Tag Archives: Great Recession

Comprehensive GDP Revision and Advance Estimate for the Second Quarter of 2013

By Alan B. Krueger

This morning the Bureau of Economic Analysis released a comprehensive revision to the National Income and Product Accounts, covering the full history of data since 1929. The revision showed that the recovery from the Great Recession has been slightly faster than previously reported, with real gross domestic product (GDP) expanding by a cumulative 8.5% from 2009:Q2 to 2013:Q1, compared to the previous estimate of 8.1% growth over that period. Including the advance estimate for 2013:Q2, real GDP has risen by 9.0% since the business-cycle trough in 2009:Q2 (see chart). In addition, real GDP surpassed its pre-recession peak in 2011:Q2, two quarters sooner than was reported prior to the revision, and is 4.4% higher than it was at the business-cycle peak in 2007:Q4.

The revision also showed that while the contraction during the Great Recession was slightly less severe than previously reported, it remains the largest decline since quarterly data became available in 1947. Cumulatively, real GDP fell by 4.3% during the recession, less than the 4.7% drop previously reported. The steep drop in economic activity caused by the recession makes it imperative that more work is done to raise economic growth and speed job creation.

The comprehensive revision to the national accounts, which is the first since July 2009, includes additional source data received by the Bureau of Economic Analysis, as well as methodological changes designed to better reflect the evolving nature of the U.S. economy. For instance, the GDP data released today incorporates input-output tables derived from the once-every-five-years Economic Census, and adopts an expanded definition of business investment that includes spending on research and development (R&D) and the creation of original works of art like movies. All told, these and other changes raised the level of GDP in the first quarter of 2013 by $551 billion at an annual rate (or 3.4%), from $16.0 trillion to $16.5 trillion.

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Source: FULL ARTICLE at The White House

What the Affordable Care Act Really Means for Job Growth

By ccorbisiero

Today, the White House released a new analysis of the relationship between the Affordable Care Act (ACA) and job growth on Tumblr in the form of an animated GIF.

Recent news stories have cited anecdotes that restaurants are cutting employees’ hours and refraining from hiring workers due to the ACA. In reality, however, restaurants have had the fastest job growth of any industry in the retail and food services sector since the Affordable Care Act was signed into law. The GIF also shows that restaurants have had even faster job growth than what would have been predicted from their growth in sales. Furthermore, workers in the restaurant industry have seen their average weekly hours increase since the ACA was signed, contrary to the notion that there has been a widespread shift to part-time hours.

During the four years since the recession ended in June 2009, 87% of the increase in employment has been due to a rise in the number of workers in full-time jobs. And looking at the period since ACA was signed in March 2010, more than 90% of the rise in employment has been due to workers in full-time jobs. Moreover, the length of the average workweek for private sector production and nonsupervisory employees has returned to its level at the start of the Great Recession.

And while the number of involuntary part-time workers has declined roughly in line with previous recoveries, it spiked up 322,000 in June. However, nearly 30 percent of the June increase was due to federal employees. This suggests that furloughs contributed to the pickup in part-time employment.

These observations strongly suggest that the Affordable Care Act has not constrained growth in hiring or work hours. So what is the ACA doing? It’s slowing the growth rate of health care costs for consumers, creating new incentives for providers to raise the quality of care, and adding new transparency and accountability in the insurance marketplace—all steps that help the economy.

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Source: FULL ARTICLE at The White House

Volkswagen Drops Lofty Sales Target, Dealers Exhale

Three years ago, Volkswagen proudly announced that it would become the world’s largest automaker — in terms of output, sales, and profit — by 2018. Things haven’t gone as planned. For starters, the global economy has faltered. When VW made its boastful declaration, the worst of the Great Recession seemed to be behind us. But as we all know from… …read more

Source: FULL ARTICLE at The Car Connection

Press Briefing by Press Secretary Jay Carney, 7/22/2013

By The White House

James S. Brady Press Briefing Room

1:16 P.M. EDT

MR. CARNEY: Welcome to the White House. Happy Monday. Hope you had a great weekend. I trust that you all saw the email that we sent out regarding the President’s travels this week. He very much looks forward to returning to Knox College, where he will deliver an address about the economy, where we are, where we've been and where we need to go — where he will lay out as part of a series of speeches that he’s given over his political career as a national figure about the need to expand the middle class, provide ladders of opportunity to those who aspire to the middle class, and to invest in our economy in a way that ensures that it will grow into the future.

So, with that, I take your questions. Please, Associated Press — Darlene.

Q Thank you. A little bit more on the speech that the President is doing this week. Can you sort of talk about why now? Why late July? And more importantly, who does he think will be listening?

