#761: New Projections from the Federal Reserve

 

#760: A Crash Course in Inflation from CBS Sunday Morning

 

#759: Tips for Secure Online Shopping From WaPo Writer Michelle Singletary

 

Online shopping will soar this holiday season. So will scams. Here’s how to protect yourself.

 

It wasn’t just the pandemic that pushed more people online. Long before covid, more shoppers decided to skip the crowds and simply click for their holiday gifts.

And I get it. I hate shopping — especially during the holidays. There’s the hunt for a parking space, the throngs of customers, the long checkout line at stores with 10 lanes but only three cashiers working the registers.

The old phrase “Shop till you drop” has become more like “Shop till you want to scream.”

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So it makes sense that for the first time in Gallup’s look at holiday spending trends, a majority of Americans — 56 percent — say they are very likely to do their Christmas shopping online. That’s up eight percentage points from 2017.

In 1998, when Gallup first asked about online shopping, only 4 percent of Americans said they were likely to shop via the Internet. Gallup doesn’t ask the question every year.

“The trend since 2017 looks more like just a continuation of the organic growth in people moving their lives online that’s been happening over the past 20 years, rather than a pandemic-driven bump,” Lydia Saad, director of U.S. social research at Gallup, said in an interview.

Americans said they are personally planning to spend an average of $886 on Christmas gifts, according to the Gallup poll. This makes the holiday season prime time for scammers. With online shopping presenting more opportunities for fraudsters, here are some tips to protect yourself online.

Pay with a credit card, not a debit card. You may be thinking you can avoid getting into debt by paying with your debit card. But a credit card purchase offers more consumer protections than a debit card.

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If you pay with a credit card for goods or services not received, you have certain rights under the Fair Credit Billing Act. Federal law limits your responsibility for unauthorized charges to $50, and even then most credit lenders won’t make you pay anything. Charges for goods and services that weren’t delivered as agreed can be disputed as a billing error. You can ask your credit card company to temporarily withhold payment while it investigates a fraudulent purchase.

The rules governing your debit card fall under the Electronic Fund Transfer Act, which doesn’t have a not-delivered-as-agreed type of error that can be challenged, according to the Federal Trade Commission. If you pay with a debit card for a service or product that is never received, you have to work with your bank to dispute the charge that has already been deducted from your account. This could mean some time before the transaction is reversed. Your debit card is directly tied to your bank account, and fraudulent transactions can quickly do a lot of damage.

If you don’t have a credit card, use a prepaid debit card to purchase things online.

Watch for unrealistic shipping promises. Supply chain issues have led to shortages, and scammers know folks will be looking for retailers that can promise fast and free delivery. In your desperation to get a gift in time for the holiday, you could fall for a scam. But you risk not just getting something late — it might never come. Be a skeptic about shipping guarantees that seem too good to be true.

 

Look out for fake shipping text messages and emails. Don’t click on anything in a text or email. It could be legit, but why take the risk? Instead, go to the retailer’s website and type in your shipping or purchase code to double-check details about your order, the Better Business Bureau advises.

Be a guest. Lots of online shopping sites want you to create an online account to make a purchase. But to do so, you have to give up personal information stored on yet another database. If you end up dealing with a fraudulent site, you’ll be giving up information that could be used for present and future scams. Check out as a guest so you don’t have to provide too much information.

Don’t be fooled by an offer of a gift card. Inflation has you worried about how far your money will go. But that email or text offering a $50 gift card is fake. They all are. Seriously. If you think it’s real, then go to the retail site online or call customer service to determine whether the offer is legitimate.

Scammers love gift cards, too. If you’re told to pay for an item with a gift card, you’re about to be scammed, according to the FTC. This is a favorite payment method for scammers because it’s like paying in cash. It’s nearly impossible to get your money back.

Look for a physical address. “Legitimate online stores should provide you with a physical address and working phone number in the contact section,” the Better Business Bureau says. If you have to hunt for a way to contact the retailer, that’s a red flag you should not ignore. Return and shipping policies should be clear and easy to understand, the BBB says.

