Skip to main content

2018 Economic Update Webinar : Second Quarter

Thank you so much for joining us. And I want to welcome each and every one of you. We appreciate you joining us today. The presentation today is another in our continuing efforts to be more than just a CPA firm. We’re having great participation. We’ve got a very diverse, and believe it or not, international group today. So we’re happy to have everyone on our webinar. Obviously there’s a considerable amount of interest, and to some degree concern, and even in some degrees rejoicing. We hope to give you a general overview of the key issues that are impacting the international economy, as well as the US economy. We’re focusing on the areas that we feel will impact the majority of the attendees the most.
Please note your questions, you’ll note there’s a chat section on your GoToMeeting screen. Feel free to type any questions in there. There’s going to be ample opportunity later in the presentation for us to answer those. Several of you have submitted questions in advance, and I will address those specific areas during the presentation, or we’ll get somebody to help answer them as we get to the back end of the presentation today.
So at this point I should have all of your microphones on mute. Please don’t be offended, we just get concerned about background noise during the presentation. Again, you have the chat feature ready to go. And so we’re ready to rock and roll. Let’s talk about the economy.
The key economic issues that we’re going to talk about today are pretty straightforward. Probably the most important is the business cycle, where are we? Going to discuss the fear, geopolitical tensions, interest rates, inflation, tax reform. What I’ve put together is what I call the watch list, what are the things we’re watching the closest, especially in the coming weeks? And what about investing in uncertain times? Always that’s the question that many clients come to us with is, “Okay, what should I be doing during these uncertain times?” Just a sidebar to that, I’m still waiting for the certain times. I haven’t quite found those during my career, but I’m sure they have to be out there, because we always hear about uncertain times.
So let’s look at the business cycle. And I’m going to initially focus over here in the macro section and talk about the fact that the global cycle has become less synchronized. We’re looking that what happens in the US happens in Europe or happens in Asia. It’s just very unsynchronized out there. The outlook tends to be that the global economy has peaked. China is shifting on their interest rates. Their central bank is shifting the policy east a little bit to tighten and to address the slowdown that we are beginning to see in China. The US economy is remaining strong. I haven’t seen the percentage yet. Thus far we’ve got a lot of earnings released this morning, but the vast majority of companies as they report earnings during earnings season have been meeting or exceeding the estimates that they were coming with. So we see that strength. But the cycle’s becoming a little more mature, and I’ll go over some graphs on that in a little bit as the fed begins to tighten on the interest rates. We’ve all seen the quarter point raises that the fed has been doing, and we continue to anticipate those to be coming forward.
There’s ample corporate liquidity, but much of that is especially due to tax reform. And I’ll talk about that a little bit later. And there are trade tensions that remain a headwind. No one knows where all this tariff rhetoric is going to end, but we know at least there’s discussions on the table, and we know that the media wants to make us fully aware that the tariff rhetoric continues, and we see rising and falling of the market on virtually a daily basis due to what is actually happening in the tariff rhetoric war.
On the asset markets the dollar rose against most foreign currencies, and non US asset prices, of course, dropped. So we’re seeing that continued strengthening of the dollar in the international side. The monetary shift to reduce global liquidity growth has caused a little boost in market volatility, as anticipated. So we’re seeing this greater swings as entering the second quarter in the market. We saw 200 and 300 point days in the Dow. There’s smaller allocation tilts at this point in the cycle. By that, we’ve been very heavy looking towards energy, financial, and healthcare for a variety of reasons, but we’re seeing those allocation tilts dwindle and a more focus on diversification and inflation resistant assets such as real estate.
WE all probably, in looking at who’s on our list today, we all went through 2008, and the battle scars of 2008 are still very fresh. But when we do look at those battle scars we have to understand that on a more global view the leading economic indicators imply that the recession is years out. I say a recession or the recession. We know that those come in the normal order of things, but the leading economic index has continued to increase quarter over quarter since December, working through March, and of course June.
Consumer confidence remains very strong. We saw a slight dip in June, 6/10 of 1%. To me that doesn’t necessarily indicate a trend at this point by any stretch, but I believe that what we saw was more of a reflection of the tariff uncertainty than the uncertainty in the US economy as it exists. That’s the one thing the market hates, of course, is any uncertainty. But let’s look at the big picture. I mentioned earlier about going to asset-based stocks. We look right here. Q2, real estate stocks had just a phenomenal quarter. So that’s obviously a real plus that we’re beginning to see. Other small, large, mid cap we saw just a real variety of things going on. High yield bonds did okay, but once you get past that into commodities, investment grade bonds, the various bond sectors as you can see, they all just had terrible quarters. And some have had not so great years. Gold, as a fixed or as a commodity catch all if you will, or safe zone, had a bad quarter as well.
