We’ve been waiting so long for good news that we are expecting one day, one report or one leading indicator to come out that will announce: “It’s over! Prosperity is here! Go out and buy a home and ask your boss for a raise. The good times are here again!”
Much like your golf game doesn’t convert overnight, neither will our economy. It will take a lot of hard work on consumers’ part to diligently save for retirement and pay down debt. It will take fiscal austerity and enormous compromise between party lines to cut back government spending and keep taxes at a manageable level for middle Americans. It will take a lot of hard work, and it will not happen overnight. So much for the hole-in-one shot.
Which is perhaps why it’s so hard when we see the latest reports that the U.S. economy grew more slowly in the first quarter of this year compared to the end of last year. Once we get good news, we want it to continue, however slowly. These back steps are painful and it feels like we’re having an emotional roller coaster relationship with our own economy.
[CLICK HERE to read, “A Weaker First Quarter Doesn’t Mean a Weak Year,” at abcnews.com, April 27, 2012.]
Global Warming Is Doing Its Part
Interestingly, consumer spending managed to accelerate to an annual rate of 2.9% in the first quarter. The strength is largely attributed to the relatively mild winter that got people outdoors and casing car lots on Saturday afternoons – as apparently the greatest increases came from robust growth in auto sales.
One surprising highlight of the first quarter was spending on home construction and renovations – also attributed to the milder weather. Residents may be fixing up their homes in anticipation of a stronger real estate market, which certainly indicates renewed hope. Experts anticipate housing to contribute to growth this year for the first time since 2005.
Overall, most agree that the first-quarter slowdown is only temporary. Growth is expected to settle in at about 3% by the end of 2012, with expectations that stronger job growth will induce more consumer spending.
Facebook Is Doing Its Part
There’s a lot of press right now about the upcoming Facebook IPO. We’ve learned more about the company’s financials and plans for its future from its S-1 financial statement filed – and amended several times – with the SEC. For example, the company has added 1,500 hundred jobs in just the last 12 months – 43% of its current workforce (although many of those jobs are overseas). The satellite Facebook app industry, which has rapidly taken off during the course of this multi-year recession, employs between 129,000 to 182,000 workers. The wages and benefits they earn range from $1.2 billion to $15.7 billion. Furthermore, Facebook has virtually doubled its spending in the last year thanks to hiring, acquiring and building data infrastructure.
[CLICK HERE to read the article, “Facebook Creates Jobs, Study Finds,” at Smith Business, Spring, 2012.]
[CLICK HERE to view the video, “Facebook Revenue Revealed: The Metrics That Matter,” at Yahoo Finance, April 24, 2012.]
[CLICK HERE to read, “Facebook Growth Stats for 2011-2012,” at Internet World Stats, April 24, 2012.]
You Can Do Your Part
If you’re worried that you’ve gotten behind on your retirement savings, a recent paper from Boston College’s Center for Retirement Research indicates that there are strategies you can employ other than taking on riskier investments to reach your goals. For example, working longer, using a reverse mortgage, or spending 5% less can all have about the same impact as investing your retirement assets in a higher risk, all-stock portfolio. In fact, simply delaying when you start drawing Social Security benefits can have a sizeable impact on your quality of life in retirement. Monthly benefits are more than 75% higher at age 70 than at age 62.
[CLICK HERE to read the article, “The top factors in retirement planning,” at cbsnews.com, April 24, 2012.]
[CLICK HERE to read the working paper, “How Important Is Asset Allocation to Financial Security in Retirement?” at the Center for Retirement Research, April 2012.]
Please give us a call to help you devise a plan to potentially increase your economic security in retirement. After all, we should be doing something other than “puttering around” waiting for the economy to rebound.
 University of Maryland, Smith School Business, “Facebook Creates Jobs, Study Finds,” Spring 2012.
Source: Woods Blog Old