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Economy

Gary Cohn Looks to Fill In Trump’s Outlines

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Three weeks into Donald Trump’s tenure as president, there’s still no Council of Economic Advisors. Instead of providing policy coordination, the CEA offers economic analysis to the president, so it’s a little odd to not have a team of economists ready to advise Trump on day one. However, that may change soon as one advisor has stepped to the forefront of the president’s economic team: registered Democrat and Goldman Sachs alum Gary Cohn. What does Cohn bring to the table?

What Can We Expect From Gary Cohn in Regards to Trump?

President Trump has been fairly vague in his economic promises, other than to say he’s got “a terrific plan, a really terrific plan” coming soon. But that vagueness looks like it may pay off soon for Trump, as he’s found himself a true economist in Gary Cohn. With several key positions (such as Commerce Secretary and U.S. Trade Representative) still open in Trump’s policy team, Cohn has an opportunity to establish himself as Trump’s go-to for all things economic policy.

Who exactly is Gary Cohn?

For starters, he’s a registered Democrat. He was also president of Goldman Sachs just a few years ago. Cohn describes himself as pragmatic and seems to contradict Trump’s isolationist policies in terms of tariffs and trade wars.

All of this seems to be at odds with Trump’s rhetoric. He’s adamantly pushed for America first policies with a “don’t bend” attitude, has distanced himself from Democrats, and demonized Wall Street so much during his campaign that his ads even featured a Goldman Sachs CEO.

But as Trump and his administration continue to ram heads against the news agencies and clash with protesters and the media, changes may soon be coming in his top staff. Time Magazine featured Steve Bannon on its cover over Trump as the new power in the country. If that trend continues, Trump may take action out of personal pride. While the hardliners get pushed out, moderates such as Cohn would take a front and center seat, advising on taxes, infrastructure, financial regulation, and how best to replace Obamacare.

Watch the Gary Cohn’s  interview on Fox Business:

Trump’s desire to dismantle Dodd-Frank has Gary Cohn’s fingerprints all over it. With Cohn on board, investors can expect to see more financial deregulation and tax cuts coming down the road.

Get the whole story on the latest Kellyanne Conway debacle right here!

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Economy

Move Over Avocado Toast: New Report Shows 92% of Millennial Millionaires Have Purchased Property

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Coldwell Banker Real Estate LLC and the Coldwell Banker Global Luxury program recently released its “Millennial Millionaires” report, part of its “A Look at Wealth” series.

In an effort to help luxury real estate professionals better understand this influential group of current and future homeowners, the company  partnered with WealthEngine to analyze key aspects of the millennial millionaire lifestyle, including wealth creation, philanthropy, property investments, spending trends and more.

“Millennial millionaires are projected to become one of the richest and most influential generations in history, said Charlie Young, president and CEO of Coldwell Banker Real Estate LLC.  “This report is a smart way to get a detailed look at this generation. Real estate professionals should take notice as understanding this generation will be key to growing your business in decades to come.”

Today, there are approximately 618,000 millennial millionaires in the United States.

According to the WealthEngine data, the vast majority – 93 percent – have a net worth between $1 million and $2.49 million, but the generation stands to be worth even more. In the coming decades many more millennial millionaires will be minted as part of “The Great Wealth Transfer;” millennials are projected to inherit $68 trillion from predecessors.

“This population of millennial millionaires is large and only getting larger – by 2030 millennials are projected to hold five times the wealth they hold today, said Craig Hogan, vice president of luxury for Coldwell Banker Real Estate LLC. “How are they investing in real estate now? How will that change when the Great Wealth Transfer takes place? This report is a must read for any real estate professional looking to build life-long relationships with top clients today and tomorrow.”

Other notable report findings include the following:

  • The top states for millennial millionaires: California (44%), New York (14%), Florida (5%), Massachusetts (5%), Texas (5%), Washington (4%) and New Jersey (4%)
  • Eight of the top ten ZIP codes are concentrated in California’s Silicon Valley, but the surprise #1 ZIP code? Traverse City, Michigan
  • Walkability is welcome: millennials value walkable neighborhoods over well-established luxury communities
  • But they’re not giving up driving altogether. The top car model for millennial millionaires is the BMW 3 Series; compare that to the top car for all millennials, the Chevrolet Silverado
  • Homeownership is high: 92% have purchased property, with 80% purchasing a single-family dwelling
  • Home Improvement = Customization: 77% are interested in home improvement as a way to personalize their space
  • Charitable causes are compelling: 56% of millennial millionaires donate to charities

Click here to read the full report!

