Employment

U.S. News & World Report Ranks Chicago Metro Area 83rd ‘Best Place To Live’

From a U.S. News & World Report press release on February 7:

U.S. News & World Report, the global authority in rankings and consumer advice, today unveiled the 2017 Best Places to Live in the United States. The new list ranks the country’s 100 largest metropolitan areas based on affordability, job prospects and quality of life…

(Editor’s note: Bold added for emphasis)

Predictably, the Chicago metro area made the list.

Somewhat surprising is how far down it was:

Chicago, IL
#83 in Best Places to Live
6.1 Overall Score
5.9 Quality of Life
6.1 Value

Scores are out of a possible 10.

Nearby metropolitan areas that ranked higher than the “Second City” included:

#18 Madison, Wisconsin
#19 Grand Rapids, Michigan
#47 Milwaukee, Wisconsin
#55 Indianapolis, Indianapolis

According to the press release:

The 2017 Best Places to Live were determined in part by a public survey of thousands of individuals across the U.S. to find out what qualities they consider important in a home town. The methodology also factors in data from the United States Census Bureau, the Federal Bureau of Investigation and the Bureau of Labor Statistics, as well as U.S. News rankings of the Best High Schools and Best Hospitals…

You can see the full rankings list here on the U.S. News website.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Tuesday, February 14th, 2017 Employment, Housing No Comments

Chicago Ties Birmingham, Alabama, For Highest Jobless Rate Among Large Metro Areas In December

This morning the U.S. Department of Labor handed the Chicago metropolitan area some bad news on the employment front. From a Bureau of Labor Statistics news release this morning entitled “Metropolitan Area Employment And Unemployment- December 2016”:

Of the 51 metropolitan areas with a 2010 Census population of 1 million or more, Boston-Cambridge-Nashua, Mass.-N.H., had the lowest unemployment rate in December, 2.5 percent, followed by Denver-Aurora-Lakewood, Colo., 2.6 percent, and Salt Lake City, Utah, 2.7 percent. Birmingham-Hoover, Ala., and Chicago-Naperville-Elgin, Ill.-Ind.-Wis., had the highest jobless rates among the large areas, 5.4 percent each.

(Editor’s note: Bold added for emphasis)

Worrisome.

You can read the entire BLS news release here (.pdf format).

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Wednesday, February 1st, 2017 Business, Employment, Government No Comments

Amended Illinois Tax Hike Plan To Hit Taxpayers, Businesses, And Employment?

Back on January 16 I published a post on Survival And Prosperity entitled “Illinois ‘Grand Bargain’ Legislation Includes 32 Percent Personal Income Tax Hike.” I started the piece with:

Illinois taxpayers may get hit with a significant income tax hike pretty soon…

Yesterday morning, I learned the potential “hit” could be a “combination of punches” directred at taxpayers, businesses, and employment.

From the Greg Hinz On Politics blog on the website of Crain’s Chicago Business:

There’s still no word on when lawmakers are going to vote on it, but an amended tax-hike plan has been introduced in the state capital.

It’s a doozy, with an even higher income tax, a limited service tax and a sort of minimum tax on business. But the soda pop levy is gone, as are a couple of those corporate loophole closings that business groups didn’t like…

The highlights:

The Individual income tax would go to 4.99 percent from the current 3.75 percent, and the corporate income tax to 7 percent from 5.25 percent. Combined, that would pull in about an additional $5 billion a year.

A new “business opportunity tax” ranging from a fee of $225 to $15,000 a year would be imposed, based on payroll. The intent is to make sure that all companies pay something, whether they are profitable or not. The state’s net on this is an estimated $750 million a year.

However, the research and development tax credit would be made permanent and the manufacturers purchase and graphics arts credits would be combined, as some businesses wanted.

A service tax—extension of the sales tax—would be imposed on certain items including repair and maintenance of personal property, use of amusement services including gyms, landscaping, laundry and dry-cleaning, and storage of personal goods such as cars and property. This would pull in a projected $400 million a year.

The telecom excise tax would be extended to cable and satellite services.