Scammers have become so clever that it’s often hard to figure out what’s fake and what’s real. They read the news, too, and will play to your fears about inflation, delivery delays, and certain hot items being out of stock.

Assume any holiday deal you receive by text or email is fraudulent. Don’t click on anything. Unless you’re willing to do some sleuth work, patronize known retailers. Your best defense is to be super paranoid about everything to make sure the season of giving doesn’t turn into a season of taking from you.

#758: Retail Resurgence

 

#757: Freight Expectations: What Caused America's Supply Chain Crunch

 A very interesting and comprehensive explanation of our current supply chain challenges. 

#756: NBC Has Exclusive Look at New GM EV Plant

 Click here to view this interesting video segment from Nightly News on GM's move to create more electric vehicles.

#755: Supply Chain Issues Worsen as Ports Face Record Backlog

 

#754: CEO Who Gave All His Employees Minimum $70,000 Paycheck Thriving 6 Years Later

 

#753: Product Scarcity May Impact Holiday Shopping

 Accounting students - don't miss the opportunity to connect this story to JIT.  No longer the darling of inventory management strategies!

#752: Why America Has 8.4 Million Unemployed When There are 10 Million Jobs

 An interesting article from the Washington Post.  You may have to register for a free account which allows you access to a small number of articles each month without paying.

https://www.washingtonpost.com/business/2021/09/04/ten-million-job-openings-labor-shortage

#751: Businesses Supporting Office Workers Suffer as Remote Work Becomes the Norm

 

#750: Tips to Save Money, Shop Smarter With Surging Prices

 Some tips on how to deal with increasing prices.

#749: New Initiatives Could GIve More Americans Access to Credit Cards, Help Refinancing Mortgages

 This excellent CBS This Morning segment reflects on post-pandemic borrowing, but the advice on using credit cards is timeless.

#748: Why Used Cars, Gas, Airfares, Meat & Other Items Are Experiencing Inflation

 This is an excellent article on our current economy and how the pandemic has shifted us into transitional inflation - some may be temporary, while some may be long-term.  You may have to register with the Washington Post to create an account which provides limited free access to a small number of articles each month. 

#747: NYT Investigates Amazon's Treatment of Workers

Click here to access this video segment on Amazon.

#746: Interesting Article on Sandwich Pricing

 How a New York City Restaurant Loses Money on a $14 Sandwich - click here to read

#745: Dow Jones Birthday Info from Morning Brew

MARKETS

Dow Cruises to 125th Birthday

125 years ago yesterday, the Dow Jones Industrial Average first appeared in the Wall Street Journal. It consisted of 12 stocks that Mr. Pennybags would approve of, such as gas and electric companies. 

Since then, the Dow has expanded to 30 companies and has grown from about 40 points on its inaugural trading day to over 34,000 today. But in the era of meme stocks, is it time for the Dow to retire and move to Florida?

Here’s one thing aging the Dow: It’s weighted by share price rather than market capitalization, like the S&P 500. That means the performance of companies with higher share prices have outsized influence, even if others may be more valuable. 

For example, United Healthcare (worth $390 billion) affects the Dow more than Apple ($2.1 trillion), because Apple has split its stock and United Healthcare’s individual shares cost more.

Some say this makes the index a good reflection of less-flashy “value stocks” favored by investors such as Warren Buffett. 

But Dowters say the index’s share-price weighting, plus its limited number of companies, makes it a poor representation of Corporate America.

#744: One Way Companies Are Concealing Higher Prices: Smaller Packages

 Click here to read this interesting Washington Post article on re-sized consumer packaging.

#743: Prices Surge and Consumers Feel the Pinch

 

#742: Tax Refunds Delayed by IRS

 This Washington Post article outlines the budgetary challenges that the IRS is facing and why you are not so likely to be audited. 

#741: Explaining Capital Gains - from Morning Brew 4/23/21

President Biden will soon propose nearly doubling the capital gains tax for wealthy people to 39.6%, according to Bloomberg. Wealthy people = individuals earning $1 million or more.

Biden is expected to announce the tax hike next week as part of the pitch for his "American Families Plan," the highly anticipated sequel to the $2.3 trillion infrastructure proposal he released a few weeks ago. 

