Dear Friends
Financial News A number of the notes and links are from CFO.com.
- 401(k) News – according to recent articles in CFO magazine, there has been change in participant behavior, investing, and employers response. 401(k)’s have rebounded from the scary periods in 2008, with contributions coming back, improved performance, and more companies reinstating suspended 401(k) matches. In addition to the April article, the link includes five articles from April 2009 thru December 2009 in part showing the historic progression over the past year. The link also references access to 401(k) Buyer’s Guide 2010. This is a large repository of information on the subject which can offer you a lot of depth.
- Audit Fees – according to an April 8 article in CFO magazine the average company each year spends .061% of revenue on audit fees. I believe this applies to companies who receive a full audit, have an audit committee, and get a signed opinion. Many of you may have smaller costs with your local or regional CPA firm. If you are interested in the “CFO Audit Fee Report” I could forward you the information and you can order a full report.
- Intel on Financial Incentives – per article titled “Intel CFO Sees U.S. Losing Battle for High-Tech Jobs” in CFO magazine, the federal government needs to add financial incentives and improve education and infrastructure to attract high-tech manufactures. Other countries have very explicit national agendas to improve their infrastructure. “China is doing an awe-inspiring amount of investment, ranging from improving the electrical grid and broadband (networks) to building roads and airports”. Intel’s recent experience in China has been very favorable.
Economic Notes
- C&I Lending to Stay in Doldrums – according to a May 5 article in CFO magazine, structural and regulatory pressures will continue to dampen commercial credit. Lenders are traditionally slow to bankroll companies in the early stages of an economic recovery. But some recent studies say the drop in commercial and industrial (C&I) lending brought on by the credit crisis will persist – and that loan origination volumes will stagnate even as US economic growth picks up.
- Business Conditions in Ohio – A year ago per PNC Economic Outlook, pessimism among small and mid-sized owners rose to an all-time high per their surveys. The new findings one year later, reveal Ohio owners are more cautiously optimistic; but, still waiting for more customers and higher sales. In addition to a marked shift in pessimism in the past year, other key findings included:
- The hiring outlook improved as one out of five expect to hire full-time employees during the next six months.
- Regarding business recovery timing, the owners report more evidence of noticeable improvement in their own businesses.
- However, expectations for the a U.S. recovery are fading as owners have grown more cautious about the U.S. economy in the last six months, despite recent signs of improvement. The overwhelming majority (93%) say the U.S. economy has not begun to improve. About one quarter expect the economy to noticeably improve within the next 12 months. Meanwhile, 66% feel the economic recovery is between 13 and 24 months away. (Survey conducted February 2010.)
- Fiscal Stimulus Impact: One year after the passage of the $787 billion American Recovery and Reinvestment Act (ARRA) of 2009, 75% of owners feel they have yet to benefit. Only 1% report their business has received a significant benefit.
- Current Status and Outlook for the United Stated Economy – In a May 4 report from the Federal Reserve Bank of Cleveland, the following were key comments:
- Production is Improving. Real GDP growth has turned positive with inventories and consumption showing the greatest strengths; but, Real GDP growth remains below historical levels despite significant improvements in industrial production.
- The Labor Market is Weak. Unemployment rates remain high due to significant declines in payroll employment while unemployment duration stands at record levels; but, the 2010 outlook for college graduates is improving with projected demand highest in health care services and business administration.
- Housing Segment is Improving. House price appreciation is recovering; but has further to go with projected recovery varying greatly across the country. Foreclosures appear to have peaked; but, remain extremely high adding to the ‘Months Supply of Homes’ currently on the market. But, the outlook for recovery remains positive as excess supply falls, demand grows, and prices increase.
- Consumers are Cautious. The expected change in Median Family Income remains at very low levels while personal savings rates improve; but, consumers remain cautious about their current situation, although slightly optimistic about the future with total retail sales beginning to show strength.
- Financial Sector is Improving. Monetary policy remains accommodating with perceptions of risk continuing to decline while the Federal Funds Rate remains low and excess reserves of depository institutions remain high with the survey of Senior Loan Officers indicating that banks view underwriting standards as tight enough.
- Finally, Consumer Inflation Remains Under Control.
Best Regards,
Paul J. Gillman
CFO & Financial Business Coach
Cell: 513-317-7039
pgillman@cinci.rr.com