Both Radogno and Cullerton are said to have negotiated and support the above, pending action on the rest of the package…

Hinz does a good job summarizing the proposed expanded revenue grab. At this point, I want to go back to that bit about a new “business opportunity tax.” From the actual legislation for the so-called “Business Opportunity Tax Act”:

Section 1-10. Tax imposed.
(a) Beginning on July 1, 2017, a tax is hereby imposed upon each qualified business for the privilege of doing business in the State.
(b) The tax under subsection (a) shall be imposed in the following amounts:
(1) if the taxpayer’s total Illinois payroll for the taxable year is less than $100,000, then then annual tax is $225;
(2) if the taxpayer’s total Illinois payroll for the taxable year is $100,000 or more but less than $250,000, then the annual tax is $750;
(3) if the taxpayer’s total Illinois payroll for the taxable year is $250,000 or more but less than $500,000, then the annual tax is $3,750;
(4) if the taxpayer’s total Illinois payroll for the taxable year is $500,000 or more but less than $1,500,000, then the annual tax is $7,500; and
(5) if the taxpayer’s total Illinois payroll for the taxable year is $1,500,000 or more, then the annual tax is $15,000…

I can see a number of existing and prospective Illinois business owners having concerns with the proposed “Business Opportunity Tax Act.”

First, Illinois already has poor business reputation. For example, early last year Chief Executive magazine asked 513 CEOs to rank states they are familiar with on the friendliness of their tax and regulatory regime, workforce quality, and living environment. The “Land of Lincoln” came in as the 48th worst state in this annual survey, beaten only by New York and California in that order. The “Business Opportunity Tax Act” has the real potential of increasing the perception that Illinois is business-unfriendly.

Second, if my understanding of the legislation is correct, the larger the payroll an Illinois business has, the more taxes they will pay. Consider the following. If I’m an Illinois business owner with a payroll just shy of $250K who would like to bring on more staff, I may be dissuaded from doing so to avoid forking over an additional $3,000 to the state (unless I’m convinced the hiring would offset the $3K hit). And how might employee raises be impacted once payrolls start approaching a higher tax bracket? The proposed “Business Opportunity Tax Act” may not be too terrific for Illinois employment.

Third, readers of this blog may know that I am in the process of rolling out a research business focusing on specialized asset protection. It’s been my intention to launch in the Chicago area. Lately, however, I’ve been thninking of opening up shop in southeast Wisconsin (where my family has a residence) due to the direction Illinois looks to be heading with taxes and its treatment of the business community. The passage of the “Business Opportunity Tax Act” could be the straw that breaks the camel’s back. I wonder how many other prospective Illinois business owners might be in the same boat?

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Hinz, Greg. “New, wider tax plan rolls out in Springfield.” Greg Hinz On Politics. 24 Jan. 2017. (http://www.chicagobusiness.com/article/20170124/BLOGS02/170129931/springfield-lawmakers-roll-out-new-wider-tax-hike-plan). 26 Jan. 2017.

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More Wisconsin Welfare Reform Coming?

Wisconsin Governor Scott Walker is pushing for additional welfare reform in the state. Reid Wilson reported Monday afternoon on The Hill website:

Twenty years after a Republican governor of Wisconsin spearheaded an ambitious welfare reform package, the current governor is trying to build momentum for a new round of reforms.

Wisconsin Gov. Scott Walker (R) on Monday said he would ask the state’s Republican-led legislature to undertake one of the most aggressive welfare reform packages since a wave of new measures passed in the mid-1990s.

Walker’s plan, “Wisconsin Works for Everyone,” would impose new work requirements on both able-bodied adults with school-age children who receive state food assistance and those who receive housing assistance. Both work plans, which would be tested on a pilot basis, would require recipients to be employed for at least 80 hours per month, or to be enrolled in job training programs. Those who do not meet work requirements would see part of their benefits cut…

(Editor’s note: Bold added for emphasis)

Food stamp work requirements for abled-bodied adults without dependents have existed in Wisconsin since April 2015.