MR. CARNEY: Well, on the first point, the President believes that it is an appropriate time to address the very issues that concern most Americans. There is no question that here in Washington, at least, if not out in the country, there have been a great many distractions from the central preoccupations of the American people, which have to do with the economy and the need to ensure that individuals have good jobs, that they have the ability to take care of their parents in retirement, and they have the ability to pay for college for their sons and daughters; that they have affordable health care, and that they are able to save some money of their own for their retirement; that they’re able to own a house or a home and that that house or home is not underwater.

And what is absolutely true is that we have come a long way since the depths of the Great Recession. We've created over 7.2 million private sector jobs, 40 straight months of economic growth. But we have more work to do. And what the President hopes to do is talk about how we can do that together, how we can do it in a way that ensures not just that jobs are created in the near term, but that we are investing in our future.

And July seems like an excellent time to do it, given that in the coming months we'll see a return to a focus here in Washington on economic issues, and he hopes and believes it’s essential that we set our sights high and that we look more broadly at the state of the economy and where we need to go as a nation as we engage in the discussions that we'll be having in the next several …read more

Source: FULL ARTICLE at The White House Press Office

Detroit Bailout Draws Little Enthusiasm From President Barack Obama, Federal Government

By The Huffington Post News Editors

WASHINGTON — During the bleakest days of the Great Recession, Congress agreed in bipartisan votes to bail out two of Detroit’s biggest businesses, General Motors and Chrysler.

Today, however, there seems little appetite from either Democrats or Republicans in Washington for a federal rescue of the birthplace of the automobile industry. Detroit now stands as the largest American city ever to file for bankruptcy protection.

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More on Detroit Politics

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Source: FULL ARTICLE at Huffington Post

Detroit's Bankruptcy: What Happens to Pensions, Taxes and City Services

By FOXBusiness

Filed under:

By KATE ROGERS

Detroit made history Thursday as the largest American city in history to ever file for Chapter 9 bankruptcy protection. The once vibrant city rooted in auto manufacturing and music finally fell victim to its dire financial situation, with between $18 billion and $20 billion in debt.

While city emergency manager Kevyn Orr says it will be “business as usual” in Detroit, experts say residents may be impacted in three major areas–pensions, city services and tax rates.

The Pension Problem

The city has yet to confirm how pensions will be impacted, although there have been suggestions that pensions will be reduced, says Bob Tomarelli, IHS Global Insights economist. The wildcard in the situation is the fact that the Michigan state constitution has a provision which some union leaders say bars pension cuts.

The provision says “the accrued financial benefits of each pension plan and retirement system in the state and its political subdivisions shall be a contractual obligation which shall not be diminished or impaired thereby.”

“The next question here is what does the judge do? The provision seems pretty clear cut, but a judge can rule that they can cut pensions,” Tomarelli says.

There are an estimated 30,000 retirees who are currently receiving pensions, he says, and an estimated $9.2 billion in pension debts.

Pensions potentially have some major changes ahead, says Alison Fraser, Heritage Foundation senior fellow and director of government finance programs.

“They are already in lawsuits with the pension programs themselves,” Fraser says of the city. “It’s unclear what the legal questions are when you go into bankruptcy. There is some possibility pensions will be redone in some way, and it will be very difficult for those who area already retired on those pensions.”

Overall, Fraser believes bankruptcy was the right way to go, as the city was irresponsible with its finances and the process will allow Detroit to restructure its debt.

City Service Cuts

Orr says the filing is the “first step toward restoring the city” and that it will be business as usual in Detroit.

“He says the lights will stay on, but it depends on what haircut the creditors will take on secured bonds, and knowing if and how much pension payments will be cut,” Tomarelli says. “They then decide how much money will be cut and saved on public services.”

Detroit has lost a massive number of residents over the past half century, and now is home to around 700,000 citizens, post-auto bailout and Great Recession. Tomarelli says if the city cuts public services, it would likely be less appealing to potential residents.

“People are still leaving Detroit at a faster rate than they are Michigan,” he says. “If there is a great reduction in services, it may be a less attractive city to live in.”

Tax Hikes on the Way?

Detroit’s current tax …read more

Source: FULL ARTICLE at DailyFinance

Hike in Payroll Taxes Hasn't Halted U.S. Consumer Spending

By The Associated Press

Filed under: , , , ,

Spencer Platt/Getty Images

By CHRISTOPHER S. RUGABER

WASHINGTON — This year got off to a sour start for U.S. workers: Their pay, already gasping to keep pace with inflation, was suddenly shrunk by a Social Security tax increase.

Which raised a worrisome question: Would consumers stop spending and further slow the economy? Nope. Not yet, anyway.

On Friday, the government said consumers spent 3.2 percent more on an annual basis in the January-March quarter than in the previous quarter — the biggest jump in two years. It highlighted a broader improvement in Americans’ financial health that is blunting the impact of the tax increase and raising hopes for more sustainable growth.

