Job Growth Accelerates in the US

Job Growth Accelerates in the US

15:47 09 March in Blog

For the first time since 1997, the job market has seen more than one million new jobs created over the last three months. This is the most significant indicator of economic growth to come. The last five years have been volatile, with many finding it difficult to find appropriate work at livable wages. The accelerated job growth rate is the most promising indicator that our economy is finally emerging from the doldrums of lackluster growth.

Job Growth Accelerates in the USAlthough the indicators of economic growth are not spread worldwide, the trend in the United States is flourishing. This trend is positive for workers who are currently employed but have not had the benefit of any significant wage growth.  Leverage on salary and hourly rate negotiations are moving in the direction of workers.  As the unemployment rate continues to decrease, the pool of qualified workers is being reduced. This will encourage employers to give existing workers raises either for retention purposes or to reduce the cost of training new workers whose performance may not be known until a significant investment of time and money occurs.

Typically, US consumers fuel the world’s economies through consumption and consumer spending. And because of the strength of the domestic job market is so strong, the Federal Government feels more comfortable raising rates. The criterion they are monitoring is wage growth, which climbed 0.5% in January (up 12 cents to $24.75 per hour and 2.2% over the past 12 month).  Combined with hiring momentum, the indicators of growth the Fed has been monitoring make a case to raise interest rates.

Prior to the great recession caused by the financial crisis, and ensuing federal regulation, growth rates in the US were approximately 3% per annum.  At 3% per year, the growth rate was deemed positive and indicated a stable and growing economy.  Currently, growth is approaching 2.5% and is encouraging economists that this will not be a cycle where there a growth spurt is followed by a decline.  One of the indicators economists are hanging their hats on is that workers have started to leave jobs in search of higher pay. This indicates that employees have confidence in the economy, and that moving to a new employer does not bring the risk of layoff should growth rates drop. Employees believe that the economy will continue to grow and their job stability is not at risk.

Of course, there are still headwinds that face the US economy, but it is more sector-related. Construction, manufacturing and healthcare are all major sectors of our economy that are hiring new workers. It is time to harness this growth and bid on new contracts, create product line extensions to sell more goods or services to your existing customers, and find new companies that will benefit from working with you.

Capstone Capital Group, LLC has eliminated the bank red tape by offering small to mid-sized business Single Invoice Factoring (“Spot Factoring”). Businesses can now get the immediate cash they need in exchange for working capital from Capstone Capital Group. For more information on Capstone’s Single Invoice Factoring, commercial financing call us today at (347) 821-3400.

Interest Rates on the Rise

16:52 15 December in Blog

UntitledThis week, the Federal Reserve indicated that interest rates will be raised next year. In a statement issued from the policy meeting, the Federal Reserve said monetary policy will be “normalized.”

Since 2008, rates have hovered near zero, with the Federal Reserve offering consistent assurances that rates would remain near zero to contend the economy’s low inflation and high unemployment rate. The proposed normalization won’t happen overnight. Even with increased rates, the flow of the economy will still be considered, with rates beginning to rise mid-2015.

But, not everyone is in agreement. According to The Wall Street Journal, “Dallas Fed President Richard Fisher said rate increases might need to come sooner than the Fed plans. Minneapolis Fed President Narayana Kocherlakota said the Fed isn’t putting enough weight on the risks of low inflation. And Philadelphia Fed President Charles Plosser wants the Fed to stop giving time-linked guidance about its rate plans.”

Rates are predicted at anywhere from 0.375% to 4% by the end of 2016, with no solid figure agreed upon. All except two policy makers noted that they predicted an increase of short-term interest rates in 2015. Their median estimate put short-term borrowing rates at 1.125% in the next year. For 2016, the median rate estimate was 2.5% and for 3.625% for 2017. Of course, this is all gradual and dependent on the growth of the economy.

While the labor market has improved, with a lower unemployment rate, inflation could alter plans. The Labor Department reported recently that consumer prices dropped 0.3% in November. This is marked as the largest one-month drop since the massive financial crisis in 2008. Federal officials have confidence that this drop, as well as the recent oil declines, won’t completely hinder their efforts. Inflation developments will be watched carefully, and we’ll monitor developments from the next policy meeting to take place January 27-28.

Capstone Capital Group, LLC. understands the importance of these policy meetings and what higher interest rates mean for you. Capstone offers Single Invoice Factoring (“Spot Factoring”) as a solution.   For years, we have helped organizations get the immediate cash they needed without the typical red tape that most banks require. For more information about Capstone and our Single Invoice Factoring and purchase order factoring give us a call today at (347) 821-3400 and speak to a representative.

Regulators Remain Unconvinced of Big Bank’s Ability to Safely Wind Down in a Financial Crisis

19:14 15 August in Blog
 As part of the 2010 Dodd-Frank regulatory scheme, banks are required to submit an annual “living will” detailing, among other things, the bank’s operations and exposures, in addition to a plan of how the bank could be dismantled without relying on tax payer funded support in the event they reach a point of potential failure during a financial crisis.
 
