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National Flood Insurance Program Extension Act of 2019 (S 1693) – This bill reauthorizes the National Flood Insurance Program, which was set to expire on May 31, through June 14. The bill was introduced by Sen. John Kennedy (R-LA) on May 23, passed the Senate and the House in one week and was signed into law by the president on May 31.

Additional Supplemental Appropriations for Disaster Relief Act, 2019 (HR 2157) – This bill adds $17.2 billion to this year’s budget for supplemental emergency funding available to many federal departments and agencies for expenses related to wildfires, hurricanes, volcanos, earthquakes, typhoons and other natural disasters. This supplemental funding basically extends the National Flood Insurance Program until Sept. 30, at which point Congress will have to reauthorize the program. The bill was introduced by Rep. Nita Lowey (D-NY) on April 9 and signed into law by the president on June 6.

Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 (S 1379) – This bill reauthorizes certain programs under the Public Health Service Act and the Federal Food, Drug and Cosmetic Act to assure preparedness and response with regard to public health security and all hazards. The legislation was introduced on May 8 by Sen. Richard Burr (R-NC). It was passed by both the House and the Senate on June 4 and is currently awaiting signature by the president.

Blue Water Navy Vietnam Veterans Act of 2019 (HR 299) – Until recently, veterans who served on ships in the Vietnam War were not eligible for the same disability benefits as those who served on land inside Vietnam.This legislation authorizes the extension of these benefits to  service members who served off the Vietnam coastline during the war and were exposed to the toxic chemical Agent Orange.It was introduced by Rep. Mark Takano (D-CA) on Jan. 8, passed in the House and Senate on June 12 and is currently waiting to be enacted by the president.

Taxpayer First Act (HR 3151) – Introduced on June 6 by Rep. John Lewis (D-GA), this bipartisan IRS reform bill is designed to improve services for taxpayers, including creating a new IRS Independent Office of Appeals, seizure modifications, improved customer service, and provisions for cybersecurity and identity theft protection. The bill was passed by both Houses in Congress on June 13 and is currently awaiting signature by the president.

A resolution condemning all forms of antisemitism (SRes 189) – In response to an alarming trend in public anti-Semitic comments and hate crimes, this simple resolution condemns and commits to combatting all forms of antisemitism. It was introduced on May 2 by Ted Cruz (R-TX) and Sen. Tim Kaine (D-VA), and was agreed to by the Senate on June 13.

Providing Accountability Through Transparency Act of 2019 (S 395) – Introduced by Sen. James Lankford (R-OK) on Feb. 7, this bill requires every federal agency that establishes a new rule to include a link to a 100-word plain language summary of the proposed rule. The bill passed in the Senate on June 11 and is currently with the House for consideration.

Measuring the Economic Impact of Broadband Act of 2019 (HR 1289) –This legislation would require the Secretary of Commerce to conduct an assessment and analysis of the effects of broadband deployment and adoption on the economy of the United States. It was introduced on May 2 by Sen. Amy Klobuchar (D-MN), passed in the Senate on June 5 and is with the House for consideration.

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There is a lot of new technology being used to automate functions and save money in large corporations, but many small organizations are shut out of those advancements. This is largely because of the cost, training, knowledge and resources it requires to take advantage of such new technology.

But while small business owners might not be able to afford such advances, it’s good to keep up with what’s going on in the tech world – particularly innovations that can help a business owner automate processes and save money on personnel expenses.

One such advancement is how artificial intelligence (AI) can be used for human resources functions. For example, automated processes that adapt to situations can be useful with recruitment, onboarding and training new employees.

Recruiting

In a loose labor market, even a small business could receive hundreds or even thousands of resumes for one open position. In a tight labor market, a job listing might not procure that many responses, but an employer can be very particular about which applicants to meet. In either scenario, AI can be deployed to screen resumes for keywords, experience and education requirements in order to narrow down the list to only highly qualified candidates.

AI processes can help reduce unconscious biases during the initial recruitment process. Furthermore, AI can help businesses automate scheduling and conduct customized text interviewing. In fact, there are now AI pre-screening tools that host video interviews of potential candidates to narrow the list even further before inviting a short list for a phone or face-to-face meeting. One such tool hosts a series of “games” to assess candidates based on their cognitive and emotional features, while avoiding traits related to their gender, socioeconomic status or race. The assessment is then matched up against profiles of past or current employees who have succeeded in that position. If the AI evaluation determines a candidate is not a good fit for the position for which he applied, it can scan other position profiles to see if there is another role for which the candidate might be better suited.

