Warren Buffett blamed healthcare for dragging down the economy. The U.S. healhcare is bloated and at 17% of GDP, is a much higher cost than healthcare costs of other countries.
Warren supported Obama's planned reforms but said he would prefer 'Plan C', one that focused on cutting costs.
Warren likened healthcare as a 'tapeworm' and said it was 'eating at our economic body'.
While the bloated healthcare in the U.S. is a serious problem, it is almost certainly not the only issue facing the U.S. economy. A massive debt, unemployment, consumer confidence, a housing crisis, not to mention a costly war, could all be added to the list.
Monday, March 1, 2010
Thursday, January 14, 2010
Long-Term Unemployment Increases
Although unemployment figures in the U.S. have remained steady at 10.0 %, long-term unemployment has continued to increase. Long-term unemployment is defined as more than 27 weeks unemployment. 39.8% of unemployed Americans, or 6.1 million Americans have been unemployed for at least 27 weeks as of December 2009. This compares to 22.9% of unemployed Americans, or 3.5 million Americans suffering from long-term unemployment in 2008.
In November 2009, Federal Reserve officials predicted modest economic growth and predicted the jobless rate would drop to between 8.2% and 8.6% in 2011. Still, the Fed cautioned it would take 5 or 6 years for the jobless rate to drop down to pre-2007 levels. Others suggested even longer.
Not all economists agree with these predictions. Some are suggesting unemployment will climb to 10.5% before declining late in 2010.
Either way, 2010 will not be 'business as usual' no matter how much profit Wall Street rakes in. Prudent management of companies, regardless of scale or industry, will do well to keep an eye on expenses as we move into a cautiously optimistic, but uncertain, economic future.
In November 2009, Federal Reserve officials predicted modest economic growth and predicted the jobless rate would drop to between 8.2% and 8.6% in 2011. Still, the Fed cautioned it would take 5 or 6 years for the jobless rate to drop down to pre-2007 levels. Others suggested even longer.
Not all economists agree with these predictions. Some are suggesting unemployment will climb to 10.5% before declining late in 2010.
Either way, 2010 will not be 'business as usual' no matter how much profit Wall Street rakes in. Prudent management of companies, regardless of scale or industry, will do well to keep an eye on expenses as we move into a cautiously optimistic, but uncertain, economic future.
Thursday, December 17, 2009
Disciplined Expense Management Can Drive Earnings
The recent news release from Best Buy (December 15, 2009), of their improved Earnings per Share over last year further confirms the wisdom of not only focused expense management, but also of the advantages of focusing on non-core expenses.
Bob Willett, CEO of Best Buy International, noted that "[their] diligent focus on expense management this year" helped improve overall profitability. It was noted that Selling, General & Administrative (S,G&A) expenses decreased from 22.5% of revenue to 21.3% of revenue. This has a direct impact on the bottom line as well as on cash flow. Even with only a 5% decrease of non-production costs, the impact is both real and noticeable.
While the focus of any company should be on increasing sales, sound expense management practices are always essential. Non-core areas, although smaller than core areas, can nevertheless impact the bottom line. Ignoring non-core areas ultimately leads to inflated expenses and lower profits.
At least Best Buy has it worked out.
Bob Willett, CEO of Best Buy International, noted that "[their] diligent focus on expense management this year" helped improve overall profitability. It was noted that Selling, General & Administrative (S,G&A) expenses decreased from 22.5% of revenue to 21.3% of revenue. This has a direct impact on the bottom line as well as on cash flow. Even with only a 5% decrease of non-production costs, the impact is both real and noticeable.
While the focus of any company should be on increasing sales, sound expense management practices are always essential. Non-core areas, although smaller than core areas, can nevertheless impact the bottom line. Ignoring non-core areas ultimately leads to inflated expenses and lower profits.
At least Best Buy has it worked out.
Thursday, December 3, 2009
Will 2010 be a Better Year?
Yesterday, the United Nations came out with a positive forecast for the global economy for 2010. The primary drive will be from Asia. The U.S. is also expected to see modest economic growth.
Nevertheless, the U.N. cautioned the growth will be 'fragile' and could fail if stimulus spending stops and if the U.S. deficit and external debt continues to climb. Such a crisis could cause global instability.
No word yet on how continued stimulus spending will not lead to a (at least temporary) increase in both the U.S. deficit and external debt.
There is a lot of talk about a looming 'double dip recession' (also mentioned in the U.N. report). There is also a lot of talk about the likehood of 'modest growth' and a 'fragile economy'. I think it's more a case of both cautious optimism and having it both ways. If the economy grows, it was predicted. If it fails, it was mentioned as a realistic possibility.
On that note, I'm not going to be any different. I think 2010 will be better although how much of this is based upon wishful thinking I can't say. Suffice it to say that everyone appears to be in general agreement that we still have a long way to go.
What this means for businesses is simple: stay focused. Don't lose sight of sound cost management practices. Put them in place now (if you haven't already done so).
Nevertheless, the U.N. cautioned the growth will be 'fragile' and could fail if stimulus spending stops and if the U.S. deficit and external debt continues to climb. Such a crisis could cause global instability.