I want to bring your attention to emerging market stocks and just plant the seed to remember this minus 7.7. I’m going to get to a presentation a little bit later today, and I want you to be aware of that. So keep in mind, emerging market stocks had just a terrible quarter. Keeping going forward and looking at the real big picture, we are trying to look at is the US economy in the mid or the late cycle phase. So we look at the things that impact or we expect to impact from a mid cycle, and we find that corporate profits, inventories, employment, wage growth, all of those things are falling as still in the mid cycle. But the monetary cycle or the monetary policy from the feds is indicative of late cycle, wage growth indicative of late cycle. I’ll talk a little bit more about that in a minute. And margin declines from the growth that we saw in 2017 are all reflecting more of a late cycle. So there’s argument that we’re still very solidly in the mid cycle. So I guess the best way I can say it is where are we? The jury’s out. We’re getting mixed messages on the level of maturity of the market. But the trend is not in the early cycle or even heavy to the mid cycle, we’re getting some of those late cycle indicators. And so we want to be sensitive to those.
So what does that mean for us? So let’s focus on the mid and the late cycle as our focus. The growth’s beginning to peak, the credit growth is strong. Profits we’ve seen peaking a little bit. The fed policy is neutral. Well, we’ve seen that the fed policy is now headed into the contractionary mode. Inventory sales growth and equilibrium were reached. So we felt this in 2017. Now for 2018 we’re seeing a little of these areas come into play into the late cycle. I don’t think we’re anywhere near this in the recession world, but it’s something that we’ll continue to monitor. And as you saw from the leading economic indicator side a couple of slides ago, we’re really somewhere in here. And when you look at the chart of comparing the US to other developed nations, we’re very much in the middle of things at this point. So we’ll have to keep watching to see what happens as to that area of the economic cycle.
In looking at the 45 year average of the S&P, we have the good years, we have the bad years. 2018 is shaping up to be just a very nominal year. We’re at 2.6 through June. And so we’ll see where we end up by the end of the year. But if you’ll remember, most of 2016’s 12% growth happened in November and December. That’s a post election effect. ’17 was reflective of the activity, the economic activity and recovery, continuing and expanding in ’17. And ’18 seems to be that flattening off period. If you look back, and I’ll just note a few recovery periods, you’ll have the couple of good years, and then you’ll have a quiet year. You’ll have a couple of good years, and then you’ll have a quiet year. So it’s not unusual to anticipate that this year might just be the quiet year. So we’ll keep monitoring, keep watching the various sectors, and I’ll talk more about just simply diversification as we move forward.
One of the things that slaps us in the face virtually every morning is geopolitical tensions. There’s no question about that. We’ve got four real watch areas that we’re taking a look at. North Korea, I’m not totally sure we can check the box yet that that’s behind us. We don’t have the trusting relationship with North Korea. They’re showing a number of gestures that look like they’re getting into more of a world oriented compliance, but we’ll have to keep them with monitoring.
China of course is in a war of words over tariffs. We’re not quite sure where that’s going to end up yet, but the words seem to keep flying. And as you may have noticed in the last couple of days, we’ve gone from, “Okay, it’s going to be a 10% tariff, it’s going to be a 25% tariff.” I don’t think anybody knows where it’s going to end up at the end of the day.
Europe we got a 120 day reprieve in the war of words over tariffs. It’s interesting to see that. I think what it says is okay, the economic union over in Europe, it’s time to come to the table and let’s talk about this. Don’t know where it will end up.
And Russia, hey, we got a second date. Vladimir has agreed to come over to dinner in 2019. So we’ll continue to stay tuned and see who else shows up for dinner of leaders around the world.
One of our advanced questions was the impact of tariffs, and just how does that impact various economies. So your imposing economy, the country that imposes the tariffs, of course they’ll have fewer imports because their citizens will be more inclined to buy domestically reduced products that don’t carry a tariff. So if you can find a comparable product that’s selling for 10, 15, 25% cheaper, you’ll probably go with it. It also incentivizes those domestic companies that they will have to produce more goods, which will have more profits and provide produced more goods, which will have more profits and provide more jobs inside of that particular country. The imposed economy, the one that is having to pay the tariffs, of course, they will lose some of their buyers, because buyers will buy the domestically produced products or products from non-tariff-imposed economies. So as a result, you will see fewer exports going on, so you get that little protectionism going of our economy. So you have to be careful to balance the tariffs. Tariffs in foreign countries have been around, to my knowledge, since World War II, especially in Europe. That was a way of raising additional monies for the rebuilding efforts. So the continuation of that is not a surprise.