As for it’s neighbor to the south, critics contend the food stamp program in Illinois is ripe for abuse. A work requirement does not exist for even abled-bodied adults without dependents. According to the Illinois Department of Human Services:

“We expect people who can work to try and do so.”

Hmm.

Head on over to The Hill website here to read the entire piece.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Tuesday, January 24th, 2017 Employment, Government, Housing, Political Parties No Comments

16,700 Illinois Jobs Gone In December

Illinois lost 4,500 jobs in November, followed by a whopping 16,700 jobs last month. From an Illinois Department of Employment Security news release Friday:

The Illinois Department of Employment Security (IDES) announced today that the unemployment rate in December inched up +0.1 percentage points to 5.7 percent and nonfarm payrolls decreased by -16,700 jobs over the month, based on preliminary data released by the U.S. Bureau of Labor Statistics (BLS) and IDES. November job growth was revised down to show a decrease of -4,500 jobs rather than the preliminary figure of +1,700 jobs. The downward revision, coupled with the drop in December payrolls kept job growth well below the national average, with Illinois -52,500 jobs short of its peak employment level reached in September 2000.

“Nonfarm payrolls reflect the job market and this kind of drop is troubling, to say the least,” said IDES Director Jeff Mays. “It’s the largest monthly decline we’ve seen this year and the drop was across most sectors.”

“Another month of climbing unemployment numbers that are far from the national average,” said Illinois Department of Commerce & Economic Opportunity Acting Director Sean McCarthy. “Illinois needs structural reforms and a balanced budget to attract new jobs and investment in our state. We cannot repair the damage of losing 11,000 manufacturing jobs, 9,700 construction jobs and 5,800 information and financial activities jobs over the course of just one year without real changes that create growth and opportunity in our economy.”

(Editor’s note: Bold added for emphasis)

To be fair, IDES added:

Over the year, nonfarm payroll employment increased by +28,400 jobs with the largest gains in two industry sectors: Professional and Business Services (+31,600); and Leisure and Hospitality (+11,900)…

Hmm. “Professional and Business Services,” which includes temporary staffing (booming after the bust). And “Leisure and Hospitality,” one of the lowest-wage sectors of the economy. Get where I’m going with this?

January’s job report should be interesting.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Monday, January 23rd, 2017 Business, Employment, Government, Manufacturing No Comments

Inflation Rises At Fastest Pace In 5 Years

It’s been some time since a Survival And Prosperity post focused on inflation.

I suspect I’ll be blogging about it more in the coming months.

Jeffry Bartash wrote on MarketWatch this morning:

Inflation rose in 2016 at the fastest pace in five years, as rising rents and medical care and higher gas prices put a squeeze on consumers.

The consumer price index jumped 0.3% in December, the government said Wednesday…

A string of sharp gains since late summer helped drive up inflation by 2.1% for the full year, marking the biggest increase since a 3% gain in 2011

(Editor’s note: Bold added for emphasis)

Bartash added:

For now it doesn’t look like inflation will wane soon. Gas prices rose again in January and many economists predict that aggressive stimulative measures by the new Trump administration could lead to even higher inflation

(Editor’s note: Bold added for emphasis)

Jeffrey Sparshott added over on The Wall Street Journal website late this afternoon:

The latest figures- driven in part by an uptick in energy prices- suggest a four-year stretch of historically low inflation could be ending

While details remain uncertain, the president-elect has pledge lower taxes and more infrastructure spending. That could lead to faster economic growth and accelerating inflation

(Editor’s note: Bold added for emphasis)

As to what this might mean for interest rates, Fed Chair Janet Yellen spoke to the Commonwealth Club of California this afternoon. Ann Saphir reported on the Retuers website:

With the U.S. economy close to full employment and inflation headed toward the Federal Reserve’s 2 percent goal, it “makes sense” for the U.S. central bank to gradually lift interest rates, Fed Chair Janet Yellen said on Wednesday…

The Fed chief said that she and other Fed policymakers expected the central bank to lift its key benchmark short-term rate “a few times a year” through 2019, putting it near the long-term sustainable rate of 3 percent

(Editor’s note: Bold added for emphasis)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Bartash, Jeffry. “Inflation climbs at fastest pace in 5 years, CPI shows.” MarketWatch. 18 Jan. 2017. (http://www.marketwatch.com/story/inflation-climbs-in-2016-at-fastest-pace-in-5-years-cpi-shows-2017-01-18). 18 Jan. 2017.

