The Commerce Department announced their "advance" GDP growth rate for 4th quarter at 5.7% this morning. Expectations had been around a consensus number of 4.5%, so this was a positive surprise. Much of the strength came from cyclical recovery in inventories (i.e. companies quit letting inventory levels just decline and instead increased production to replenish inventories).
While GDP 4th quarter strength is a plus, it comes against the backdrop of significant structural challenges in the U.S. and worldwide economies. Examples of these challenges are timing and methods of removal of low interest rates and other stimulus by the Fed, possible long-term increased savings (and resultant consumption reduction) by U.S. consumer, and effect of eventually addressing U.S. and other developed countries budget deficit.
We'd conclude these comments with applause for today's GDP announcement accompanied by recognition that the private sector will need significant strength and resilience as we address a variety of sizeable challenges.
Friday, January 29, 2010
Friday, January 22, 2010
Roth IRA Conversion Opportunity in 2010
In the past anyone with income over $100,000 could not perform a Roth IRA conversion. Effective January 1, 2010, the income limitations for this strategy have been removed. Bill Gates could do a Roth IRA conversion in 2010 (and almost certainly will)!
There are many key steps to doing a Roth IRA conversion properly. Perry Moore, our Director of Wealth Planning, has written an extensive white paper on the considerations surrounding a Roth IRA conversion. This white paper is available to those who contact us via our website at http://tiny.cc/AiO9h .We’ll be confirming contact data with you before sending out, so that we know we aren’t training our competition.
There are many key steps to doing a Roth IRA conversion properly. Perry Moore, our Director of Wealth Planning, has written an extensive white paper on the considerations surrounding a Roth IRA conversion. This white paper is available to those who contact us via our website at http://tiny.cc/AiO9h .We’ll be confirming contact data with you before sending out, so that we know we aren’t training our competition.
Monday, January 18, 2010
Recovery.gov
On February 17, 2009 President Obama signed into law the American Recovery and Reinvestment Act of 2009. The stated goal of this legislation was to stimulate our economy via spending, benefits and tax cuts. The total dollar value of the bill was $787 billion.
Here we are almost precisely 11 months later. If you visit the website set up for tracking this bill at http://www.recovery.gov/ you will see that as of January 8, 2010 about $260 billion (33%) of the total has been paid out (must add 3 numbers under "overview of funding" to arrive at this).
We have a few observations: (1) Our $14 trillion economy has yet to recognize the growth associated with remaining $527 billion which is equal to over 3 1/2% of our total economy so economic growth will be supported by this in 2010 (especially the first half), (2) the private sector will need that much more recovery to continue to grow after this stimulus is fully spent, and (3) the U.S. borrowed all of the money for this stimulus and will have to repay this someday.
Here we are almost precisely 11 months later. If you visit the website set up for tracking this bill at http://www.recovery.gov/ you will see that as of January 8, 2010 about $260 billion (33%) of the total has been paid out (must add 3 numbers under "overview of funding" to arrive at this).
We have a few observations: (1) Our $14 trillion economy has yet to recognize the growth associated with remaining $527 billion which is equal to over 3 1/2% of our total economy so economic growth will be supported by this in 2010 (especially the first half), (2) the private sector will need that much more recovery to continue to grow after this stimulus is fully spent, and (3) the U.S. borrowed all of the money for this stimulus and will have to repay this someday.
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