But what does happen is where a country’s been comfortable charging tariffs, countries have been comfortable paying those tariffs or being charged those tariffs, and the relationship was balanced. Other issues were addressed. Well, those relationships, when suddenly you’re going to raise the price of their goods by 10 to 25%, gets strained. And that opens up to retaliation. “Okay, if you’re going to bump it 25%, we’re going to bump it 25%.” And the end result is the governments raise more money, which they desperately think they need, and the consumer ends up paying an additional hidden tax in the form of a tariff if they want to get those foreign goods or services. So keep that in mind. That’s how the tariffs come into play.
Well, what about interest rates? If you haven’t been watching any media in the last two or three months, they you haven’t heard the wonders about interest rates. And in case you didn’t know, the yield curve is flattening. The yield curve is flattening. We hear it almost every day. For weeks, this has become a headline. So what’s the big deal? Well, what’s the worry about the mid-curve flattening? Well, first, what is a yield curve? I’m going to cover that in a minute. And it’s very simply the yield curve is just a line graph. And as you can see from the chart, the line graph shows the interest rates of government bonds at some eventually maturity out 30 years. The 30-year bond is as far as it goes out. So the curve depicts the rate of bonds from the very short term to the very long term. The line uses those dates of maturity from now through 2048, and the interest rates from 0 headed up to 3% right now. We don’t have anything going out over 3% at the moment. Boy, that’s an interesting comment.
Normally, the short rates are lower than the long-term rates. But, as you can see with the flattening out here, there could reach the point where there is an inversion, and that’s where the short-term rates exceed the long-term rates. So we’ve seen that flattening occur, and we have to be very cautious about how that goes. Well, what happens? The changes in the curve impact bank lending. And as you know, bank lending impacts in everything. So banks traditionally borrow at short-term rates, whether they’re borrowing from the feds or borrowing from a customer, the two-year CD, the two-year treasury are usually their borrowing instruments that they use. And then they turn around and lend it out. And by lending it out under longer term and making the differentiation, of course, on the spread. That’s how banks make money.
So the big fear is that we get to inversion. Well, one of the big things that’s impacting, or protecting us, from that inversion, or the impact of it, is just very simply there’s still billions of dollars sitting on the sideline from 2008 in short-term instruments at the bank. The banks still have CDs. The banks are still issuing CDs. And so your traditional look that the money was held in bonds, not in the CDs, and not in the banks, is just not in the mix this time. So the flattening of the yield curve, or even a potential inversion, doesn’t lead us to the interest rate debacle and the recession at this point in the economy. So while we hear about the flattening of the yield curve, it’s not the giant boogeyman that many of the pundits are making it out to be.
Well, what about inflation? Core CPI is still above 2%, and the two biggest weaponries in here, or the causes, are oil … which we watched go from in the low 30s to $1 per barrel to $75 a barrel. This last year, it’s been a 12% increase. Housing is going up about 6.5%, or has gone up. And the federal guidelines, of course, still call for an interest rate adjustment, so we’re expecting that other quarter to half of a point of interest rates. We’ve also got GDP and jobs. GDP is up to 4.1. keep in mind, while 4.1 received a lot of touting, the rolling 4-quarter average is only 2.9. so if your annual rolling number is around 3, that’s very strong. If we can keep growing at the 3%, that’s very good. At the 4%, economy tends to heat up, and we’re going to see the federal have to rush to tighten to protect us against inflation and see the return of the early 1980s come and slap us again.
Unemployment’s down to 4%, which if my college economics class serves me well, that’s technically full employment. The challenge … and my partners and I meet with clients all the time, and almost to a person who sits down at our desks to do planning, the one challenge that they’re facing in their company is finding the employees with the talents and the experience to meet the needs that they have for the job openings. It permeates the accounting profession. It permeates the medical profession. Everywhere you turn, that seems to be the issue.
Wage inflation is beginning, but it’s not happening at a rate you might expect. Only 2.8% year over year, and that’s the most since the third quarter of 2008. So it’s been a decade since it’s been that high. And there are a couple of reasons for that. Number one is the baby boomer effect. There’s a concept of replacing older, more experienced workers with younger, cheaper workers. Now, I’ve got several partners that are toned into this, and so if you will please ignore that previous statement about the baby boomer and the older being more expensive, we’re good with that. Don’t pay any attention to that if you’re a partner at GunnChamberlain.
