Transcript The State of the U.S. Economy

Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
1. What we care about
2. Understand economic issues of concern
3. Where the US is now and where we
are going
4. How to prepare for the next
12 months and beyond
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com

Do I have income? A job? F/T? P/T?

Do my friends have jobs?

Do I have investments? Are they still down?

Gas prices increasing? Inflation?

Am I upside down on my house?

Are my taxes going to increase?
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
A partial list:
 Environment
 Health
 Education
 Water/Drought/F
arming
 Immigration
 Unemployment
 Budget/Debt
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
5,123,010 people in Colorado (rising)
511,152 on Food Stamps (falling)
$51,231,770,201 CO debt
$10,013 debt owed per citizen (falling)
$9 billion deficit 2013 (increasing)
www.USdebtclock.org as of 2/3/12
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
DJIA up Feb1 over 14,000 PSYCH!
Perspective: May 2, 2008 – DJIA-13,058
What stocks are doing well?
What goes down does not
come up
$1,000
- 40%
$600 +40%= $840
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
*Gas prices
*Increasing prices of everything…$1.84 in
Jan 2009…$6 in CA
*Inflation (2.2%), even with low growth
(1.7%)
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
*One out of 6 houses is upside down
(Moody’sEconomy.com)
Bought in the last 5 years? 29% upside down
(Zillow.com)
◦
Refinancing is very difficult, cumbersome, and repetitive
◦
More government legislation regulating lending
institutions – more than 3,300 pages of Dodd-Frank
legislation
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
 Average
credit card debt per
indebted household $15,442
 Down
from March 2010 $17,630
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
-$864,769,524,121 in American credit card
debt (Feb 3, 2013)
-Up from $805.7 billion March (2010)
Problem: Falling indebtedness due to defaults
vice repayments (Fed Reserve)
-46.7% of Americans carry CC debt
-US citizens: $11.31 total trillion total
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
-$732,594 per family (Feb 3, 2013)
-$5,727 savings/citizen
-$50,048 debt/citizen
(mort/student loans/cc)
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Unemployment
Election consequences
Fiscal cliff
Business concerns
Moving toward Europe
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Unemployment figures….
◦ Unemployment: 8.1% in Aug to 7.9% Jan 2013
Ex. 157,000 new jobs in Jan 2013 (falling)
12.3 million Americans unemployed (40.6% of
those for
more than 6 months)
◦
How it is calculated?
◦
Doesn’t measure discouraged workers
part time, or underemployment 14.7%
Ex. 844,000 discouraged workers
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
US Spending 1997-2017
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Taxes are going to increase
Over $6 trillion new debt last 3 years
◦ $16,500,332,842,500 per www.usdebtclock.org
2/3/13
◦ $142,367 per taxpayer (Dec 6,2012)
◦ $146,049 per taxpayer (Feb 3, 2013)
◦ $51,918 per citizen (Dec 6,2012)
◦ $52,338 per citizen (Feb 3, 2013)
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Taxes are increasing for everyone
◦ Top 5% of Americans pay 58.66% of federal income
taxes collected
◦ Bottom 46.3% of Americans pay no federal income
taxes
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Rate Single Filers Married Joint Filers Head of Household Filers
10% $0 to $8,925 $0 to $17,850 $0 to $12,750
15% $8,925 to $36,250 $17,850 to $72,500 $12,750 to $48,600
25% $36,250 to $87,850 $72,500 to $146,400 $48,600 to $125,450
28% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150
33% $183,250 to $398,350 $223,050 to $398,350 $203,150 to
$398,350 35% $398,350 to $400,000 $398,350 to $450,000 $398,350
to $425,000
39.6% $400,000 and up $450,000 and up $425,000 and up
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
*New QE3 - adds $40 billion/month
buying mortgage-backed securities until
further notice. Creates inflation.
*Big concern: Could last until mid 2015 and
cost $2 trillion (Goldman Sachs Sept 26)
*Still buying long-term Treasuries and
selling short-term Treasury paper
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com




Yes (although it doesn’t look that way WRT
spending)
Over $146,000 per taxpayer
Even with proposed GOP and White House
deficit reduction plans, debt still increases
Must be paid at some point (will not just ‘go
away’)
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com

Larger debt weakens the dollar
◦ Higher interest rates reduces investment
 High interest loans even if economy improves
◦ Hurts future growth (less borrowing)
◦ Higher inflation from Federal Reserve printing

Increased payments for interest on debt
◦ Less money available for real programs
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com