Consumers have shed debt. Gasoline has gotten cheaper. Rising home values and record stock prices have restored household wealth to its pre-recession high. And employers are steadily adding jobs, which means more people have money to spend.

“No one should write off the consumer simply because of the 2 percentage-point increase in payroll taxes,” says Bernard Baumohl, chief economist at the Economic Outlook Group. “Overall household finances are in the best shape in more than five years.”

Certainly, spending weakened toward the end of the January-March quarter. Spending at retailers fell in March by 0.4 percent, the worst showing in nine months. And more spending on utilities accounted for up to one-fourth of the increase in consumer spending in the January-March quarter, according to JPMorgan Chase (JPM) economist Michael Feroli, because of colder weather.

Higher spending on utilities isn’t a barometer of consumer confidence the way spending on household goods, such as new appliances or furniture, would be.

Americans also saved less in the first quarter, lowering the savings rate to 2.6 percent from 3.9 percent in 2012. Economists say that was likely a temporary response to the higher Social Security tax, and most expect the savings rate to rise back to last year’s level. That could limit spending.

But several longer-term trends are likely to push in the other direction, economists say, and help sustain consumer spending. Among those trends:

Wealth Is Up

Home prices rose more than 10 percent in the 12 months that ended in February. And both the Dow Jones industrial average (^DJI) and Standard & Poor’s 500 (GSPC) stock indexes reached record highs in the first quarter. As a result, Americans have recovered the $16 trillion in wealth that was wiped out by the Great Recession. Economists estimate that each dollar of additional wealth adds roughly 3 cents to spending. That means last year’s $5.5 trillion run-up in wealth could spur about $165 billion in additional consumer spending this year. That’s much more than the $120 billion cost of the higher Social Security taxes.

Debt Is Down

Household debt now equals 102

Source: FULL ARTICLE at DailyFinance

Campaign Promises Revisited: Obama's Mixed Economic Record

By The Associated Press

Filed under: , ,

Getty Images

By CHRISTOPHER S. RUGABER

One in a series examining President Barack Obama’s campaign promises and what he is doing, or not doing, to keep them.

The issue:

The U.S. economy is recovering from the Great Recession but at a modest, uneven pace. Many scars remain visible, particularly an unemployment rate of 7.6 percent. The U.S. has 2.8 million fewer jobs than in December 2007, when the recession began. And average hourly wages have trailed inflation in the past three years.

Meanwhile, the federal budget deficit has ballooned, topping $1 trillion each year in President Barack Obama‘s first term. It is forecast to fall to $845 billion this year. Obama faces the challenge of reducing that gap without cutting it so quickly that it slows growth.
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The campaign promise:

Obama promised a balanced approach to deficit reduction that wouldn’t undermine the recovery or place most of the burden on the middle class.

He also sought to revitalize manufacturing, harkening back to an era when high-paying factory jobs were a gateway to the middle class. Obama promised to cut the corporate tax rate for U.S. manufacturers to 25 percent from 35 percent, while penalizing those who shift work overseas. He also proposed more job training and called for the creation of 15-20 manufacturing research hubs, all as part of his promise to create 1 million new manufacturing jobs by the end of 2016:

“We can help big factories and small businesses double their exports. And if we choose this path, we can create a million new manufacturing jobs in the next four years. You can make that happen. You can choose that future.” –Democratic convention speech, Sept. 6, 2012.
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The prospects:

Obama has had mixed success in reducing the deficit without unduly impacting growth. He struck a deal with Congress to avoid the “fiscal cliff,” a set of tax increases and spending cuts scheduled for Jan. 1. Relieved businesses responded by stepping up hiring and spending.

But he and Republican congressional leaders allowed Social Security taxes to rise 2 percentage points at the beginning of the year, cutting take-home pay for nearly all working Americans. Middle and lower-income Americans were hardest hit because the tax is levied only against the first $114,000 of income.

And Obama wasn’t able to avoid $85 billion in automatic spending cuts that kicked in March 1. Economists warn the cuts could shave a half-percentage point from growth this year. Obama said in a presidential campaign debate that the cuts “will not happen.” But they have. They could be reversed in a future agreement.

In his budget plan, Obama now proposes cutting future Social Security benefits by changing how they are calculated. Some liberal Democrats in Congress expressed opposition, charging that the move would harm lower-income recipients.
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From: http://www.dailyfinance.com/2013/04/16/campaign-promises-revisited-obamas-mixed-economic-record/

Coke Stock: One of Warren Buffett's Biggest Investments Might Be His Worst

By Adam Levine-Weinberg, The Motley Fool

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Global beverage titan Coca-Cola has for a long time been one of Warren Buffett‘s largest holdings at Berkshire Hathaway . Buffett began purchasing Coke stock in 1988, and the stock saw tremendous gains for the next decade, leading some observers to call Coca-Cola one of his greatest investments. Yet the stock‘s performance since 1998 has been decidedly mediocre.