We also have the technology effect, where we replace workers with technology. Our new addition to the firm a couple of years ago now, GCTechnology, continues to replace numbers of bookkeepers within an organization with the technology that we have access to. So we see companies that can’t find those ones or twos or threes bookkeepers, and we’re able to replace that service for them. So we see it first hand on the technology effect and the impact that that is having on wage inflation.
The economy added 2.3 million new jobs in the last 12 months, and I just wanted to do a quick example of what does that mean to the government coffers. So bear with me on the math here, but you’ve got 2.3 million new workers. The average wage in the U.S. is 54,110. That’s per the Jacksonville Business Journal last week. And payroll taxes, FICA and Medicare, total 15.3%. So if you can do your math in here, that’s about $19 billion per year just in new payroll taxes by the jobs that were added.
And then let’s look at income taxes. Again, 2.3 million jobs. 54,000. And I just used 10% as an average taxing. So if you look at that, that’s $12 billion in new income taxes. So that’s a little over $30 billion in fresh taxes that are a result simply by jobs that were added in the last 12 months. Granted, with our debt, $31 billion is kind of a drop in the bucket, but if there’s anybody on the call who wouldn’t like 31 billion deposited into their bank account, please send me a message, we’ll make sure that that doesn’t happen to you. But it’s got to help.
On the tax reform side, we’re not seeing the impact of the tax reform. And what are people doing with their money? I wanted to focus on really a couple of areas over here on this chart. And looking at what they’re doing with the money. Number one that we get into that I want to focus on is paying down the debt. And number two is the share buybacks and Capex. Those are a couple of areas that would come in here that are looking very strong. We’ve seen with the share buybacks, of course, that puts more money into the pockets of their investors that come back into the market in other entities generally. And the Capex side, of course, expands that technology that I talked about to help fill those jobs that we’re not able to fill through technical advances. That’s where we’re seeing that happen.
So as we look at that, let’s look at what’s happened in the bond market. As a result, new corporate bond issuance has plummeted. Why? Well, back to the previous slide. They’re paying off the debt, and they’ve got the cash flow to fund the expansion that they were looking to do. In addition from the bond buybacks, look at the number of the drop and the number of outstanding shares in the S&P 500. And so you’ve got that buyback going on. There’s somewhere around half a billion shares have been bought back by companies. You may have experienced that with some of your holdings.
So what’s the watch list? The watch list is pretty straightforward. We need to watch for home sales, because with home sales, we’ve seen a seasonally adjusted decline to an eight-month low in existing home sales. We’ve seen rising mortgage interest rates. The mortgage rates are holding at about 4.5% on the 30-year fixed. Those rates tend to mirror the 10-year treasury. There is a question … and we’re watching this … has the market absorbed the foreclose vacancies and the foreclosures that occurred as a result of the great recession? We’re now hitting 10 years of that, and have those houses cycled, and they’re back on the market?
One of the things that realtors that I speak to talk about is the lowering of the quality of inventory as well as the quantity of inventory. And so the sales cycle was taking them a little long to get to, because people are watching a little bit more. So see how that shakes out in the coming months.
Inflation. Do oil prices begin to cap at $75 a barrel? That tends to be the impact that we’re seeing at this point. And so we’ll continue to watch and see what happens to oil prices. But there at least seems to be a temporary stability on it. We will have to look and see what happens to oil and gasoline prices after the Labor Day hit. If you’ve watched prices, they tend to increase leading up to Memorial Day, and then we get a little bit of a decline after Labor Day.
On jobs, we’ve got multiple impactors on the jobs we’ll need to continue to monitor. Of course, there’s immigration, the skillsets of the employees, technology, and the retiring or semi-retiring baby boomers. That’s been one of the biggest change of the economy is that baby boomers are semi-retiring rather than retiring, and that’s filling certain jobs that we haven’t seen replaced in wage increases in that same area.
On profits, now that the tax reform has settled in, will profits continue to grow at a similar rate? The general consensus is no, they won’t. So you’ll want to watch your forward PE ratios on your various holdings.
On the rate side, in light of the economic indicators that are sitting out that, it’s going to be surprising if the federal does not do at least one, if not two, more quarter point bumps between now and the end of the year. I think another quarter is probably in the offing before October 1st. And the question becomes the 4th quarter, what happens what the elections, and do we see a 4th quarter bump as well?
