The Link Between Payroll Taxes and Jobs Creation

What if the government kept their hand out of your pocket and kept payroll taxes where they are, or better yet…reduce them. The result could give a much needed, nice shot in the arm to the economy. Say what? How’s that?

Let’s break it down. By reducing payroll taxes, small and medium businesses have more free cash to expand. One form of expansion often is in hiring additional workers. Let’s say the “XYZ” company hires more workers…now the government receives more in tax receipts from the “XYZ” company. The government receives more, and the “XYZ” company is able to produce more with the added workers. In addition, all the employees of the “XYZ” company benefit and keep more of their hard earned cash.

Now that the workers of “XYZ” company have more income, what might they do with it? They may save some….and spend some. By spending in their communities, consumers help support local businesses. Now these local businesses have more coming in, thus are collecting more state sales taxes, which helps our states and municipalities. In addition, they are making more revenue by the increased sales and can produce more goods, hire more people and also contribute to the growth.

Sounds simple enough. Not only does this benefit the economy but could have a positive impact on existing Jobs and Jobs creation.  Maybe our government will see the light.

Our Dollar Bill – Interesting Facts

This weekend we celebrate the birthday of the United States.  Outdoor barbeques, pool parties, parades, fireworks, and the like will be enjoyed across the U.S.  As we celebrate this great country, it dawned on me that I have this really neat slideshow that shares some very cool facts about our dollar bill.  Little known factoids actually. 

What is sad, is that most of us don’t know this stuff…our kids don’t learn it in school either.  And it is reported that many history teachers aren’t dialed into this either.  So please, take a moment and view this slideshow and learn a little slice of history – the symbolism that decorates our dollar bill.

Happy Fourth of July! Happy Birthday America!  Enjoy…

Home Loans Take a Back Seat to Credit Cards

Sitting at the kitchen table, faced with the ever present stack of bills many homeowners are chosing to pay their credit card bills before the mortgage.  This disturbing trend is gaining steam in recent months.

Experts noticed this trend as early as 2006 but they pretty much agreed that it would subside once the economic downturn had passed.  But the economic downturn gained momentum and turned into an economic crisis that has affected nearly everyone.

So what is the rationale for consumers to decide to pay off their credit cards before their mortgages?  It could be a number of things. 

  • Adjustable mortgages reset, consumer’s can’t keep up with the payments so turn their attention to credit card debt;
  • Reduction of income or job loss;
  • Weak job market and depressed home values across the U.S. has fundamentally redefined how consumer manage their finances and set priorities;

But there is debate.  Are consumers shifting their focus…or have the big banks encouraged this in order to get a loan modification or negotiate on a short sale?  When people begin to struggle, and seek help…they are being told that they must be behind on payments to show distress before they are eligible to receive assistance.

This has been a tough recession and recovery seems elusive.  Jobs are scarce and people are being more cautious and frugal.   I’m not sure this trend is an accurate picture of most consumers mindset and could be influenced by behavior from big banks.

Another home run for home loan rates…

Fence sitters might want to take notice.  Home loan rates are at it again…the bulls pushed the bears around and the Bond market moved higher over the past week driving interest rates lower.  Some say it is a 50 year all time low, although we have touched this low briefly several times in the since January 2009. 

Today you can own more home for less money than you could just a mere month ago.  And it is a great time to refinance your property too…if you think you might stay a while.

But if you are wondering…is this the best they will get? Will they go lower?  Will they move higher?…the answer is probably, maybe, and yes. 

There are 4 major reasons that interest rates will be moving higher, and I’ll explain these in greater detail over the next several weeks.  The reasons are: 1) soverign debt in Europe and the headwinds for a downgrade in U.S. credit rating;  2) Inflation; 3) makings of a shift in Carry Trade; 4) the sale of Fed held Mortgage Backed Securities (MBS).

In addition, the bond market is ripe for a reversal…and something will trigger it.  When that happens, look for the market to move quickly and without warning.  Time waits for no one…when home loan rates rise, they will rise quickly.

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