Coke stock has joined in the recent market rally, more than doubling off its Great Recession low. That said, I’m skeptical that the company will be able to grow its bottom line enough to justify its generous P/E ratio of 20.7. Coca-Cola may therefore continue its long run as one of the biggest dogs of Buffett’s portfolio.

A love affair with Coke
Coca-Cola has been the largest holding in Berkshire Hathaway‘s equity portfolio for much of the past two decades. In the earliest 13F filing available online from the SEC — for the first quarter of 1999 — Berkshire Hathaway reported holding 200 million shares of Coke stock, valued at $61.375 a share, or more than $12 billion in total.

Buffett is often associated with the “buy and hold forever” investing strategy, and this is exactly what he has done with Coca-Cola. Berkshire Hathaway still owns every one of those shares — although a recent stock split means that Berkshire now owns 400 million Coke shares, valued today at more than $16 billion. That makes it the second largest holding in Buffett’s portfolio, only recently eclipsed by Wells Fargo.

Yet Coca-Cola has basically been a dud in Buffett’s portfolio for the past 15 years. While the stock has recovered very nicely from the global recession in the past four years, it still sits below the all-time high it touched all the way back in mid-1998:

Coca-Cola 15-Year Price Chart (split-adjusted); data by YCharts.

Of course, the stock market as a whole hasn’t performed too well for the past 15 years, either. There was a crash at the end of the bubble period in 2000, followed by a second crash associated with the 2008-2009 recession. Still, the S&P 500 has outperformed Coke stock by nearly 40% over the whole 15-year period:

Coca-Cola vs. the S&P 500; data by YCharts.

Poor total return
From a total return perspective — which includes the benefit of dividends — Coca-Cola has still been a poor investment since 1998. Since June 1998, Coke stock has generated a total return of 33%. Obviously, that’s a lot better than losing money; however, it represents a less than 2% annualized return. Buffett could have done better in government bonds!

Coca-Cola Total Return (June 1998-present); data by YCharts.

In short, this means that Buffett and Berkshire Hathaway investors have had a lot of money tied up in an underperforming stock for a very long time. Coca-Cola was a great investment in the 1990s, but in retrospect, Buffett clearly should

From: http://www.dailyfinance.com/2013/04/13/coke-stock-one-of-warren-buffetts-biggest-investme/

Hidden Tax Time Bombs That Sabotage Retirement

By John E. Girouard, Contributor

If you think your taxes are too high, you might be right, but don’t be so quick to blame Washington, or the percenters—be they the 1, the 47, or the 99. You could be sabotaging your financial goals by making a couple of common tax-related decisions that seemed right at the time, but could come back to haunt you later. Examples facing a growing number of people these days are the second home/rental income property and the home-office tax traps. Starting in the late 1980s, many families bought or built second homes in vacation spots, covering the overhead by renting them out during the high seasons. As owners of income property, they deducted the expenses of maintenance, mortgage interest and depreciation of the structure. For years they enjoyed their off-season vacations, paid the mortgage out of rental income, and got a tax break, all while building equity in an appreciating asset. Now that more people are reaching retirement age with accounts upended by the Great Recession, an expedient solution is to sell the vacation home and sock away the cash. But many people are discovering that they unwittingly planted inside their financial plan a tax time bomb. If you’ve owned a rented-out vacation home and claimed the deductions you were entitled to for two or three decades, you could be in for a ugly shock. Older couples who thought they were building a secure nest egg are discovering that a chunk of the equity they thought they had will be eaten up IRS depreciation recapture rules that impose a tax on the accumulated depreciation deductions they took for all those years. With the decline in home prices, it’s possible to sell a rental vacation property at a loss but still owe the tax collector a bundle. Plus, you’ll likely be paying that bill with income dollars that have already been taxed—a case of taxation duplication. The home-office deduction is another nasty surprise awaiting the millions who joined the ranks of telecommuters and entrepreneurs who took deductions for business use of their residences. If you claimed 20% of your home for your office, you could deduct 20% of the cost of maintaining the house and the depreciation. But when the house is sold, the IRS will have its hand out for its share under the Unrecaptured Section 1250 Gain rule, which imposes a special 25% tax. If you were paying attention, or were lucky, and stopped claiming a home office several years before selling the house, IRS rules may let you off the hook. But not everyone has the luxury of waiting. Special Offer: If you’ll be paying for college anytime in the next decade, don’t miss this free report. There are many moves you can make today to lower college costs and increase financial aid options. Find out how in 12 Insider Tricks to Pay For College. Read it now FREE. In addition to tax time bombs, there are other hidden costs associated with taxes that most people are oblivious

From: http://www.forbes.com/sites/investor/2013/04/12/hidden-tax-time-bombs-that-sabotage-retirement/

Stocks Rise for Fourth Day in a Row, Led by Retail

By The Associated Press

Filed under: ,

Alamy

By MATTHEW CRAFT

NEW YORK (AP) – Rite Aid (RAD), Ross Stores (ROST) and other retailers surged Thursday after turning in better sales, and major stock market indexes rose for a fourth day straight.

