Margin Squeeze on Businesses

Rising costs are creating a margin squeeze on businesses.  We have been encouraging readers and listeners alike to take preemptive action against these rising costs, and hopefully, you have.  Act quickly if you have not because material and labor costs are going up.  According to the National Association of Business Economics (NABE), twice as many businesses reported higher material costs in the first quarter of 2014 as compared to the last quarter of 2013 and 35% reported higher labor costs.  This is a tough environment in which to raise prices, but do so if you can as

Taxes Do Matter

Romania, one of Europe’s growing countries, is cutting taxes to spur more growth.  They are planning on eliminating the business profits tax on profits reinvested into the country, lower the social security tax, and lower the value-added tax (VAT) on some foods.  Eventually it hopes to reduce the income tax on lower income earners.  The government will either freeze or cut expenditures at the same time in order to reduce their deficit and compensate for the lack of tax revenue.  Romania seems to have the political will to put together what should be a winning formula to

We Listened: Coming Improvements to the ITR Economics Trends Report

In May 2014, ITR Economics’ lead publication, the ITR Economics Trends Report, will be moving to a new all-digital platform.  The ease of accessibility and the benefits of flexibility found in a digital publication work to enhance the same insight and analysis you’ve come to expect from the team at ITR Economics.

France is Catching On

France has a new Prime Minister, Mr. Manuel Valls.  He spoke before France’s Parliament and announced that he will work to make their economy more competitive by cutting taxes and federal spending.  He said those spending cuts will not amount to austerity, but they will slow the rate of growth in federal spending and hopefully trim the budget deficit to 3.0% of the GDP by the end of 2015 (it is currently at 4.3%).  Doing so will keep France within EU guidelines.

Examining CEO Wages

Do you remember last week’s USA Today headline article about CEO wages?  CEOs making $10 million a year?  Others were reported at earning over $100 million a year.  That’s right; I said “earning” because they are being paid to do a job.  Their pay is set by the Board of Directors, and the Board is established by stockholder/investors.  They decide whether the pay is reasonable or not.  A salary level is not a function of voter referendum or public opinion.  The people who have a financial stake in the financial success of the firm determine whether the CEO

A Closer Look at the Job Numbers

The February-to-March increase in jobs, at 0.73%, was just shy of the upper-side normal trend characteristic and very consistent with March increases over the last four years.  I am bringing this up because some broadcast media were saying that the number was disappointing after the poor January and February job numbers associated with the polar vortex.  The reality, based on Bureau of Labor Statistics not-seasonally-adjusted data, is that the January and February numbers were good and consistent with historical norms.

A Strengthening Hand in the EU

The Euro Zone showed an improving current account surplus with the release of the January data according to the European Central Bank.  The EU-27 surplus rose to a record high $34.9 billion in January.  The current account balance is a broad measure of an economy’s international financial positive.  Think of it as cash flow.  What this mean is that the EU-17 is exporting more than it is importing, and currency is moving into the zone.  This is good news for them and for the US in that a stable/mildly expanding EU provides for markets for US goods and removes a finan

Rethinking the Proposed Tax Overhaul

It is never fun to admit you were wrong about something, but it happens. I wrote a blog on February 28th that said I was pleased with the tax overhaul proposal put forth by David Camp, Chairman of the House Ways and Means Committee, (R-MI). I read the published overviews of the proposal and came away believing there were things that both sides would like and things they would not like, but overall, it deserved consideration even though it has not had a chance of being seriously considered.

A Look at February Factory Output

The February US Total Manufacturing Index (not seasonally adjusted) bounced back nicely from a disappointing January.  The January decline was the steepest since 2007, and the February rebound was the best since 2005.  A way to smooth out the sharp monthly movements is to look at the three-month moving average (3MMA).  The 3MMA has been experiencing an average seasonal decline off an October 2013 high.  The annual moving average (12MMA) has risen to the highest level in just over five years.

China: Spending Too Much

The US government is not the only place where too much spending could bring about a financial reckoning.  China is facing some credit and spending problems that may threaten the nation’s health, though not immediately.

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