Sparshott, Jeffrey. “U.S. Inflation Gauge Tops 2%, Supporting Fed’s Plan to Raise Rates.” The Wall Street Journal. 18 Jan. 2017. (http://www.wsj.com/articles/u-s-consumer-prices-up-2-1-in-december-from-year-earlier-1484746534). 18 Jan. 2017.

Saphir, Ann. “Fed’s Yellen says ‘make sense’ to gradually raise interest rates.” Reuters. 18 Jan. 2017. (http://www.reuters.com/article/us-usa-fed-yellen-idUSKBN1522VH). 18 Jan. 2017.

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Jim Rickards: ‘We’re Going To Go Into A Recession Or The Stock Market Is Going To Have A Very Severe Correction’

Marc Faber isn’t the only “crash prophet” who realizes the financial environment U.S. President-elect Donald Trump could inherit is significantly different than what Ronald Reagan encountered in 1981. Back on December 5 I blogged about James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author, who was on RTÉ Radio 1 (Ireland) the prior week informing listeners of the following:

Less regulation, lower taxes, and a lot more infrastructure spending. This was Ronald Reagan’s playbook. This is what Ronald Reagan did in 1981 with a lot of success. But there are big differences, reasons to believe Trump will not be as successful. Namely because when Reagan came in, the U.S. debt-to-GDP ratio- the amount of debt relative to our economy- was 35 percent. Today it’s almost 105 percent. Reagan had inflation of 20 percent. Trump has it close to zero. In other words, Reagan had a lot of tailwinds– inflation had to come down, interest rates had to come down, he had fiscal space to run up the debt. Trump has headwinds

(Editor’s note: Bold added for emphasis)

Last Tuesday, Rickards appeared on CNBC TV’s Squawk Box (Asia) and made this prediction about Trump’s first term in the Oval Office:

I definitely see a stock market correction, perhaps a disorderly one Martin. I’m not sure the Fed is ready to cut rates yet. But I expect it will raise rates in March. I think that’s on track. But beyond that, we’re going to go into a recession or the stock market is going to have a very severe correction. Either one of those will cause the Fed to back-pedal.

(Editor’s note: Bold added for emphasis)

CNBC anchor Martin Soong asked his guest, “What is it going to take to cause these two outcomes- what’s the trigger going to be?” Rickards replied:

First of all, it’s already happening. There’s basically a head-long collision coming between perception and reality. So what’s the perception? The market’s rising on the Trump reflation trade. So, Trump wants to cut taxes. Steve Bannon’s talking to his advisors about a trillion dollars of infrastructure spending, cutting regulations. So all these things are viewed to be highly stimulative. So that’s why the market’s going up… But with the Fed, they’re thinking of two things. Number one, they believe in the Phillips Curve… With unemployment at 4.6 percent and that kind of stimulus coming, they know monetary policy acts with a lag- they want to get out ahead of inflation. So they’re on track to raise rates. By the way, they want to raise them anyway independent of this because they’ve got to raise them so they can cut them in the next recession. So the Fed’s on track to raise. The market expects stimulus. But here’s the point. The stimulus is not going to come. Congress has already said tax cuts have to be revenue neutral- that’s going to take away the stimulative effect. They’re going to balk at more spending. We have $20 trillion of debt. A 104 percent debt-to-GDP ratio. So we’re not going to get this trillion dollars of spending. And we’re in the eighth year of an expansion Martin. Keynesian stimulus- if it works at all, it works at the beginning of an expansion or in a recession. Not after 8 years. You don’t get much bang for the buck.


“Fed to reverse course by year-end: Expert”
CNBC Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Survival And Prosperity
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Christopher E. Hill, Editor

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