The discount chain Ross Stores jumped 6 percent, the best gain in the Standard & Poor’s 500 index. The company said stronger sales in March will likely push profits above its previous estimate this quarter. The stock jumped $3.56 to $63.80.

A surprising drop in claims for unemployment benefits last week gave investors more encouragement. Analysts said it could mean a slowdown in hiring last month may have been temporary.

“The numbers today make it seem like that March report was an anomaly,” said David Heidl, a regional investment manager at U.S. Bank’s wealth management unit. “It’s another reason for optimism.”

The Dow Jones industrial average gained 62.90 points to close at 14,865.14, an increase of 0.4 percent. The Standard & Poor’s 500 index rose 5.64 points, also 0.4 percent, to 1,593.37.

Rite Aid soared 18 percent to $2.12 after the drugstore chain said higher sales of generic drugs and lower costs helped it post better earnings than analysts had expected.

Makers of computer hardware and software sank following a report that first-quarter shipments of PCs dropped 14 percent worldwide over the past year. That’s the steepest fall since International Data Corp. started tracking the industry in 1994.

“The IDC report is much worse than anyone expected,” said David Brown, director of Sabrient Systems, an investment research firm. “That’s obviously shaking up the tech sector, but everything else is resuming the climb.”

The three companies in the Dow that deal in PCs held the index back. Hewlett-Packard (HPQ) dropped 6 percent to $20.88, Microsoft (MSFT) lost 4 percent to $28.93 and Intel fell 2 percent to $21.82. Without them, the Dow would have gained 25 more points.

The tech-heavy Nasdaq composite index rose 2.90 points to 3,300.16. That’s just 0.09 percent, far behind the Dow and S&P 500. Of the 10 industry groups in the S&P 500, information technology was the only one to fall.

It was a different story on Wednesday, when technology stocks surged on optimism that businesses would step up spending on computer systems. That pushed the Dow and the S&P 500 index to their third straight day of gains as well as record highs.

The stock market has soared this year, clearing record highs and recovering losses from the financial crisis and Great Recession. For the year, the Dow is up 13 percent, the S&P 500 index 12 percent.

Brown thinks the market can keep climbing. Measured against earnings, the stock market doesn’t look expensive, he said. And compared to the alternatives, like bonds or money-market funds, stocks in many big corporations offer a better source of income. The average stock in the

From: http://www.dailyfinance.com/2013/04/11/stocks-rise-for-fourth-day-in-a-row-led-by-retail/

J.C. Penney Stock Could Be Headed for Single Digits After CEO Shakeup

By Adam Levine-Weinberg, The Motley Fool

Filed under:

For more than a year, I have been following the transformation fiasco at J.C. Penney . On Feb. 5, 2012 — as the stock was nearing its peak above $40 — I suggested that the company was “the Netflix of 2012″, referring to Netflix’s 75% fall from peak to trough during 2011. Sure enough, J.C. Penney stock has fallen nearly 70% since I suggested back then that investors should sell or short the company:

J.C. Penney Stock Chart (Feb. 1, 2012-present), data by YCharts.

J.C. Penney’s dreadful performance can be attributed primarily to the ambitious but poorly tested transformation plan implemented by CEO Ron Johnson shortly after his arrival at the company. Johnson’s merchandise changes and attempts to dramatically scale back the use of coupons and sales alienated many previously loyal customers. On Monday afternoon, J.C. Penney’s board confirmed the inevitable, firing Johnson after only 17 months on the job.

The new (old) boss
Unfortunately for shareholders, J.C. Penney stock dropped by more than 10% when the markets reopened on Tuesday. Apparently, Mr. Market wasn’t inspired by the J.C. Penney board’s choice of successor: Mike Ullman. Ullman was the CEO who was pushed out in 2011 to make room for Johnson. At the time of Johnson’s hiring, shareholders were delighted to get rid of Ullman. In fact, J.C. Penney’s largest shareholder, activist investor Bill Ackman, was instrumental in bringing Johnson on board. It is somewhat understandable that shareholders were happy to show Ullman the door; J.C. Penney stock delivered a total return of approximately negative 12% in the six-and-a-half years between when Ullman became CEO and when Johnson’s hiring was announced:

J.C. Penney Total Return (December 2004-June 2011) data by YCharts.

To some extent, Ullman was playing with a bad hand; his previous tenure included the Great Recession, which decimated nearly all retail stocks. That said, Kohl’s was able to contain the damage from the recession, and Macy’s has bounced back very strongly, posting four straight years of double-digit EPS increases. Meanwhile, J.C. Penney was already on the way back down when Ullman left, with same-store sales down 1.6% and gross margins down 160 basis points year-over-year in his last quarter at the helm, driving lower adjusted EPS.