Life Expectancy 1935
◦ 61.7 years

Life Expectancy 2010
◦ 78.7 years – 28% increase

Social security created in 1935
◦ Benefits to those 62 or older
◦ Less per month if starting at 62 instead of 67
◦ ?? Increase to age 70 to save 13/247 billion by
2015/30
◦ Interestingly, the first monthly retirement check was issued to an
individual who had paid a total of $22.54 into the system and received
$22,000 in benefits over her lifetime!
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Creates wealth redistribution
◦ Affordable Care Act raises taxes for top 1% by
$52,000
◦ To finance $250-$2,000 of health benefits for
bottom 50% by 2016 (Tax Foundation)
◦ Worries business owners and investors
◦ Unintended consequences 50 employees
◦ /30 hours per week/cash only
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Taxes will rise by more than $500 billion in 2013
◦ Average tax increase of $3,500 per household
◦ Married couple pays 28% vice 25% above $72,300
◦ On income up to $8,900, goes from 10% to 15%
◦ Summary: Typical middle-class family making
$40,000-$64,000 sees $2,000 more in taxes
◦ Family making $110,000-$140,000 sees $6,000 more
in taxes (Tax Policy Center)
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com

$1 trillion over 9 years
◦ 50% DoD
◦ 50% other federal programs

1 million jobs lost in 2 years

277,000 federal workers fired
◦ 14% federal work force
◦ Dept of Ag/FBI/FAA/Nat’l Parks

-1.3 GDP in 2013
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
$65 Billion loss of consumer
expenditures in early 2013
C + I + G + (X-M) = GDP
18% Federal grants to states cut ($7.5 Billion)
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com


Debt ceiling pushed to May ’13
Clueless
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com

1.7% annual growth rate 3rd quarter, down
from 2.3% 2th quarter, which is down from
2.7% 1st Q

-.1% 4th quarter 2012 due to 22.5% less
military spending, fewer export, lower
inventories
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com

Consumer confidence is not terrible

US was slowly growing for 32 months

American consumers account for 70% of
every dollar spent in US economy

Housing values don’t matter as much as
people think
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
 Hard
to start and sustain a
business
◦ Taxes, Regulations, Health Care
(CBO 20 Sept 6 million owe
health care penalty)
◦ Note: Small businesses are where the
growth is
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
 End
of payroll cut, costs $50,000
income earner $1,000 more in
taxes
 Estate tax at $5.25 Million/per
person
 Tax rates increase to 39.6% for
$400,000 single
 $450,000 married
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
The Laffer Curve
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com








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US taxes
US debt www.usdebtclock.org (States info too)
US spending
US education
EU recessing – Portugal, Italy, Greece, Spain
Germany & France
Iran’s nuclear ambition
Syria and Egypt
Terrorists
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com

Retirees are suffering

Millions of retirees did everything right:
1.
They saved
2.
Invested in stocks, then shifted to bonds and CDS – in
bundled mortgages – to get steady stream of income
3.
Because of lower interest rates, retirees are not getting
rates of return on investments
4.
Retirees not able to spend on travel, entertainment,
restaurants, housing
5.
Retirees seeking good rates are vulnerable to scams
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
 What
 We
can we do?????
have to be really good at our
business and take care of our
clients and customers
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
5. Clean your business house.
Review processes to maximize resources to
focus on clients.
6. Know profits and losses.
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
1.
People don’t know where to turn.
Reduce and manage uncertainty.
Be smart.
Pay attention.
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
2. Security/safety factor.

Stay focused.

Remind of goals and
long term.

Banking scandals and mortgage crisis
made people wary.
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
3. Adjust portfolio to resist external shocks.

Plan for contingencies.

Most people understand real estate.

Use foundations and tax-free investments.
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
4. Prepare for higher taxes in
2013, 2014, 2015,2016.
Perfect storm:
Debt, Health Care, Fiscal
Cliff
EACH individually =
higher taxes
Invest in tax-free.
Reduce taxable income.
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
5. Clean up your business house.

Review processes to maximize resources to
focus on clients.

Protect assets.
6. Know client risk tolerance.
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
7. Communicate with your clients the way that works
best for them.
Social media triad
E/newsletters
Phone
Seminar/Meet
Notes
Carrier pigeons
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com

8. Be wildly successful to help your clients.
Run your business well.

Know your profits and losses.

Know breakeven points.

Don’t expand into a loss.
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
9. Cooperative collaboration.

Connect with the right people.

Work cooperatively to push each other
forward.

How can you help someone else’s business
today?

Who can you refer today?

Who here are you going to help today?
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
 Starbucks
is adding 3,000
stores
◦(We may be broke but at least
we’ll be caffeinated)
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com


15 Ways to Grow
Your Business in
Every Economy
Use your friends!
Mary C. Kelly copyright 2013
www.ProductiveLeaders.com
Author, speaker, frustrated comedian
In Case of Emergency, Break Glass!
360 Degrees of Leadership
15 Ways to Grow Your Business in Every Economy
Stop the Barking
Master Your World: 10 Dog-Inspired Leadership Lessons for
Greater Productivity, Profits, and Communication
Money Smart: How not to buy cat food when you don’t have a cat
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[email protected]
443-995-8663 (Mary’s cell)
Mary C. Kelly copyright 2013 www.ProductiveLeaders.com
Stay in touch! Use your friends!
• Leadership, Dogs and
Twitter
• PETS Rotary March 3,
2012
Master Your World
Mary C. Kelly copyright 2013
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