To pay for the first plan, which includes spending on bridges and broadband, Biden wants to hike taxes on corporations.

To pay for his second proposal, which includes spending on childcare and paid leave for workers, he wants to hike taxes on wealthy investors.

Capital gains 101

You pay capital gains taxes on your profits from a savvy investment. For example, say in the summer of 2020 you listened to Roaring Kitty and bought GameStop at $4.50/share, then sold it this year at $150/share to buy courtside tickets to the Knicks' NBA Finals game—nice work, but you're going to have to pay taxes once you sell that stock.

Investments held for less than one year are taxed like regular income, but long-term capital gains (investments held for at least one year) have three tax brackets that top out at just 20%.

Critics of the current capital gains system say, "So you're telling me this rich investor is paying less in taxes on their stock sales than a middle-class worker pays on their income? That doesn't sound right." Wealthy people with a majority of their net worth tied up in investments do benefit from the current system—Warren Buffett once said he's the lowest-paying taxpayer in his office. 

But people who oppose raising capital gains taxes argue that the ripple effects would be way worse, disincentivizing risk-taking, holding back economic growth, and discouraging investors from selling their assets, which is seen as keeping the market healthy. 

Bottom line: Investors knew this dramatic hike was coming (the proposal was in candidate Biden's tax plan), but the report jarred Wall Street nonetheless. It could lead to a lot of asset sales before 2021's out, according to Axios. 

#740: America's Microchip Problem - 60 Minutes 5/2/21

 Click here to load this fascinating segment from 60 Minutes on what many consider our top supply chain problem as we emerge from the pandemic - a shortage of manufacturing capacity in the US for semiconductor chips.

#739: Tax Day is May 17

 

#738: Understanding Quarterly Earnings courtesy of Morning Brew

Q&A: Why Should I Care About Earnings?

Every Wednesday, we answer a reader-submitted question about business and the economy. Want clarification on something you read in the Brew? Click here and ask. Question from Reha in Boston: How does a company's quarterly earnings report affect its stock price? Brew's answer: Whew. It's that time of year again. Every three months, publicly traded companies give the Securities and Exchange Commission a detailed account of their financial performance from the previous quarter. Then, execs usually host a conference call to parse the data in front of analysts and whichever media interns drew the short stick. "Earnings" is basically a fancy word for profit: what companies make after expenses. But an earnings report can also show metrics like revenue, subscriber counts (in the case of companies like Netflix), and predictions for future performance, aka "guidance." Creditors use earnings information to help determine a business's creditworthiness, and investors use it to gauge things like whether a company is tracking on long-term goals, the leadership team's effectiveness, and industry standing. Generally, if a company's earnings underperform analysts' expectations, shares might decrease; if they beat expectations, shares  may rise. But sometimes, if earnings were underwhelming but the company drops some exciting information about what's ahead, investors send prices up.

#737: What's Behind Rising Grocery Costs and How to Save

 From 4/13/21 NBC Nightly News, view this segment here. 

#736: How to Start or Restart Saving for Retirement

 

#735: What the Ever Given Saga Has Taught Us About the World

 Click here to access an interesting Washington Post article about global supply chain and the implications of a disruption in international shipping.  You may be required to register for free access to a small number of articles monthly. 

#734: Tax Predictions from The Morning Brew 3/16/21

 We're just going to rip off the Band-Aid: President Biden is aiming to raise taxes sooner rather than later, according to a new Bloomberg report. 

What can you expect? For individuals...

• Bumping the income tax to 39.6% for those earning $400,000+  
• Taxing capital gains like normal income if you earn $1+ million
• Increasing estate taxes to 45% for assets worth $1+ million

So, if you still clip coupons, don't expect any changes. These increases largely follow Biden's campaign proposals to only tax high-earners.

What about businesses?

The headline proposal is raising the corporate rate to 28%. Biden may also get rid of preferential tax treatment for "pass-through businesses" like LLCs and increase incentives to avoid offshoring. 

