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Friday Financial Five – April 18th, 2014

Friday, April 18, 2014

 

The IRS starts the fiscal year off right

Thanks to higher tax rates and an improving economy, Fiscal Year 2014 is shaping up to be very good for everyone’s favorite government agency, the Internal Revenue Service. According to the Congressional Budget Office’s projections , receipts from October 2013 to March 2014 are $1,300 billion. That’s over $100 billion more than the same period in Fiscal Year 2013, or a roughly 10 percent increase. The extra revenue included a $92 billion increase in personal income tax withholdings, a $17 billion increase in corporate tax income, and $12 billion more in receipts from the Federal Reserve.

Colleges feeling the pinch

There are signs that the demand for college, replete with ever increasing costs and options, may be reaching a tipping point. In many areas, tuition rose over three times that of overall inflation in recent years and only recently shown any sign of a slowdown. This Bloomberg article details the growing trend of colleges that are being downgraded by Moody’s or closed altogether. For those institutions subject to downgrades or dwindling enrollment, the students face the real possibility of receiving a diploma from an institution that may not exist in the near future.

CPI sees a small increase

Speaking of inflation, as the story goes, the country will continue to experience depressed price increases in accordance with a stagnated recovery following the most recent recession. The recent Department of Labor numbers show a 0.2 percent increase in the Consumer Price Index for March. The cost of food and clothing was on the rise while gasoline decreased by almost 2 percent. Overall, there has been a 1.5% increase in prices year over year, still well below the historical average.

Employment numbers fail to impress

March’s employment numbers show total payrolls up 192,000 for the month. The unemployment rate remains stuck at 6.7%, but the positive news is that most of the gains were realized in the private sector. To really jump-start the recovery, the goal should be for 200,000 or more new jobs to be added each month. Each state’s primary focus should be removing barriers for small businesses to create and grow job numbers.

Genworth’s annual cost of long term care

Genworth, one of the country’s leaders in Long Term Care insurance, has produced the 2014 Cost of Care Survey. With just a quick glance, it’s apparent that care costs in the Northeast are trending much higher than the rest of the country, with the average private room in a Rhode Island or Massachusetts nursing home coming in at over $100,000 annually. The huge expense associated with caring for an aging population may drive more retirees to the Midwest. Why pay $130,000 annually for a private room in New York when you can get one in Oklahoma for $57,000?

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at dforbes@forbesplanning.com .

 

Related Slideshow: 13 Biggest Business Stories in RI in 2013

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13 Best Biz Cities in RI

GoLocal's examination of the Best Cities and Towns to do business in RI explored new ground for companies looking to relocate or expand.

Our researchers culled municipally-distinct data on tax rates, workforce availability, cost of living index, economic indicators for short term and long-term job growth, even average driving time to TF Green Airport, to quantify a blend of factors that make for a pro-business environment. Because every city and state in RI complies by statewide measures, those metrics weren't included in GoLocal's research.

READ THE STUDY

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12 Superman

Our coverage of the Superman building's threatened future started back in 2011, when a news story by GoLocal's News Team first unveiled the threat that Bank of America would leave the building and leave the city with the largest embarrassment.

In the story, The Superman Building: Downtown’s Ticking Time Bomb - former Mayor and developer Joe Paolino predicted the demise of the iconic building.

The failure to act by the Taveras Administration created the tallest embarrasment in America - one that has been reported by most every news organization in America.

GoLocal covered the demise of the building throughout the year.

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11 JetBlue Factor

JetBlue's arrival to Rhode Island was first announced by GoLocal is the summer of 2012, but no one quite knew the impact of the JetBlue factor, until a promotion by the airline was launched in partnership with the Big Blue Bug, which rocked the internet and sold out $20 tickets in minutes.

The promotion launched on GoLocalProv showed the world of advertising has changed forever. 

Launched one minute and thousands sold out nearly instantly.

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10 New England's Business

GoLocal's business team loves to collect and breakdown critical data to help Rhode Islander's get a beat on the story or even the bigger story.

One massively wide-read story was one that pivoted off the data of the Milken Institute and its rankings of all the cities in America.

The Best-Performing Cities study is published annually in order to highlight the cities and metropolitan areas in the U.S. that are prospering, and to point out those that are struggling from a structural point of view. By examining job, wage, and technology metrics over a five-year period, the publication utilizes a data-driven approach to provide a comprehensive measure of economic strength.