Onboarding

Onboarding often consists of paperwork, digital tools and videos, with very little personal contact apart from a mass orientation. However, AI-enabled chatbots can provide new employees with a more customized and pseudo-personal experience by answering specific questions and providing tailored information based on their role, department or required job skills and processes they need to learn. AI allows a new hire to self-acclimate to the job without having to bother HR, the hiring manager or colleagues with a lot of questions – helping the new employee get up-to-speed and gain confidence on his or her own.

Consumer goods manufacturer Unilever uses a chatbot that is able to speak and answer employee questions in plain, human language. The chatbot can answer hundreds of general questions and even tailor specific advice, ranging from where to catch a shuttle bus to the office in the morning to how to handle HR and payroll issues.

On-the-Job Training

No matter how perfectly qualified a new hire is for the job, there is always a learning curve. Most of the time, it’s a matter of learning the company’s specific computer programs, processes and even in-house jargon – such as what acronyms mean and the names and locations of conference rooms. AI can help new workers learn basic operating procedures such as these as well as specific job tasks.

For example, a new employee could wear an AI headset throughout the day to help carry out daily job functions, all the while asking specific questions and receiving guidance on best practices. An AI headset may even use image recognition technology to identify what the employee is referencing, and even playback images through virtual reality (VR) to help direct the worker to the appropriate screen on his or her computer.

Enhance Productivity (of Human Employees)

Instead of replacing humans, AI can be used to handle menial tasks so that employees can engage in more meaningful work that requires experience, knowledge and the ability to make calculated decisions. While technology is widely used these days for communication, data mining and researching information, AI as the technology of the future might replace lower-level administrative positions so that resources can be allocated to hiring more higher-level workers who will have a greater impact on firm revenues.

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During its annual Worldwide Developers Conference (WWDC) on June 3, Apple introduced a lot of new technology. Here, we will have a look at iPhone iOS13 upgrades and the all-new Mac Pro.

iOS 13

The main reason for this upgrade is to have a faster and more secure iPhone. Some of the new features that Apple has added to entice buyers include:

  • New map tools that enable consumers to zoom in on a location and have a tour around the place.
  • A dark mode color scheme that users can switch to, replacing the usual white background. The dark mode helps reduce eye strain that users might experience from using a brightly lit screen.
  • Ability to customize your Memoji avatar. Apple added makeup, new hairstyles, accessories and more skin colors to help personalize iPhone avatars. 
  • To enhance security Apple added Sign In with Apple, a privacy tool that uses your Apple ID to verify credentials instead of an email address.
  • A swipable keyboard that relieves iPhone users from the trouble of having to use third-party apps to swipe their keyboards.
  • New photo tools that include adding more lighting effects, removing duplicate photos and additional editing filters. It will also be possible to rotate a video shot in the wrong orientation.
  • iOS 13 also comes with an upgraded Siri, Apple’s voice assistance, that will sound natural and smoother to your ears.

All-new Mac Pro-225

Apple will be introducing a new Mac Pro, which is basically a retooled version of their leading desktop computer. Here are some features to expect from the $5,999 new Mac Pro that will be available for purchase this September:

  • A new design, meant to achieve two objectives: performance and modularity. To handle huge computations without burning up, the new Mac Pro’s tower design includes an offset two-layer circular lattice that will serve as a high-surface area heat sink. A semicircular handle at the top can be easily opened to expose PCI expansion slots.

Specs include up to 1.5 TB system memory, 32GB RAM, Xeon chips supporting up to 28 cores, Pro Display XDR, supports up to 4 GPUs, 8 PCIe expansion slots, up to 2 Radeon Pro II duo GPUs, and two built-in 10GB ethernet ports.

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Members of the college graduating class of 2017 owed an average of close to $30,000 each in student loan debt. Imagine starting out adult life with that kind of debt load?

The prevalence of this type of mounting debt for a 21- or 22-year-old is unprecedented in U.S. history – and all the more reason why young adults need sound financial advice. Financial advisors might not necessarily market to this demographic; instead, waiting until they’re older and have assets worth their while. However, if today’s young adults don’t get off on the right financial footing with regard to managing debt, saving, budgeting and investing for the future, there won’t be that many in need of financial advice once they hit middle-age.

The following are a few tidbits of advice to help recent college grads develop successful money management habits.