And the risks? Well, the risks are everywhere, and the media does a marvelous job of reminding us about that.
So what do you do? Well, we always want to look at investing in uncertain times. And I want to reiterate, of course, that the following are not recommendations to buy or sell. They’re only presented for information.
The following are not recommendations to buy or sell. They’re only presented for informational purposes. So, what you want to focus on are some various rules. Buy companies not headlines. Warren Buffett has tried to drill that into our heads for the longest period of time, and so we’ve got to be smart on buying companies that are solid companies not just because they’re having a hot month or a hot quarter. Be an investor, not a trader. A trader is in and out of the market focusing on the short term only, but I’m going to show you a chart in a few minutes where short term can come back and bite you. You have to be careful.
Think independently, and I put the two Kramers up here. The first one has a TV show called ‘Mad Money,’ and of course, the second one was a star on ‘Seinfeld.’ The first one scares us to death. The second one made us laugh. More laughter is good so I ask you to focus on the Kramer with a ‘K.’
Avoid emotional decisions. It’s one of the big emotional areas we’ve seen clients focus on has simply been Bitcoin. We’re going to talk about Bitcoin in just a couple of minutes. We don’t have a track record on it, and so it’s an emotional decision more than a technical decision.
Diversify, Diversify, Diversify, and I’ll show you more of that in a minute. And monitor your portfolio regularly. In talking about diversification, this is a chart, and I apologize. It’s a lot on the screen, but hopefully it’s giving you some things for thought. The first thing I’ll point to is that these are the percentage increases of different asset classes on a year-by-year basis. When we look at it, you’ll find that one of the things that can be misleading to a trader versus an investor is if you looked over here at the end of 2017, you would have found that emerging market stocks were just knocking the socks off of the market. They had gone up 38%. And so, that would immediately tell you that, “Okay. I need to go out and buy emerging market stocks. They’re just smoking it, so I’m going to tilt my portfolio in that direction.” Well, that would not have been a very good decision because they lost seven percent the first six months of 2018.
So, when we talk about diversification, we look at this white box being the blended of 60% large cap and 40% investment grade bonds, just to give you an idea. The large cap stocks essentially would be the S & P 500. And as you can see bouncing around, they hang in this middle so you have a whole lot less, if you will, volatility relative to guessing which is the hot stock to pick. If you had to ask me do I really think that small cap stocks are going to hold for the rest of the year, I’ll be totally honest with you, I don’t have a clue. What we’ve always encouraged clients to do is diversify, diversify, diversify.
So, what’s our outlook? We take a look at the outlook in the coming bit of the cycle, the business cycle again appears to be somewhere in the mid range to the late range. The global economy is still in expansion, but the real driver’s the future growth have peaked. And the export-oriented countries have softened a little bit. Some of that may be due to the tariff rhetoric. Some of that may be due just simply to the business cycle. We’re watching that and see how that evolves. Your risks … well, monetary policy with the Feds raising rates, that’s all but a given. We’re real certain that we’re going to see that, and the trade policy regarding tariffs, they’re just as you can see even by today are going to contribute to increased volatility. So, that’s what we’re going to see in Q3 at least. China, the challenge with China is the accuracy of the data, but I think generally the slow down in China is part of their cyclical economy is all but certain, so it’s creating uncertain cyclical outlook for them as to where they are in particular.
So, the current environment warrants smaller asset tilts. An asset tilt, I mentioned earlier that we have been tilting in the direction of energy, financial and healthcare. It’s a time to kind of reign those tilts in a little bit and focus a little bit more on the traditional diversification as the US economy matures. But there are select opportunities within each asset class. Look for winners who look like they’re going to continue to be winners, and that’s where the selection comes into play.
So, that raises up the Gunn Chamberlain Advantage. What we look with clients is gaining financial independence through a properly diversified portfolio. We want you to maximize your portfolio efficiency, and help you to avoid taxes on income and death, and of course, beat inflation. On this what we’ve had a number of questions come in. Joel, I’ve got one that you might be able to see. Actually, there’s two that deal with real estate, so I’m going to unmute your mic for a second and see if you can’t help me with these.
You work with a number of construction and mortgage lenders. Can you grab those questions on housing?