No word yet on how continued stimulus spending will not lead to a (at least temporary) increase in both the U.S. deficit and external debt.
There is a lot of talk about a looming 'double dip recession' (also mentioned in the U.N. report). There is also a lot of talk about the likehood of 'modest growth' and a 'fragile economy'. I think it's more a case of both cautious optimism and having it both ways. If the economy grows, it was predicted. If it fails, it was mentioned as a realistic possibility.
On that note, I'm not going to be any different. I think 2010 will be better although how much of this is based upon wishful thinking I can't say. Suffice it to say that everyone appears to be in general agreement that we still have a long way to go.
What this means for businesses is simple: stay focused. Don't lose sight of sound cost management practices. Put them in place now (if you haven't already done so).
Tuesday, November 10, 2009
Lack of Capital Still a Problem for Small Businesses
The recent news that commercial lending giant CIT Corp. is filing for bankruptcy can't be good for small and mid-sized businesses that rely on easy and cost-effective access to credit in order to survive.
Although experts are indicating that the short-term impact for retailers will be modest, there is less certainty about the impact by spring. John Holub, president of the New Jersey Retail Merchants Association indicated that the economy might turn around by this time, leading to alternative financing opportunities.
What if he's wrong? Banking (no pun intended) on a stronger economy is not a great strategy. Companies should always have contingencies for the worst economic times. Anyone can manage in a good economy. Surviving in a tough economy takes preparation and foresight, two key elements of effective management.
What strategies are companies putting in place to keep costs down and to maximize productivity? These should be the areas of focus. There is never a time when good expense management is unimportant, but there are times when it is paramount. Now is such a time.
Although experts are indicating that the short-term impact for retailers will be modest, there is less certainty about the impact by spring. John Holub, president of the New Jersey Retail Merchants Association indicated that the economy might turn around by this time, leading to alternative financing opportunities.
What if he's wrong? Banking (no pun intended) on a stronger economy is not a great strategy. Companies should always have contingencies for the worst economic times. Anyone can manage in a good economy. Surviving in a tough economy takes preparation and foresight, two key elements of effective management.
What strategies are companies putting in place to keep costs down and to maximize productivity? These should be the areas of focus. There is never a time when good expense management is unimportant, but there are times when it is paramount. Now is such a time.
Monday, September 14, 2009
Ignoring the Lessons of the Past
On the anniversary of the collapse of Lehman Brothers, President Obama urged Wall Street to learn 'the lessons of Lehman' and not repeat the same mistakes.
There are many who are suggesting that Wall Street has not learned the lessons of Lehman, opting instead to fight any new regulations that might impede lending, borrowing, investing or any other business the banks are involved in.
What lessons should have been learned? What lessons have been learned?
Large banks CAN and Do fail.
Re-packaging junk and calling it AAA doesn't change reality.
Being highly leveraged in high-risk securities is dangerous.
Investing in complex derivatives that you don't understand is downright foolish.
However, what has probably been learned is this: if Big Banks get into trouble, the government will bail them out.
Without the bailouts, the crisis would have been massive. With the bailouts, the lesson is not learned.
Caught between a rock and a hard place.
There are many who are suggesting that Wall Street has not learned the lessons of Lehman, opting instead to fight any new regulations that might impede lending, borrowing, investing or any other business the banks are involved in.
What lessons should have been learned? What lessons have been learned?
Large banks CAN and Do fail.
Re-packaging junk and calling it AAA doesn't change reality.
Being highly leveraged in high-risk securities is dangerous.
Investing in complex derivatives that you don't understand is downright foolish.
However, what has probably been learned is this: if Big Banks get into trouble, the government will bail them out.
Without the bailouts, the crisis would have been massive. With the bailouts, the lesson is not learned.
Caught between a rock and a hard place.
Friday, September 4, 2009
U.S. Debt Approaching $12 Trillion
I had to post this link to the new Calculator developed that has 16 digits...in order to show the U.S. debt which was $11,792,918,170,836.43 on Sept 1st.
this is a sobering thought in light of the rosy economic predictions coming out of Washington. Layoffs have continued, although at a slower rate but there are some signs that a recovery is beginning.
The stimulus package has had a positive impact and this will likely lead to improvements next year. Vehicle sales were positively impacted by the 'Cash for Clunkers' program and total vehicle sales will likely be higher next year. However, recovery is not going to happen overnight.
Still, in case some of you are thinking that everything is fine again, take a look at the debt. You may have to purchase the new calculator as most calculators are unable to display the number.
this is a sobering thought in light of the rosy economic predictions coming out of Washington. Layoffs have continued, although at a slower rate but there are some signs that a recovery is beginning.
The stimulus package has had a positive impact and this will likely lead to improvements next year. Vehicle sales were positively impacted by the 'Cash for Clunkers' program and total vehicle sales will likely be higher next year. However, recovery is not going to happen overnight.
Still, in case some of you are thinking that everything is fine again, take a look at the debt. You may have to purchase the new calculator as most calculators are unable to display the number.
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