided on retirement accounts and the head of the SEC agrees. It’s possible Ms. White won’t still be chairwoman when legislative action finally comes to fruition, but as she stated, the SEC should “implement a uniform fiduciary duty for broker-dealers and investment advisers where the standard is to act in the best interest of the investor.”

Different indicators in the housing market

It was a matter of time, but Bloomberg reports there are signs that the rising cost of renting is pushing young people into buying a home. One of the impediments to the Fed raising rates has been a desire to keep the housing market afloat. For first time home buyers, the market is making it economically sensible to put rental dollars toward a purchase. On the other hand, new home builder confidence took at dip in March. Wealthier, more experienced buyers tend to build new homes, and this may be in indication that new construction purchases will limp into the spring.

The Gini coefficient measures income inequality

Income inequality dominates news and political chatter, with statistics and explanations available to “prove” both sides of the debate. What might not be as publicized is that there is a unit of measurement to compare the phenomenon across countries. The “Gini coefficient” was developed and published by Italian sociologist Corrado Gini in 1912. Zero represents perfect equality while a value of one represents maximal inequality. Developed countries approaching or above a level of 0.50 are considered to have high inequality, and several groups claim the United States is close to that mark before taxes or transfers. The World Bank’s latest calculation is 0.41 as of 2010, with the country’s highest level of inequality occurring in the District of Columbia. 

More Madoff money

Settlements related to the Bernie Madoff debacle have topped $10 billion, according to Reuters. The latest amount was a $93 million settlement from a “feeder fund” that funneled client money to the firm. That brings the total recovery by trustee, Irving Picard, to roughly sixty percent of the over $17 billion in lost principal for Madoff clients.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at dforbes@forbesplanning.com. 

  • 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. 

     

  • 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. 

     

  • 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

     

  • 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

     

  • 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

     

  • 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

     

  • 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.

    Read More About Tax Foundation Ranking Here

     

  • 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

     

  • 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

     

  • 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

     

  • 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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