After a review by the Federal Reserve (the Feds) and the Federal Deposit Insurance Corporation (FDIC) of recently submitted bankruptcy plans of eleven of the nation’s largest banking institutions, the Feds and the FDIC chastised the plans as being “unrealistic or inadequately supported” and that the plans “fail to make, or even identify the kinds of changes in firm structure and practices that would be necessary to enhance the prospect for an orderly failure.”
 
Regulators set a time frame for these banks to address the apparent deficiencies in their plans by July 2015 or face tougher capital requirements, growth restrictions, and even go so far as to break up the bank if they are unable to make significant progress. 
In order to avoid harsher rules and possible dismantling, regulators say banks can take steps to make their bankruptcy plans by establishing a rational and less complex legal structure, essentially showing they can quickly produce reliable information about their exposures, and amending derivatives contracts to make them easier to bring through bankruptcy. 
 
These actions by regulators gives a clear sign they believe that banks aren’t doing enough to insulate themselves and protect the tax payer in the event of a future financial crisis. With increased regulation and scrutiny looming over the banking industry, which isn’t likely to ease up any time soon, banks are feeling the pressure to restrain growth by curbing lending practices.
 
 Some borrowers, like small business owners, may have a more difficult time obtaining the necessary financing they need to maintain and grow their business.  Unfortunately, the focus on unwinding banks and compliance with regulations takes away resources that can be used to help finance small businesses.  Capstone Capital Group, LLC has funding solutions that can get you the financing the big banks can’t provide. 
Capstone Capital Group, LLC has been helping small to mid-sized businesses for years obtain the necessary working capital they need to sustain and grow during uncertain economic times without all the red tape you normally get from most banks.  Capstone Capital Group, LLC specializes in Business finding solutions, Single Invoice Factoring (“Spot Factoring”) for firms in need of immediate cash. Spot Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group.

 

Pulling Back the Reigns of Growth – Small Banks Restrain Progress Fearing Costly Regulations

14:55 08 August in Blog
Banks have come under intense scrutiny in recent years following the financial crisis that began in 2007.  The regulatory pressure doesn’t seem to be letting up anytime soon as regulators attempt to reign in banks designated as “systemically important.”  
 
According to regulators, systemically important banks are those which report assets of more than $50 billion on average for four quarters in a row.  Once a bank has achieved this status, banks are required to comply with, among other things, stringent capital requirements, submit to yearly “stress tests” and to create processes for the winding down of a bank in the event of a crisis.
 
The purpose of placing a $50 billion asset threshold amount, according to regulators, is to keep a closer eye on banks whose potential problems could endanger the broader financial system.  However, some critics within the banking industry argue the threshold is too low and that banks who come close to that amount are far from “financial giants”.  This issue has caught the eye of Federal Reserve governor Daniel Tarullo, who stated in a speech that it might make more sense to increase the threshold from $50 billion to $100 billion for applying certain rules.  The suggestion being that the “stress test” process seems unnecessary for banks under $100 billion. 
 
As a consequence of these stringent and costly regulatory requirements, some small asset banks like New York Community Bank (NYCB), whose reported assets in the first quarter of 2014 was $47.6 billion, has come out with a statement that it is restraining its lending growth citing loans amount to assets.  If other small banks, like NYCB, who are coming up to the $50 billion threshold limit decide to take a similar approach and restrain growth by curbing its lending practices, some borrowers, like small business owners, may have a more difficult time obtaining the necessary financing they need to maintain and grow their business.  Fortunately, Capstone Capital Group, LLC has the solution. 
 
Capstone Capital Group, LLC has been helping small to mid-sized businesses for years obtain the necessary working capital they need to sustain and grow during uncertain economic times without all the red tape you normally get from most banks.  Capstone Capital Group, LLC specializes in Purchase Order factoring, Single Invoice Factoring (“Spot Factoring”) for firms in need of immediate cash. Spot Factoring provides flexible, no contract invoice selling in exchange for working capital from Capstone Capital Group.  

5 Items to Look Out for When the GDP is Announced

20:28 31 July in Blog
The Bureau of Economic Analysis released an advanced estimate of the United States GDP for the second quarter earlier today. After what many would have designated as a weak first quarter, the US economy gained some momentum in the second quarter and came in stronger than anticipated. The report showed the GDP increasing at a rate of 4%, respectively to a 2.1% decline in the first quarter.
Today’s announcement has a substantial impact on nearly everyone within the US economy. However, is just knowing the numbers really enough? There are certain thoughts that should be placed into question when the GDP is announced. After all, this is an assessment that is used as an indicator of our standard of living. Below we offer five items to look for when the GDP is announced:

Top GDP Stats to Look for

  1. The offset of the loss in GDP in the first quarter with second quarter growth. During the first quarter of 2014 GDP declined by 2.9%. During the second quarter of 2014, the GDP was forecasted to grow by 3%. However in an advanced estimate that was released today, it showed the GDP actually increased by 4% These two quarters essential have left the economy flat for the first six months of 2014.
  1. What are consumers up to? Discretionary purchases and household spending represent about two thirds of the economy.  Depending on consumer sentiment could foreshadow increases in demand which was necessary because the first quarter of 2014 demand increased by 1%.  The government blamed the lack of consumer confidence on the “Polar Vortex” or bad weather.
  1. Business inventories; how high or low are they? In the first quarter they rose by 1.7% which means goods were not being shipped.  Unless this trend has been reversed it could spell trouble for business sales and consumer confidence.
  1. Will the Government revise their numbers? Should the government increase the negative growth percentage for the first quarter of 2014 it could have negative implications for the balance of 2014.  If the revise it in a positive manner it will yield positive results for growth for the balance of the year.
  1. If GDP increases beyond the forecast of 3% then there is a chance that business confidence has increased as well.  This translates into higher production rates and hopefully increased sales and employment.
After a negative first quarter, the GDP rebounded back at an annual growth rate of 4% due to an increase in household spending and business inventories. At Capstone Capital Group, LLC we feel as if this growth may blossom into other opportunities. Capstone is a factoring company here to help your new business start, grow, and thrive. We pride ourselves as a factor whose objective is to help you succeed. We offer single invoice factoring which can provide you with the capital you need to accelerate your cash flow and help your business continue to grow and thrive in today’s market.
For more information on how Capstone can help, please email [email protected] or call (212) 755-3636 to speak with a representative today.

 

It’s the Economy, Stupid?

19:47 23 January in Blog

Everyday, depending on what consumers or employers are doing, the economy is either growing or contracting.  There are a few Economic Indicators or news announcements that you might be interested in following to come to your own conclusions: 
  1. The decision by the Federal Reserve (“Fed”) to either increase or decrease the Quantitative Easing (“QE”).
  2. Whether or not Congress or the President plans on not enforcing certain aspects of Dodd Frank,
  3. How your local Business Climate is reacting to the changing economic conditions in your region or area of operations.
The decision by the Fed to ease further or decrease their QE program is important because the program has had unintended consequences.  The original strategy behind QE was to increase the money supply to stimulate the economy.  Put simply, if banks had more money they would lend it to you, the small business owner. In turn these business funding solutions you to hire new employees and increase sales through which the economy would grow.  grow.  The reason why small business funding may have worked in the past (i.e. the early 1990’s) is because banks did not receive interest on funds deposited at the Fed.  Under the QE banks will receive interest on their deposits.  This has translated to no lending to the Small Business Community because lending to the Federal Governmentcomes without the chance of a default.  Small Businesses who take risks often default and are not as good credit risks as the Federal Government.
The “To Big to Fail Banks” are now lending to their guarantor and not to you.  These banks have been able to recover from the financial crisis without taking any risks.  During the same period of time in the early 1990’s the Prime Rate was 8% (per annum) and the Fed Funds Rate was approximately 3%.  Parking money at the Fed yielded negative 3% and lending to a good credit yielded 5%.  The banks made loans and the economy recovered all they way until 2001.  As a result of the stimulus the private sectorrecovery led to robust economic growth with limited (if any) budget deficits by the time President Bill Clinton left office.
Because the banks are lending to the Federal Government there is no inflation risk since all the excess liquidityis in the bank being borrowed by the Fed.  That’s good for a business owner and homeowner but not good for people planning to retire because more likely than not, they’ll have to go back to work to increase their nest egg or just cover living expenses.  This is why temp agencies have so many qualified candidates to hire to support the growth of your business.
When reviewing Dodd Frank headlines what you should focus on is the reserve requirements of the banks.  If it appears that the law will be amended to reduce the reserve requirements for small business loans then you could consider going back to the bank for financing.  However, you will still need audited financial statements and three years of profitable operations, personal guarantees and the rest.  You have to weigh the cost to you personally versus going to a finance company or Factor where the cost of capital may seem more expensive but the cost to you personally as the business owner is far less and there is less risk to your personal assets than at the bank.
Finally, how is the local economy doing?  Connecticut is considering developing a Port Authority,  Florida is creating a for-profit railway system, New York is building at least three new bridges,  the City of New York is in fear of being washed into New York Harbor and has initiated a $20 billion flood control plan.  I am sure if you read your local paper everyday you will find that there are significant opportunities available to you or your business.  Take a minute to cut out the article and call the reporter to ask them questions.  Who doesn’t like to talk about their work?  Contact whoever is in charge of the project; find out how you can help. 
The worst case scenario is that you prepare a presentation and you don’t get to participate in the original project it was intended for however the presentation can be utilized for a variety of other opportunities so another opportunity can be gained from poking around.  This could actually lead to multiple jobs.  Although the opportunities identified above all seem like construction projects, they need Supplies, Office Supplies, office space, etc. and they last several years.  You might not be able to change the direction of the economy, but you are able to change the direction of your company.  Set yourself up for success by working towards completing your business goals and use spot factoring to make progress by any means necessary.

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