Manufacturing http://www.wisebread.com/taxonomy/term/11186/all en-US Retirement: Not Just for People? http://www.wisebread.com/retirement-not-just-for-people <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/retirement-not-just-for-people" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/1517561890_ceeea08098_z_0.jpg" alt="man by beach" title="man by beach" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>This has always been true &mdash; almost all the economic value of a typical household is the future value of its members' labor.</p> <p>With a little foresight, this will change over time. As your career progresses, you build up savings and investments, with the goal of replacing your income from labor with income from financial assets, preparing for some future time when you can no longer work. You accumulate other assets as well. Household goods, once purchased, continue to provide value for years or decades. If you pay off your mortgage (rather than doing a series of cash-out refinances), you eventually own a house you can live in. (See also:&nbsp;<a href="http://www.wisebread.com/what-it-really-costs-to-own-a-home">What It Really&nbsp;Costs to Own a Home</a>)</p> <p>A lot of what I've written here at Wise Bread has been to advocate for this shift. To advocate for making it early. To advocate for making it consciously.</p> <p>One thing that I hadn't really thought about until recently, is that corporations have been making much the same shift.</p> <p>Until around 1980, the economic value of a corporation was almost entirely the value of its productive capacity. Over the next decade or two, that changed. Instead of investing in plant and equipment, corporations found it more profitable to set up financing arms, to lend their customers the money to buy their products. During the 1990s and early 2000s, companies like General Electric and General Motors found that their money-lending businesses made much more money than their manufacturing businesses.</p> <p>This had a lot of negative side effects. It led to the elimination of good manufacturing jobs, only partially offset by the creation of finance jobs. This shift, as much as off-shoring, was what eliminated six million manufacturing jobs over the past 20 years.</p> <p>It also made corporations much less answerable to their customers. Before, companies either produced what people wanted to buy, or else their profits suffered. After this shift, it scarcely mattered what corporations produced, because so much of their income was <a href="http://www.wisebread.com/simple-living-through-capital">investment income</a>.</p> <p>Basically, the corporations could retire.</p> <p>This shift only benefits the management &mdash; they can now report reliable profits without having to actually do any work.</p> <p>It might be nice if the harmful effects on workers would be enough to promote change, but I don't think that's going to happen. Fortunately, this whole thing is also a negative for shareholders &mdash; the corporate structure doesn't provide any value-add for the shareholders. (Really, it's of negative value &mdash; another layer of expense and another layer of taxation.) The shareholders would be much better off simply getting their money back and investing it themselves.</p> <p>So, although the negative side effects are large, I don't think they're permanent. I foresee an end to the days of retired corporations. If you own stock in such a corporation, you might consider whether your money would be better off in a <a href="http://www.wisebread.com/investing-with-your-values">company that actually does or makes something</a>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/retirement-not-just-for-people">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/boost-your-retirement-savings-avoid-401k-fees">Boost Your Retirement Savings: Avoid 401(k) Fees</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-calculate-future-value-and-why-it-matters">How to Calculate Future Value, and Why It Matters</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-profit-from-obamas-cuba-announcement">5 Ways to Profit From Obama&#039;s Cuba Announcement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Investment Retirement corporations investment income Manufacturing Tue, 18 Sep 2012 10:00:43 +0000 Philip Brewer 954552 at http://www.wisebread.com Recession Journal Part III: How Low Can We Go and When Will We Get There? http://www.wisebread.com/how-low-can-we-go-and-when-will-we-get-there <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-low-can-we-go-and-when-will-we-get-there" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000008682804XSmall.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>As a business blogger, high-finance business journalist, business man and one who minds his business &ndash; who pretends to know what he's talking about &ndash; I pretty much always answer &quot;stay in bonds,&quot; when called upon for investment advice.</p> <p>I hate giving it so I don't. I tend to just pose more questions, as I do in all discourse, objectively presenting many sides of the equation. So people can make up their own minds</p> <p>After all there are two sides to every story and then there's the truth.</p> <p>So I thought I'd utilize the ever-changing world of telecommunications, in a figurative sense of course, to try to get at the most pressing question these days: when will this crappy economy turn up?</p> <p>The answer is, well, when it bottoms out.</p> <p>But when is that?</p> <p>Hold on let me check (ring ring).</p> <p>Hello economic bottom? Economists and forecasters called and left a message, again.