J.C. Penney stockholders thus have good reason to doubt that Ullman has any good answers for the company’s woes. The company’s long-term underperformance vis-a-vis Macy’s and Kohl’s is largely the result of its stodgy image and aging customer base. As I wrote back in February, bringing back sales won’t necessarily bring back profits (or customers) for J.C. Penney. In fact, there are some good reasons to believe that performance will continue to slide; when all is said and done, J.C. Penney stock could be sitting in the single digits.

Challenges ahead

It seems all but certain that first-quarter sales have been dreadful, and I expect J.C. Penney to lose even more money than it did last year, when it posted an adjusted

From: http://www.dailyfinance.com/2013/04/11/jc-penney-stock-could-be-headed-for-single-digits/

America's 3rd Best CEO Could Give You an Investing Edge

By Brian Stoffel, The Motley Fool

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Once you get the hang of it, it’s pretty easy to dissect balance sheets, income, and cash flow statements. This is the first step in getting your feet wet in the investment world.

But it doesn’t stop there. If we were to base investing decisions solely on what we read in these statements, that would be akin to picking a significant other based solely on their Facebook profile — to many, it just doesn’t make sense to avoid real-life interaction.

Investigating these “soft” aspects of a company is important for investors. And although we can’t capture all of the intangibles of a company in one article, Glassdoor.com — a website that collects employee sentiment for companies across the world — recently came out with a list that could help: the Top CEOs of 2013.

Over the past few days, I’ve covered CEOs 25 through 4. Today, I’m going to introduce you to the company with the third-highest-rated CEO, give you some background on the company, and at the end, I’ll offer access to a special free report on who is going to win the war between the five biggest tech stocks.

Cognizant Technology
Cognizant is a specialist in technology and outsourcing consulting. It is the second technology-consulting firm to have a CEO in the top 25, as Accenture‘s Pierre Nanterme was ranked as seventh overall this year.

In understanding why technology-consulting can be such a big business, I think fellow Fool Dan Caplinger put it best: “With constant advances in technology, many companies simply can’t keep up without outside help.” And that makes sense, if one is focused on clients, there hardly seem to be enough hours in the day to serve them and keep abreast of all the ways the latest technology can help you serve them.

That helps explain why Accenture and IBM, the industry’s two biggest players, have been able to gobble up so much market share. But there’s a second tier of technology-consultants — in terms of sheer size — as well. That’s where Cognizant, as well as its main competition — Infosys and Wipro  — come in to play.

One of the key differentiators between Cognizant and its two closest competitors is location. While Infosys and Wipro are located in India, Cognizant is headquartered in New Jersey. That might sound like as disadvantage — as much of the outsourcing occurs in India — but lately, it’s been more of a boon.

Take a quick look at where these three companies get their revenue.

Source: SEC filings. Wipro numbers are for all of “Americas,” not just North America.

What might look like a weakness for Cognizant — in that its clients are mainly centered in one region — has been a strength over the past few years, as North American economies have recovered from the Great Recession much quicker than other regions of the world (Europe especially).

A leader to take the company global
But as you might guess, remaining focused

Source: FULL ARTICLE at DailyFinance

Oshkosh Corporation Announces Defense Employee Layoffs Slated for June 2013

By Business Wirevia The Motley Fool

Filed under:

Oshkosh Corporation Announces Defense Employee Layoffs Slated for June 2013

OSHKOSH, Wis.–(BUSINESS WIRE)– Oshkosh Corporation (NYS: OSK) announced today that its Defense division plans to reduce its workforce in Oshkosh by approximately 700 hourly positions starting in mid-June 2013 and by approximately 200 salaried positions through July. After the layoffs, Oshkosh will employ approximately 2,800 Defense employees in Oshkosh.

As discussed on numerous occasions, Oshkosh expects domestic military vehicle production volumes to decline significantly as the year progresses. The Company’s lower expected vehicle production is due mainly to the reduction in U.S. Defense budgets and a return to peacetime spending levels as the U.S. winds down war activities. Daily production volumes are expected to decline by approximately 30 percent this summer.

“These were difficult, but necessary decisions,” said John Urias, Oshkosh Corporation executive vice president and president of Defense. “When other business segments of Oshkosh and many companies in the U.S. were enduring layoffs, pay cuts and furloughs during the Great Recession, Oshkosh Defense was hiring employees and retaining jobs which ended up helping many people manage through that difficult period. However, circumstances have now changed.”

Urias went on to say, “We have taken numerous actions to lessen the impact, including insourcing work customarily done externally, thus saving more than 165 production jobs.”