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Business

Why is Small Business in America Dying?

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Why is Small Business in America Dying

A lot of people are saying small business is dying in America. An article on Brookings charted data from the U.S. census of the bureau, which tells us:

  • 1978 had a ~14% firm entrance rate and a ~11% firm exit rate
  • 2011 had an ~8% firm entrance rate and a ~9.5% firm exit rate

In short, the U.S. is now losing more businesses than its creating. This trend developed slowly over three to four decades.

The question is why? Here are the most common theories that explain why the U.S. isn’t creating as many small businesses:

1. Big companies are taking up the market

It’s simple math. If Starbucks opens 1,000 new stores, it means mom and pop cafes will have to suffer. Markets are limited. If customers are going to big companies then small businesses are losing customers.

Big companies also tend to hog the best talent in the industry. Put yourself in these worker’s shoes. Would you rather work for a 10-employee tech company? Or take a 6-figure salary at Google?

Also, large companies absorb smaller ones and set them up as subsidiaries. The bigger they become the less small businesses there are.

2. Healthcare costs

The cost of healthcare is astronomical. Not only do entrepreneurs have to pay for their own health insurance, but they also have to pay for employee benefits.

Large companies have an advantage in this regard since healthcare becomes cheaper when you purchase it in bulk.

3. Technology costs

Technology is imperative to streamline production and scale business. Unfortunately, it’s usually expensive to acquire and properly implement. It’s not cheap to develop an online presence and big business usually scoops up the talent.

There’s also automation, which saves tons of time and money for businesses, but it’s so expensive that only bigger businesses can afford it. If a customer wants self-checkout, chances are they will go to Wal-Mart or Lowe’s before a small business.

4. Our systems are not small business friendly

Some point out that small businesses are held to similar regulations as giant companies. Small businesses must pay income taxes, sales taxes, unemployment taxes, payroll taxes, and more. They are not equipped to handle these regulations and are punished by the IRS.

Others point out that the U.S. government does not provide a lot of assistance to help jump-start small businesses. Some have called for lower taxes on small businesses or for government funds to help them.

5. Can’t get funding

Starting a business costs a lot of money and it’s a huge risk. Consequently, the loans that are readily available to entrepreneurs have high-interest rates and quick payback terms. This crushes small businesses early in their development when they need money the most.

Another problem is that professional investors heavily favor mature companies that have a proven track record of growth. The capital available for business tends to go to larger companies rather than small businesses.

6. Student debt

Young adults have a student debt problem. Many of them are exiting college with several loans that will take years to pay off. On top of this, many are saving up to buy houses. Therefore, they view starting a small business as unwise at best.

A lot of entrepreneurs rely on a personal savings account to cushion the costs of launching a business. But few have the finances to pull that off.

Unfortunately, many would-be-entrepreneurs are crippled from launching a small business.

The decline of small business may not be bad

Some experts posit that the decline of small businesses is not necessarily a bad thing. We just have to look at it the right way.

With the dawn of the internet, a lot of business is now conducted online. This gave rise to the gig economy, a workforce that is difficult to measure. Since remote work is becoming easier, companies hire freelance writers, web designers, remote secretaries, temporary bookkeepers, and more.

Factors like this are hard to calculate when analyzing the overall health of the American economy. In other words, the decline of small businesses may be a natural development in a technological economy.

What do you think is causing small businesses to decline?

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Economy

Could Trump’s Tariffs Hurt The U.S. Economy?

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Could Trump’s Tariffs Hurt The U.S. Economy

About a year ago, the media was talking about how Trump’s trade wars could negatively affect many industrial companies, the agricultural sector, and right down to the every day American worker.

The recent stats from Gross Domestic Product has now revealed the current reality of Trump’s multiple front trade war.

Data shows that imports increased, while exports decreased by over 5%. Business investments have declined by 0.6%, and this decline has been happening since 2016. Most North American corporate capital spending is also on a declining trend.

Trumps’s tax reform was short-lived for most American companies. We did not get many benefits from the trade tensions either. U.S. corporate debt is getting much worse and far more significant than household debt.

Many are speculating that the cutting interest rates will lead to more zombie companies that will threaten both the U.S. and global economy.

Click here to learn more.

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