See which New England cities ranked best overall--both in the 200 largest metros pool and the 176 smallest metros pool.

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9 Arcade is Back

GoLocal has been tracking the Arcade since we came online in 2010 - from investigative video reports about the homeless living in the building to restoration and the reopenning.

While the financial district is only a shadow of itself - kudos need to go out Evan Granoff for pouring millions into the restoration of the classic Greek revival edifice.

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8 38 Studios Defendants

An exclusive report by GoLocal's Investigative Team unveiled that defendant's in the 38 Studio's lawsuit had filed responses, and they had a very different opinion of what caused the collapse and the loss of $100 million to the State of Rhode Island. 

Almost every defendant pinned the blame on Governor Lincoln Chafee for failing to give oversight and then hitting the panic button and forcing the ultimate collapse of the company.

GoLocal posted more than 440 page of court documents.

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7 Social Media

Social media continues to flex its muscle and demonstrate that it is far more influential than legacy media. 

Twitters IPO and the progression of the Facebook model have redefined business.

One article in GoLocal's on going coverage of the metamorphosis of social media was a great guidance article by Johnson & Wales' Sierra Barter which functionally went viral. 

Amazingly, one of the biggest stories of 2013, the effort by union leaders to force John DePetro off the air for calling female teacher protestors "WHORES," has been battled almost exclsuively on social media. 

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6 Alex and Ani Growth

Rhode Island's homegrown Alex and Ani continues at rocket speed growth. 

The Cranston-based, Made in America jewelry company continues to bundle the very best of Rhode Island: jewelry design, old school manufacturing and smart marketing.

According to a study by Bryant University:

 

• Generated $80.04 million in revenue, including $22.06 million in sales in the state of Rhode Island, $51.42 million in sales in other U.S. states, and $6.57 million in exports.

• Supported 1,094 full-time equivalent (FTE) jobs in Rhode Island, from which 296 are direct FTE jobs and 798 are induced FTE jobs.

• Created $35.4 million in income for Rhode Island households. Direct earnings totaled $10.32 million and induced earnings totaled $25.1 million.

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5 College Endowments

In Rhode Island, colleges and universities are big business. They are major economic engines and each of the local colleges readily announce the positive impact they have on the local economy and job creation.

GoLocal's look at the top 50 endowments of the college and universities in New England, found that Harvard's $30+ billion endowment overshadowed all other colleges in New England.

Brown ranked ranked 5th in New England and 28th overall with an endowment of more than $2.4 billion.

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4 Fastest Growing

While Rhode Island's economy is trailing the rest of the country, there are some bright spots. Throughout 2013, GoLocal featured a number of companies that were fast-growing.

Inc Magazine's fastest growing companies in the US list flagged some real growth engines.

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3 Twin River Rebound

Twin River is now a real casino with humans not video tapes dealing black jack.

Under the leadership of John Taylor, the company has rebounded from bankruptcy and become a model for gaming firms.

Now, Twin River is expanding and has made a strategic purchase in Mississippi.

With casinos coming online in Massachusetts sometime in the future, Twin River is doing a better job diversifying and planning for the future than the state of Rhode Island, who is so dependent on the revenue.

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2 Unemployment

Rhode Island's unemployment situtation is a national embarrassment, and it is hard to see a governmental strategy designed for its improvement. In the post-38 Studios environment, decision-makers are affraid to champion significant initiatives.

The result is now that Rhode Island is last in America in unemployment and the crisis has gone on without improvement for years and years.

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1 Demise of Newspapers

In the past year, the Providence Journal has laid off, demanded buyout or pushed retirements of over 50 reporters, editors and photographers - a staggering percentage of the newsroom.

Many of the those who departed were among the most recognized. Pulitzer Prize winning writer Mike Stanton quit to take a teaching job at UConn and now freelances for the Boston Globe.

Speaking of the Boston Globe, Red Sox owner John Henry bought the Globe from the New York Times for $70 million which represented a 97% loss in value for what the NYTimes had paid for the Globe and other related media.

As GoLocal's Pultizer Prize winning reporter Dean Starkman has written repeatedly about the need for media to invest in content. His words seem to fall on deaf ears.

 
 

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