Sure, Sure. Thanks, Marshall. First question was, do you foresee any additional issues with housing affordability related to millennial and the cost of living? That’s a great question. We meet with young millennials and business startup owners on a regular basis, and it is harder for them, I think, for the higher house prices. What we see them doing is focusing on up-and-coming neighborhoods, so maybe where neighborhoods that are transitioning. Also, millennials are unique that a lot of them have multiple income streams. I met with some millennials recently in New York, and one of the topics of conversation at dinner was what’s your side hustle? So, what other income streams do you have coming in besides your main business or your main profession?
And then I think the other thing that we see changing is alternative down payment solutions, so there’s a company that was brought to our attention that they provide the down payment, a 20% down payment for the home. Right now they’re in the market of Seattle, but we see this expanding across the nation. And what they require, it’s not a second mortgage, but it’s actually a Airbnb partnership. They want these millennials and these first time home owners to rent out part of their house, maybe a room or several rooms and be in partnership with an Airbnb rental business for the house. We’re seeing that’s allowing these homeowners to buy up to get a bigger house than they normally would have the down payment money for. Very interesting developments in that area.
Great. Thank you, Joel. One of the questions that just came in is what will be the impact of the trade wars on the economy and interest rates? I tried to address the imposing tariff assessing economy in the NAT as far as interest rates. Of course, if the economy slows down a little bit, you’ll see the interest rate increases be delayed. So, that could be where you will see some impact from the trade war covering just the uncertainty.
Interesting question. We wouldn’t have seen this a year ago. Can we protect our profits from the start market by investing in Bitcoin or L coins? I don’t know, and here’s why. We haven’t had that situation with Bitcoin and Altcoins. We don’t know how they will perform in the long term. Of course, if you’d listen to Time Magazine, you should’ve been buying like crazy when it was 18,000 on Bitcoins, and now you would have succeeded in losing about half of your money. So, I’m not certain that that is the answer. Bitcoin is volatile. It is untested, and so we continue to encourage our clients to shy away and avoid it. If you want to risk some money on it, go right ahead. You never know what’ll happen with it, but as we’ve seen, it can be extremely volatile and because it doesn’t have the track record, it’s more of an emotional type of investment rather than a tangible type of investment.
One question was an explanation on the medium range economic impact from recent tariffs and the impact on US dollar compared to the Euro. Well, we’ve seen the US dollar rise or continue to rise against the Euro, so the rhetoric or discussion between the European countries and the US and the 120 day moratorium, so to speak, to sit at the table and talk thus far has only seen the US dollar continue to remain strong. So, the short term becomes a question mark. Will we see the tariff on German automobiles, which their President has been adamant that that’s one of his targets that he wants to go after, and suddenly the Mercedes or the BMW or Audi are costing 25% more. Will that slow down on those? I would anticipate that it would, but we haven’t seen the US impose tariffs in a long, long time so I don’t know how that’s going to shake out, but obviously it will have a slow down impact on the imports. With people having to replace vehicles, that F150 and the Silverado will become much more popular. Vehicles carrying the American brands, so we would expect that those companies would do better if there is a tariff in the foreign sectors.
The other problem that we have, though, is that steel that they may be using, parts that they may be using aren’t necessarily American made. Those products come from all over the world, and so we have the percentages of a vehicle that’s American made, so you could still end up with tariffs inside of an American vehicle. It’ll be interesting to see whether it’s rhetoric, whether it’s a negotiation to get other countries to reduce their tariffs and create a more even playing field or how does it all shake out at the end, and I can give you real honest answer that no one really knows. So, we’ll continue to monitor.
I have a question, says you say there are 2.3 million new jobs. How many of those jobs are replacing old jobs that have disappeared, and what is the true net gain, and wouldn’t this affect the calculation of payroll and income taxes? Yes. You can break down the 2.3 million, but if you’ve added those people to the economy who were not paying the taxes, obviously new players in are paying taxes that wouldn’t be there. So, if there’s a reduction in unemployment that is being caused by the creation of jobs or those new jobs that are in place, it has a positive impact on those taxes collected. The other side, of course, is the quality of the job and are people underemployed. We’re seeing a change in that just because of the need for employs with skill sets that that underemployed person is now able to find a job more commensurate with their skill set as those jobs begin to open up.
Those are my only questions that have come in. I don’t see anyone else typing at the moment. Thank you for joining us. We look forward to meeting with you soon, and I hope you have a wonderful day. Thank you for the nice comments that are coming up in chat. We really appreciate this opportunity to make this presentation for you. Thank you very much.

Monthly Tax and Financial News

Sign up for information about tax, retirement, and business.

No thanks