The Company will be reaching out to the county and state workforce development agencies, as well as local employers to help those affected by the layoffs make the transition to other employment if they so desire.

The Company will continue to build high-quality trucks and trailers, and provide support service and training for its military customers around the clock and around the world.


About Oshkosh Defense

Oshkosh Defense is a leading provider of tactical wheeled vehicles and life cycle sustainment services. For more than 90 years, Oshkosh has been mobilizing military and security forces around the globe by offering a full portfolio of heavy, medium, light and highly protected military vehicles to support our customers’ missions. In addition, Oshkosh offers advanced technologies and vehicle components such as TAK-4® independent suspension systems, TerraMax unmanned ground vehicle solutions, Command Zone integrated control and diagnostics system, and ProPulse® diesel electric and on-board vehicle power solutions, …read more

Source: FULL ARTICLE at DailyFinance

Can Dead Dividends Deliver Growth?

By Justin Loiseau, The Motley Fool

Filed under:

On Feb. 26, Atlantic Power did something responsible: It slashed its dividend by 66% in the name of long-term value creation. But the aftermath of its actions shows that dividend haircuts don’t always look good. Let’s dig deeper into Atlantic’s decision, peek into the past for some much-needed perspective, and check out the new look of another company that recently received a dividend haircut.

Dawn of the dead dividend
As part of Atlantic’s Q4 2012 earnings report, CEO Barry Welch noted that the utility’s board decided that “it was in the best interest of the company and its shareholders to establish a lower and more sustainable Payout Ratio that balances yield and growth and is at the same time consistent with our outlook for current and prospective projects under a range of scenarios.”

In real numbers, this announcement represented a 66% drop in the company’s monthly payouts, a move that would’ve devastated the utility’s 10.2% dividend yield – if not for its share price plummet.

Source: AT data by YCharts

But the cause for Atlantic’s crash didn’t come from its dividend cut. Since its announcement, three law firms have filed class action lawsuits against Atlantic for intentionally misleading investors about its current cash flow and the impending deadlines of key contracts. If the allegations turn out to be true, Atlantic’s dividend cut did nothing more than reveal an inevitable bald spot in the company’s receding hairline.

Look into the past…
Dividend cuts happen. This Friday, TECO Energy will celebrate the 10th anniversary of the day it dropped its dividend 46% to balance its books and refocus on its core businesses.

CEO Robert Fagan’s carefully chosen words during the announcement hint at what he was sure would amount to Wall Street suicide: “We recognize the greatest impact will be on our retail shareholders. However, we believe that it will be in their interests longer-term… This level of dividend positions TECO Energy to return to… long-term dividend growth when conditions improve.” But since that fateful day, TECO‘s stock has stepped up a respectable 66% alongside its growing dividend.

Source: TE data by YCharts

Beware the “Stairmaster”
Companies must decide for themselves whether dividends are the best method to return value to shareholders. Although it’s never inherently a bad idea to boost dividends, investors should beware the “Stairmaster.” A dividend stock that flexes its financial muscles quarter after quarter may not be using its resources intelligently. Step after step, Southern Company and Xcel Energy have pushed their dividends higher through the worst of the Great Recession.

Source: SO Dividend data by YCharts

Atlantic, why can’t you be more like Exelon?
Atlantic wasn’t the only utility to dice up its dividend this past quarter. Exelon announced on Feb. 7 that it would slash its dividend by a whopping 40%. But unlike Atlantic, Exelon’s stock has risen 12% since its earnings report. That’s 4.5 percentage …read more

Source: FULL ARTICLE at DailyFinance

Midday Report: Market Faces Expectations of Weak First Quarter Earnings

By DailyFinance Staff

Filed under: ,

Stephen Morton/Bloomberg via Getty ImagesAlcoa Inc. employee Stephen Tally makes a line on the rod of a carbon anode before it is set into place at the company’s Mt. Holly production plant in Goose Creek, South Carolina.

Earnings season could be the next big hurdle for stock market investors.

As usual, Alcoa (AA) kicks off the earnings season after today’s closing bell. Even though its ticker symbol is AA, this is not done alphabetically.

For many years, Alcoa was viewed as a trendsetter, not just because it’s first, but because it was seen as a proxy for the broader economy. That’s not as true now; Alcoa has become more of a commodities play. And with aluminum prices slumping, the company is expected to post flat to slightly lower earnings.

Later this week we’ll hear from banking giants JPMorgan Chase (JPM) and Wells Fargo (WFC). Wells, a leading provider of home mortgages, could provide a look at whether the housing industry is still on the upswing.

And next week, the earnings calendar fills up. We’ll get a slew of quarterly reports. Overall, first quarter earnings are expected to be relatively weak, after strong gains the past few years.

