Download Document

Economic Outlook 2011
Sponsored by:
Presented by:
TERENCE SHEPHERD
1
Economic Outlook
What does the current environment and
economic outlook mean to business owners?
And what should they be doing to move
forward in 2011 and beyond?
2
The Great Recession!
After a tough 2 years of hanging on
Business Owner’s Are Tired
3
The Great Recession!
But Today…
Thoughts shouldn’t just be about “hanging on”!
4
The Great Recession!
With Staggering Unemployment,
Struggling World Economy,
Massive and Growing Federal Deficits,
Pending Federal and State Income Tax
Increases . . .
5
Knowing Your Environment
. . .Success is still possible, but business owners
must understand the environment they face
and the magnitude of potential changes in
the background.
Growth will continue!!... but businesses should
plan on an extended period of slow growth.
And, for every dollar you make, plan on having
less in your pocket after taxes.
6
Economic Outlook
Decrease In Consumer Spending
• Consumers account for 70% of economic activity
• Consumers are paying down debt and not spending
as much
• September 2010 consumers saved 5.3% (5.6% in
August) of disposable income; before recession 2.1%
• End of September 2010 – 14.8M received
unemployment benefits (including extended benefit rolls of
6.1M)
• 5 more years before employment around the world
rebounds to before the financial crisis (International
Labor Organization-Annual Report)
7
Economic Outlook
Less Available $’s to Spend
Potentially more expensive goods
• China’s low cost of goods
• Obama presses China to let currency rise
(currency experts advise undervalued by
20% to 25%) (NY Times 9/24/10)
• Congressional action – punitive tariffs
8
Economic Outlook
Less Government Spending –
The Age of Scarcity
For the past 7 decades, in both foreign
affairs and domestic policy our defining
watch word was “more”…in the 2nd decade of
the 21st century and beyond it will be “less”.
Thomas Friedman
NY Times 9/5/10
Frugal Superpower
9
Economic Outlook
Less Government Spending –
The Age of Scarcity
Standard remedy for fighting recessions (deficit
spending) losing effectiveness
Diminishing marginal effect of debt on
growth ratio of debt growth to GDP growth
1950’s
1.35
1970’s
1.67
1990’s
3.12
2000’s
5.57
Carol McMullen
Eastern Bank Wealth Management
10
Economic Outlook
Less Government Spending –
The Age of Scarcity
“China and other countries will not lend to
the U.S. indefinitely and without limit.
Americans will have to consume less.”
Michael Mandelbaum
The Frugal Superpower, America’s Global
Leadership in a Cash-Stripped Era
11
Economic Outlook
Less Government Spending –
The Age of Scarcity
• National debt $13.4 Trillion
• War financing
• Aging baby boomers will rise the costs of social
security and Medicare rapidly
• Rising health care costs (including health insurance)
• 2009 annual deficit $1.4 Trillion (10% of economy; 3%
considered maximum safe amount)
• 2010 Projected deficit $1.6 Trillion
• Annual deficit projected for next decade of over $1
Trillion each year
12
Economic Outlook
13
Economic Outlook
The Answer
Ten – 1 = 5
• Cut taxes
• Cut spending, but entitlements are off limits
AND
• Balance the budget
14
Economic Outlook
To Govern Is To Choose
• It is about fiscal responsibility.
• It is not a failure of understanding or
foresight. It is a failure of political will.
• Borrowed money…simply postpones the day
of reckoning and increases the price that
has to be paid when that day arrives.
Michael Mandelbaum
The Frugal Superpower, America’s Global
Leadership in a Cash-Stripped Era
15
Economic Outlook
Government Deficit Fallout
• Reduced Federal Spending
• Discretionary
• Entitlements
• Reduced money to the States
• Increased taxes
• 29 States raised taxes $24Billion
• Federal: some on their way,
more may have to follow
16
Economic Outlook
Advice To Business Owners
• Don’t wait on a hockey stick recovery
• Understand the economic environment
you are facing
• Formal planning
17
Economic Outlook
Advice To Business Owners
• Begin With The End In Mind
• Re-energize Your Business
18
Economic Outlook
Advice To Business Owners
• Stabilize Your Business
• Revisit Your Value Proposition
• Strategic Growth Analysis
19
Closing Thoughts
New courses of action are
necessary to survive the challenges
that lie ahead and prosper.
It is those businesses that properly
plan and execute that:
• will drive profitability and growth,
• help command maximum business
value upon sale and;
• protect and grow their wealth to
live the lifestyles they choose.
20
Economic Outlook
Questions &
Answers
21
Boston Office
Terry
Shepherd
(
*
Carl
Goldstein
Joe
Vajda
: (617) 412-4640
:
[email protected]
[email protected]
[email protected]
Start Your Planning Now
22