Jobs, GDP, PCE, Personal Income, 504 Day, Who Pays Taxes, the Sales Tip of the Week and Epic
This Week, Economically Speaking
In any one week, there are numerous data point indicators. This past week, there were 22, and no, I won’t go over every one, but let’s start with jobs.
Initial jobless claims were expected to come in at 212,000, after hitting 215,000 last week. They came in at 189,000.
That’s good news for workers and the economy as a whole, and the stock market liked it. Not good news for folks looking for lower rates. That brings us to…
The PCE, or Personal Consumption Expenditures index. It’s like the CPI – Consumer Price Index, except slightly more important. Kind of like your cousin that lives in Newport Beach.
Expectations were for a monthly increase of 0.7%, up from last months’ 0.4%. Yep, it came in on target: 0.7%. Year over year, it was 3.5%, up from 2.8%. Ugh.
Core PCE also met expectations, coming in at 0.3% and 3.2% annually, up from last month’s 3.0%.
You take food and fuel out, and it still goes up. This is the hangover effect of tariffs, causing prices to creep up. Speaking of hangovers, King Charles managed to get the tariffs on Scotch whiskey lifted. I’ll drink to that!
The initial reading of Q1 GDP is in – that’s Gross Domestic Product for the non-acronym folks.
GDP was 2.0%; expectations were 2.2% and Q4 2025 came in at 0.5%.
That’s still OK, though.
Finally, personal income in March was up 0.6% for the month, up from 0% in February.
Naturally, personal spending was up 0.9%, after 0.6% in February. Why not? Daddy needs a new pair of shoes.
And we’ll keep it at that.
May the 4th
It’s May 4, a day the Small Business Administration folks call 504 Day as a salute to the SBA 504 loan program that enabled MANY business owners to purchase the building/property they occupy. However…
True geeks recognize the day as Star Wars Day, as in “May the 4th Be With You”.
I have commented in the past that the name of the New York Fed president is John Williams (similar to the Star Wars composer) and as it turns out, Mr. Williams is giving a speech on May 4.
What are the odds that he will say the phrase ‘Star Wars’? I’m guessing no one really cares. It’d be fun though.
However, the 25-year fixed rate for a commercial real estate purchase financed through the SBA is 5.7% for manufacturers and only requires 10% down.
And that is information more people probably care about.
If you’d like more information, drop me a line and I’ll have my people talk to your people.
Who Pays the Taxes?
According to the IRS, in 2023…
The top 1% of individual filers paid 38.4% of all U.S. federal income taxes, down from 40.43% for 2022.
To be in the 1%, your adjusted gross income – AGI – needs to be at least $675,602. They account for 20.63% of total AGI.
The top 5% paid 59.3% of total income tax and accounted for 36.4% of total AGI.
To qualify for the top 5%, you need an AGI of $272,209.
The top 10%, AGIs of $187,608 or more, pay 70.5% of all taxes while totaling 47.6% of all AGI.
The bottom 50% of tax filers paid 3.26% of the total federal income tax. Their AGI is below $53,801.
Just in case someone brings up the issue of fairness.
Sales Tip of the Week
The State of California offers tax credits to keep your business here and retain jobs, or expand your business here and grow jobs.
It’s called the California Competes Tax Credit, and I’ve mentioned it a number of times over the last few years.
Any company that is looking to expand, either in or out of California, can apply to the state for tax credits as an incentive to expand in California or not leave California.
The key part here is “looking to expand.” That’s growth. I don’t know a business owner, insurer or banker that isn’t looking for a business that is growing AND staying in California.
And I mention this because…?
The company information is publicly available.
As an example, the most recent go-around included S&E Gourmet Cuts, aka Archer, the beef jerky people. They are looking to add 338 employers in San Bernardino and Vernon and are applying for a $5,700,000 tax credit for an investment of $30,250,000. And the tax credit agreement is signed by Adam Razek, the President and CFO.
Previous tax credits have gone to Le Vecke Corporation in Jurupa Valley, Diamond Wipes in Chino, Response Envelope in Ontario and Juanita’s Foods in Wilmington.
All middle market companies.
The point is, if you look in the right spots, you can find a lot of pre-qualified leads. They may become prospects and, in turn, customers. If you’d like some coaching on how to do that, I’m happy to help. I’ve only been doing that for 38 years.
As they say in the social media world, that’s worth a like and a share.
I really should figure out how to do that.
Epic Systems
Freakonomics did a podcast on the CEO of Epic Systems, Judy Faulkner. Epic is a healthcare software company based in Verona, Wisconsin, with over $6,000,000,000 in revenue.
She started it out of her basement – how cliché – in 1979.
I really liked the podcast, and there is so much more to say, but there is only so much space. So…
Here are a few takeaways from commandments posted throughout the company:
Software must work. – That seems obvious, but its why they don’t buy any companies. They write their own software. No patchwork quilt here.
Keep commitments, even the unspoken ones – Some folks hide behind plausible deniability. I’m guessing that doesn’t happen at Epic.
Focus on competency. Do not tolerate mediocrity.
Ms. Faulkner commented: “If you tolerate mediocrity, you become a mediocre company. And is that what you want to do?”
Have courage. What you put up with is what you stand for. – The corollary here is ‘inspect what you expect’.
Here is the link to the podcast. If you are driving from point A to point B and have some time, this is a good listen.
Oh, and just to show they have a sense of humor, the company’s Intergalactic Headquarters are 1979 Milky Way, Verona, Wisconsin. And no, I’m not making that up for Star Wars Day.
A good company culture prevents many problems because it sets the bar for what is expected. The product must work, keep commitments, and focus on competency – these are all ways of setting expectations and holding folks accountable. It also helps prevent noise from interfering with work. If you focus on the product and the customer, the economy only plays a supporting role, not a starring role. The odds are good that job, GDP, and inflation numbers won’t interfere with operations if the company culture is maintained.
It’s May – make sure your PTO schedule is in place and that you have the coverage you need prominently posted in the company, so there are no surprises.
Stay focused!