</p> <p>They said they&rsquo;re still looking for you and you&rsquo;re still hard to find.</p> <p>Therefore indicators for recovery from and continued length of the current recession remain inconclusive.</p> <p>They also said, &quot;We hope to see you soon because you&rsquo;re neither here nor there.&quot;</p> <p>Indeed, the more economic information that comes out, the more guesswork there is. As of July 17, jobless claims are up to 554,000 &ndash; a sum that is less than June numbers but still up versus 524,000 in the previous week, according to FactSet Economics.</p> <p>Also as of June, the national civilian unemployment rate rose to 9.5%, the highest it&rsquo;s been year-to-date and average hourly wages are also down compared to last year and last month. Additionally Federal government debt is up to $11.5 trillion as of the end of June opposed to $11.3 trillion at the end of May.</p> <p>Yet there are a few bright spots. Home sales, building permits and monetary supply, through historically low interest rates, are all up.</p> <p>So now we can breathe a little bit right?</p> <p>Well, not so much. Those figures are up while consumer confidence and industrial production output, as of the end of last month, are still down.</p> <p>Why the disparity among all the leading indicators? And what does a stoppage of declining figures mean vis-&agrave;-vis inclining figures in the future?</p> <p>Enter the Federal Reserve, which this week released its Beige Book survey to arrive at forecasts based on statistical and anecdotal economic evidence. In the report, the Fed said that most of its 12 regional bank districts are seeing a slower pace of economic decline for the months of June and July but didn&rsquo;t go so far as to predict a turn around.</p> <p>To the glass-half-full soothsayers, this comes as an early sign that the worst of the worst economic doldrums since the Great Depression is closer to coming to a halt and that thereafter an ascent of the proverbial bar graph of growth will emerge once again.</p> <p>Such are the sentiments Fed chairman Ben Bernanke, who, despite seeing personal his assets take a 30% decline in 2008, is bullish on the broader economy.</p> <p>Bernanke recently told Congress that the economy&rsquo;s contraction &ldquo;appears to have slowed significantly,&rdquo; with demand and production showing &ldquo;tentative signs of stabilization.&rdquo;</p> <p>He echoes other policy makers such as New York Fed Chief William Dudley, who predicted that a modest recovery in housing activity and car sales coupled with fiscal stimuli from the government would give the U.S. economy moderate growth in the second half of this year.</p> <p>Then in the same speech this week, Dudley turned around and said &quot;the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation.&quot;</p> <p>The only grain of certainty to be gleaned from cautiously optimistic policy makers and from the Beige Book is that neither provides any tangible signs of outright growth.</p> <p>For instance the Beige Book found that retail demand was &ldquo;sluggish&rdquo; in most areas, and that auto sales were &ldquo;mixed.&rdquo; Manufacturing was &ldquo;subdued, yet slightly more positive.&rdquo; Meanwhile, according to the survey, non-financial services businesses are &ldquo;largely negative with a few bright spots.&rdquo;</p> <p>Yeah that's clearly the sign of recovery right? (Pshhaw!)</p> <p>Lastly, the most telling indicator, bank lending, &ldquo;was stable or weakened further&rdquo; in most loan categories across all 12 Fed districts, with tightened credit standards in at least seven districts.&nbsp; It looks like finding that elusive V-shaped recovery as it relates to the current economic downturn is going to take a bit longer, despite some sporadic cheerleading and sparsely positive numbers.</p> <p>Plus one must take into consideration that financial firms are still digging out of holes, which means credit will remain tight and in Dudley&rsquo;s words, for the near-term still &ldquo;limit the pace of the recovery.&quot; &nbsp;</p> <p>Suffice it to say, policymakers, analysts, investment managers and consumers will all be calling again next week, next month and perhaps even next year, looking for you, economic bottom.</p> <p>Are you still there?</p> <p>Well folks it's not there right now, act accordingly.</p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jabulani-leffall">Jabulani Leffall</a> of <a href="http://www.wisebread.com/how-low-can-we-go-and-when-will-we-get-there">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-16"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-trump-bring-higher-interest-rates-and-inflation-consider-these-money-moves">Could Trump Bring Higher Interest Rates and Inflation? Consider These Money Moves</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-should-you-say-no-to-those-who-want-to-borrow-money-from-you">When Should You Say No to Those Who Want to Borrow Money from You?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-boost-your-finances-while-you-sleep">7 Ways to Boost Your Finances While You Sleep</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-how-much-the-feds-interest-rate-hike-might-cost-you">This Is How Much the Fed&#039;s Interest Rate Hike Might Cost You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/will-high-inflation-persist">Will high inflation persist?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance federal reserve lending Manufacturing US economy Fri, 31 Jul 2009 12:00:11 +0000 Jabulani Leffall 3447 at http://www.wisebread.com