Be Patient

Interestingly, many college graduates know they are in over their heads and welcome financial advice; in fact, they’re hungry for it. A recent survey found that the No. 1 goal for 94 percent of Millennials is to become debt free. Unfortunately, tackling thousands of dollars in debt while earning an entry-level salary is a difficult task. The first rule of thumb is to be patient.

It takes time to pay off that much debt. The best advice is not to develop expensive habits, such as buying an expensive car, one with poor gas mileage or a make that is known for expensive repairs. Don’t get into the gourmet coffee habit. Bring your lunch to work. These are common habits among young adults with little discretionary income, but the hard part might be refraining from this type of spending once they start earning a higher salary.

Any wage increases or monetary windfalls should be directed to paying off debt and establishing an emergency savings fund to cover three to six months of living expenses – just in case they get laid off or encounter a large, unexpected expense.

Be Disciplined

Just as it takes time and patience to pay off a large debt, it also takes time and patience for invested money to compound. Once debts are paid off, extra income should be devoted to a regular, automated savings plan, such as a tax-deferred retirement plan with a company match.

Here’s an example of the reward:

  • Madison starts investing $10,000 a year at age 25 for 15 years, for a grand total of $150,000. At age 40, she stops and never returns to that investment habit.
  • Aidan starts investing $10,000 a year at age 35 and continues that habit for 30 years – twice as long as Madison. His total contribution also is twice that of Madison’s, at $300,000.

By age 65, Aidan’s investment grows to $790,582. While Madison invested only half as much as Aidan, by age 65 her investment grows to $998,975 – $208,392 more than him (assuming a 6 percent average annual return). That’s what the power of compound interest can do for a new college graduate who starts saving young.

Be Diligent

Compound interest works both ways, so it’s important that young adults don’t miss or make late payments on student loans or other debt. Such bad habits lead to negative information being reported on their credit report, resulting in a low credit score that can cause them to be turned down for loans or charged higher interest rates. It can even mean losing out on a job opportunity, as some employers check out candidate credit scores.

Above all else, young college graduates need to make debt payments on time, build a credit history and protect their credit score.

Ideally, no matter how large debt payments are or how little a new college grad earns, a young adult should get in the habit of saving the same amount of money each month. Even if it’s just $20 a paycheck; it’s not the amount that matters – it’s the habit.

The best way to accomplish this is to live below your means. When you get a salary increase, increase your monthly savings amount. The easiest way to entrench a savings habit is to “keep living like you’re still a college student.”

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With the Office of the U.S. Trade Representative announcing the increase of tariffs on imported Chinese goods from 10 percent to 25 percent on $200 billion worth of goods, and a directive from the executive branch to increase tariffs on an additional $300 billion in Chinese goods, how will publicly traded companies’ earnings be impacted?

According to a May 10 press release from the office of the United States Trade Representative (USTR), tariffs of 10 percent on imported Chinese goods, consisting of $200 billion, increased to 25 percent. The press release also indicated that the remaining amount of Chinese imports, about $300 billion, will now be subject to tariffs. Based on a June 14 USTR press release, hearings on implementation of the additional tariffs on Chinese goods will be held during the second half of June. This, as the press release notes, is being considered in addition to the pre-existing $250 billion in Chinese tariffs.

Based on a recent publication from the International Monetary Fund (IMF), the United States-China trade war has had an ongoing impact on both U.S. businesses and consumers of Chinese imports. When it comes to Chinese imports headed for the United States, there has been a record amount of American importers increasing their orders to hedge tariff rate increases or additional products subject to tariffs.

The IMF’s piece found that increased tariff costs have been passed onto consumers by American businesses in some instances. One example the piece noted is increased consumer prices of washing machines due to increased tariffs on Chinese imports. In other instances, however, companies have decided to accept reduced profit margins versus increasing the prices of other imported Chinese goods subject to higher tariffs.

How This Impacts Consumer Spending

Analysis of recent economic data reveals that American households consume between 1.5 percent and 2.5 percent of goods imported from China. Using midpoint of 2 percent and a mean consumption rate of $60,000 per American household, the additional tariffs would cost a minimum of $300 more per household for the same imported Chinese goods. 

According to a Trade Partnership study conducted in February 2019, the calculation of Chinese steel and aluminum tariffs plus the 25 percent rate of the initial $250 billion of imported Chinese goods – would result in the average American household spending $767 more.