That’s part of the problem: Those big gains we saw in 2011 and 2012 came off of the Great Recession, so the comparisons were very easy. That’s no longer the case. Thomson Reuters projects earnings to rise by just 1.6 percent in the first quarter, and other forecasts are even weaker. Bloomberg’s survey of analysts points to a 1.8 percent decline in profits at S&P 500 companies. That would be first decrease since 2009.

Some of the weakness is due to international issues. Analysts point to the recession in Europe and the economic slowdown in China. A number of multinationals have already lowered their earnings forecasts, citing problems overseas. Ford (F), FedEx (FDX) and Caterpillar (CAT) have all cut their outlooks. Cat could report back-to-back declines for the first time since 2009.

But there’s some optimism in other sectors. Consumer products companies such as Procter & Gamble (PG) and Clorox (CLX) have remained positive about their results, and analysts say retailers also should do well.

And results for the first quarter could be the low spot for the year. Most analysts expect earnings growth to improve as the year rolls on. Right now, the expectation for the fourth quarter is for earnings growth of about 13 percent.

-Produced by Drew Trachtenberg

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Source: FULL ARTICLE at DailyFinance

Dropouts: Discouraged Americans leave labor force

After a full year of fruitless job hunting, Natasha Baebler just gave up.

She’d already abandoned hope of getting work in her field, counseling the disabled. But she couldn’t land anything else, either — not even a job interview at a telephone call center.

Until she feels confident enough to send out resumes again, she’ll get by on food stamps and disability checks from Social Security and live with her parents in St. Louis.

“I’m not proud of it,” says Baebler, who is in her mid-30s and is blind. “The only way I’m able to sustain any semblance of self-preservation is to rely on government programs that I have no desire to be on.”

Baebler’s frustrating experience has become all too common nearly four years after the Great Recession ended: Many Americans are still so discouraged that they’ve given up on the job market.

Older Americans have retired early. Younger ones have enrolled in school. Others have suspended their job hunt until the employment landscape brightens. Some, like Baebler, are collecting disability checks.

It isn’t supposed to be this way. After a recession, an improving economy is supposed to bring people back into the job market.

Instead, the number of Americans in the labor force — those who have a job or are looking for one — fell by nearly half a million people from February to March, the government said Friday. And the percentage of working-age adults in the labor force — what’s called the participation rate — fell to 63.3 percent last month. It’s the lowest such figure since May 1979.

The falling participation rate tarnished the only apparent good news in the jobs report the Labor Department released Friday: The unemployment rate dropped to a four-year low of 7.6 percent in March from 7.7 in February.

People without a job who stop looking for one are no longer counted as unemployed. That’s why the U.S. unemployment rate dropped in March despite weak hiring. If the 496,000 who left the labor force last month had still been looking for jobs, the unemployment rate would have risen to 7.9 percent in March.

“Unemployment dropped for all the wrong reasons,” says …read more

Source: FULL ARTICLE at Fox US News

Incentivizing Employers to Hire Veterans through Permanent Tax Credits

By Denis McDonough and Gene Sperling

With the Iraq War over and the war in Afghanistan drawing to a close, the Administration has undertaken an unprecedented effort to help our veterans and military spouses find employment and build their careers. Today, the overall unemployment rate for veterans remains below the national rate at 7.1 percent. But for veterans of the post-9/11 generation, many returning to the civilian workforce at a time when our economy, while making progress, is still healing from the Great Recession, too many American heroes are struggling to find work. This is a critical economic challenge that requires our long-term focus, especially as in the coming years over one million service members will be hanging up their uniforms and transitioning back to civilian life. In August 2011, President Obama visited the Washington Navy Yard to outline his comprehensive plan to ensure that all of America’s veterans have the support they need and deserve when they leave the military, look for a job, and enter the civilian workforce. This plan included a total redesign of the military’s transition program to ensure every service member is “career-ready”; a challenge to the private sector to hire and train veterans; increased access for veterans to intensive reemployment services; and new online tools to boost veteran employment.

A signature component of his plan was a series of significant, new tax credits aimed at getting veterans back to work. In the American Jobs Act the President proposed three new veterans hiring tax credits that greatly expanded the number of veterans eligible to be hired with tax credits. Recognizing the specific imperative of helping veterans dealing with long-term employment, the President proposed in the American Jobs Act tax credits that for the first time offered tax relief at least two times larger than current veterans tax relief for those veterans that have been pounding the streets for over six months looking for work. This includes the Returning Heroes Tax Credit, which provides an incentive of up to $5,600 for firms to hire long-term unemployed veterans, and the Wounded Warrior Tax Credit, which provides firms with up to $9,600 for hiring long-term unemployed veterans with service-connected disabilities.

The President’s tax credits were passed with full bi-partisan support by Congress and signed into law by the President in November 2011 as part of the VOW to Hire Heroes Act, and were extended through the end of 2013 by the American Taxpayer Relief Act of 2012.

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Source: FULL ARTICLE at The White House