Inflation (PCE), GDP (China & India), Filing and April 15, First to Market & Barriers to Entry, and Daylight Savings Starts!
The Weekly Economic Summary – Another Mixed Bag
The good news is that the PCE came in at expectations. The bad news is that expectations really weren’t that good.
So, the PCE month-over-month measurement came in at a 0.3% increase from the previous month, and that is exactly where folks predicted it would be, making everyone feel like a winner!
PCE = Personal Consumption Index; the preferred inflation measurement index of the Fed.
The annual increase for prices on the PCE index came in at 2.4%
The core PCE, which is PCE less food and fuel, came in at 0.4% month over month. More winners!
And 2.8% year over year.
So, folks, we are in the 2% range, but the Fed wants to get that down to 2%, not just in the range.
The rest of the economic news was mixed, with one manufacturing measurement showing a positive uptick (PMI) and the other showing a negative downtick (ISM Manufacturing).
Personal income was higher than expected, but consumer confidence dropped below expectations.
What is an economist to do? Darts, anyone?
A mixed bag, indeed.
India’s GDP Grows to 8.4%
That is a great number!
It’s also a number China used to have. As a matter of fact, China’s average GDP from 1979 to 2010 was 9.91%.
That’s like getting a salary raise of 9.9% every year for 30 years!
In 2022 it was 3.0%. That’s more like the wage increases I used to have.
Well, like many things Chinese, that GDP growth now belongs to India.
And, like China used to be, a lot of that GDP is based on infrastructure growth.
With some of it caused by companies that used to be in China but moved to India.
Like they say, history may not necessarily repeat itself, but it sure does rhyme a lot.
Did You File?
A tax return, that is.
The IRS is sending out 125,000 notices to individuals who made $400,000 or more and failed to file returns between 2017 and 2021.
How do they know, you ask?
1099’s and W-2s.
As it turns out, the four most common reasons folks don’t file returns are:
Procrastination
Financial woes. Hmm. $400,000 goes a long way to solve financial woes.
Tax evasion
Protest
Yes, you can protest all day long, but sooner or later, you have to pay your taxes.
And on $400,000, that would be about $125,000 or so.
Now that I think about it, writing that check would create financial woes, causing procrastination, protesting, and ultimately, evading the payment.
1st World problems.
Two Important Business Terms
First to Market and Barriers to Entry
First to Market is usually an advantage since you are the first to market whatever new product it is you have created/invented.
Kind of like building a better mousetrap. Or an electric car.
Barriers to Entry can be high or low, depending on the industry.
An industry with low barriers to entry would be a business consultant. The costs are minimal, there’s no licensing and it is usually the loss of a salaried position that pushes you in that direction.
That’s why business consultants are always popping up at Chamber mixers.
An industry with high barriers to entry would be automobile manufacturing.
Like a billion-dollar barrier to entry. It’s really expensive to open a car factory and get it up and running.
Oh, profitably also needs to be part of the plan.
And that’s when it helps to be first to market.
Like Tesla was.
Because, as it turns out, Fisker, one of several electric vehicle start-ups like Rivian and Lucid, has issued a going concern warning.
A “going concern” warning is made when there are doubts that the company can continue as a, well, going concern.
Tesla was started in 2003 as a pure electric vehicle manufacturer and was first to market. This was a huge advantage in an industry that has very high barriers to entry.
As Fisker is finding out. Actually, Henrik Fisker found out 10 years ago with Fisker Automotive.
It went bankrupt. This is his second go-around.
No bank financing here, I can assure you.
Folks, we are in March. Q1 is almost in the bag so start comparing actuals to budget and give yourself a grade.
Oh, and don’t forget to “Spring Forward” Saturday night! 6 a.m. is going to feel like 5 a.m. and you’ll be wide awake at midnight. Well, at least I will be.