When it comes to recent and longer-term consumer surveys, the news is mixed; however, it doesn’t portend well over the long-term, especially if the trade issues persist. This is based on survey results from the University of Michigan for June 2019.

The survey found that “consumer sentiment” fell after May’s gain because of both a slower increase in job production and the tariff situation, including the real potential for Mexican tariffs and ongoing Chinese trade issues. It also found that many consumer respondents thought the nationwide economic growth would slow, thereby creating fewer new jobs.

This trend is evident from the survey. In June of 2018, 40 percent of respondents looked poorly at tariffs, compared to 21 percent of those surveyed in May 2018, and 35 percent in July 2018. The respondents similarly indicated, without prompting, that 19 percent of consumers would buy ahead of tariff implementation during the start of June 2019, compared to only 12 percent doing so in May 2019, and 21 percent of those surveyed doing so in March of 2018. Overall, “real personal consumption expenditures” is expected to increase by 2.5 percent in the year ahead.    

The survey’s Sentiment Index improved because consumers said they’re planning to make more “large household durables” purchases sooner to stave off the impact of increased tariffs. This aligns with other experts referenced but can be argued as pulling demand ahead with the potential for fewer future sales.

While there’s no way to predict future sales, for companies reliant on Chinese imports and consumers facing higher costs due to tariffs, consumer sales could very well be lower in the future.

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According to data from a U.S. Small Business Administration Office of Advocacy report from August 2018, businesses have varied longevity.

Nearly 80 percent (79.8 percent) of business startups in 2016 lasted until 2017. Between 2005 and 2017, the SBA mentions that 78.6 of new businesses lasted 12 months. Similarly, nearly 50 percent lasted at least five years.  

While there are many reasons why a company goes out of business – one is profitability. Knowing when the business is breaking even and will start making a profit can be accomplished with a break-even analysis.

Defining a Break-Even Analysis

As the SBA explains, a Break-Even Analysis is a useful way to measure the level of sales necessary to determine how many products or the amount of services that must be sold in order to pay for fixed and variable costs, otherwise known as “breaking even.” It refers to the time at which cost and revenue reach an equilibrium.

In order to get the Break-Even Quantity (BEQ), as the SBA uses, businesses must take their fixed costs per month and divide this figure by what’s left over after subtracting the variable cost per unit from the price per unit – or the product’s selling price.

Fixed Costs

These types of costs can include things such as rent or lease payments, property taxes, insurance, interest payments or monthly machine rental costs.

Variable Costs

In contrast to fixed costs, such as taxes or interest payments for the next month or year, business owners also must deal with variable costs. Utilities and raw material expenses are two examples of variable costs.

Looking at electricity costs, the amount and price of kilowatts used per month will vary based on the amount and length of usage of lights, climate control equipment, production runs and the rate of kilowatts from the supplier.

Looking at raw materials, such as oil or precious metals, these costs can decrease or increase frequently due to tariff or commodity fluctuations.

Sales Price Per Unit and Further Considerations

When it comes to how much an item is ultimately sold for, there are different considerations for different product sales. If a company is selling a product for $100 on the retail level, and the business’ fixed costs are $4,000 and there’s $50 in variable costs, the Break-Even Quantity can be calculated like this:

$4,000 / ($100 – $50) = $4,000 / ($50) = 80 products (to break even)

If those products are surfboards priced at $100 each, then sales of the 81st surfboard and onward would represent profits for the company. It’s also important to see how changing either fixed costs or variable costs can make a difference in the break-even point.

Reducing Fixed Costs

If a business owner refinances a loan to a lower, fixed interest rate, or reduces a salary for the next 12 months, the overall fixed costs will go down. Here’s an example with a lower fixed cost for the same scenario:

$3,500 / $50 = 70 products (to break even)

Reducing Variable Costs

If a business owner searches for another supplier, such as one that’s not subject to import tariff costs that get passed on to consumers, variable costs can be reduced for the same scenario. In this example, the variable cost is reduced to $45.

($100 – $45) = 55

$4,000 / $55 = 73 products (to break even)

While each business has its unique costs and industry conditions, a break-even analysis can help business owners determine future moves.

Sources

https://www.sba.gov/sites/default/files/advocacy/Frequently-Asked-Questions-Small-Business-2018.pdf

https://www.sba.gov/sites/default/files/Worksheet_Pricing_Models_for_Successful_Business.pdf

 

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