When Trump slashed the corporate rate to 21% in 2017, he wasn't the first to bat for business interests. From 2000–2018, 76 countries reduced their corporate rates to attract investment; now, the average rate is ~24%. Treasury Sec. Janet Yellen wants to stop that "race to the bottom," which some economists say has only benefited large companies, so she's working with allies on establishing a global minimum tax for multinationals. 

• UC Berkeley economists estimate 40% of profits earned by multinational firms (or $700+ billion) were located in tax havens in 2017. 

Critics argue this plan puts companies at risk for double taxation. And the Tax Foundation estimates that some of the proposed changes to corporate taxes would reduce US GDP by 0.8% and wages by 0.7% in the long run. 

So why do they want to do this? 

Given that the last major tax hike happened in 1993, it's not an easy play for hearts and votes. And groups with lots of money at stake are sure to lobby against the plan.

But after funding his ambitious $1.9 trillion Covid package largely with government debt, Biden needs something more sustainable for the even more ambitious infrastructure package he's eyeing, which could run anywhere from $2–$4 trillion. 

#733: Supply Chain Executive Order

 From the 2/25 edition of Morning Brew - click here

#732: From Morning Brew - Explanation of Market Capitalization

 Click here for an excellent article on what market capitalization means.

#731: Game Stop? Reddit? An Explainer

 This short article from the Today Show website, along with the video from Stephanie Ruhle, provide a good explanation of what is going on with GameStop's stock this week.

Please note this post contains 2 different links - one to an article and one to a video.

#730: From Morning Brew 1/23/21 - US Business on the Importance of Getting Their Employees & The Country Vaccinated

Executives from major US corporations are eagerly raising their hands at the front of class hoping to get called on by President Biden. The problem they think they can answer? How to speed up a vaccine rollout that is wayyyy behind schedule.

• New York State was set to run out of vaccine doses yesterday, Gov. Andrew Cuomo said. And just 67% of hospital staff (who are in the first priority tier) have received shots. 
• Elsewhere in the country, about half of the 38 million doses distributed to states are stuck in freezers.

A few notable hand-raisers

Walmart, which is already vaccinating healthcare workers in Arkansas and New Mexico, is expanding its vaccine efforts to seven additional states, Chicago, and Puerto Rico. Eventually, the nation’s largest retailer thinks it can dole out 10 million to 13 million doses a month. 

Over in Washington state, Starbucks, Microsoft, and Costco have all been tapped by Washington Gov. Jay Inslee to help distribute vaccines. And this week, Amazon implored the Biden administration to call upon its expertise for something a little more pressing than delivering a Ninja food processor in less than 12 hours. 

Private sector  public sector 

Big retailers, working more closely with local governments, could be a missing link in the distribution effort’s 10,000-piece puzzle. “Their core businesses are already geared around serving millions of customers day in and day out. They have locations right across the country and...national distribution and logistics networks,” Neil Saunders, managing director of Global Data Retail, told the Washington Post.

It’s not just the big kids helping out, either. Carbon Health, a healthcare startup that just finished raising a Series C round, now powers the back-end tech for the City of Los Angeles’s entire vaccine program. 

Zoom out: The private sector has every incentive to help out the government. “Our economy will not recover, and we won’t be able to get people back into the office, until we have good penetration of the vaccines,” Goldman Sachs CEO David Solomon said.

#729: Fixing Social Security

 Another article from Michelle Singletary of The Washington Post, this time about needed fixes to strengthen Social Security.  This article points to how the pandemic is going to affect long term solvency of the Social Security trust funds.

#728: Tax Season Kicks Off February 12th. Here's What to Expect.

 Click here to read this excellent article by WaPo's Michelle Singletary.  You may be prompted to register for a free account which allows for access to a limited number of articles per month. 

#727: Party Like It's 1925 on Public Domain Day

 Click here to read this interesting article about one type of intangible assets courtesy of WKMS, our local NPR station.

#726: Grocery Trends for 2021

 This article from the Washington Post offers up some interesting comments on manufacturing and supply chain as the grocery industry continues to respond to pandemic conditions. You may be required to register for a free WaPo account which allows for a minimal number of articles to be viewed each month.

#725: 2021 Money Moves