Warren Buffett says U.S. economy gradually improving

OMAHA, Neb., Mon May 6, 2013 — Warren Buffett said on Monday the U.S. economy is gradually improving, helped by the efforts of Federal Reserve Chairman Ben Bernanke to stimulate it.

Speaking on CNBC television, Buffett said the economy is benefiting from improvement in areas that had not previously performed well, particularly homebuilding.

He also said the improved economy is helping create increased traffic for NetJets, Berkshire’s private plane unit.

“The economy is moving forward, but at a slow pace,” he said. “Demand has come back, but slowly.”

Buffett said low benchmark interest rates, including overnight rates that have been effectively zero since late 2008, can help stimulate demand.

“When interest rates are low, and people expect them to stay low for a while, it pushes up the value of all other assets,” he said. “Interest rates act like gravity for all other asset prices.”

Buffett called Bernanke “a gutsy guy” who has “done very, very well in terms of what he has done for the United States.”

Last week, the Fed said it will continue to buy $85 billion of bonds per month to keep interest rates low and spur growth, and said it will step up purchases if needed.

The economy grew at a 2.5 percent annualized rate in the first quarter.

Buffett spoke on CNBC after Berkshire’s annual shareholders meeting over the weekend here.

U.S. economy to grow 2.5 percent this year: Fed’s Evans

CHICAGO, Mon Jan 14, 2013 — The U.S. economy is expected to grow by 2.5 percent in 2013, improving to 3.5 percent growth in 2014, Chicago Fed President Charles Evans said at the Asian Financial Forum in Hong Kong.

Evans also forecast the U.S. unemployment rate would be 7.4 percent this year, easing to about 7 percent in 2014.

Last month, Fed policymakers said they expected GDP growth of between 2.3 and 3.0 percent this year, and 3-3.5 percent in 2014.

FedEx to add 20,000 seasonal workers; sees shipping up 13 percent

MEMPHIS, Tenn., Mon Oct 22, 201 – FedEx Corp said on Monday it plans to hire 20,000 seasonal workers, the same as last year, to handle holiday shipping volume that it expects will be up more than 13 percent.

An ongoing increase in e-commerce and last-minute orders amid a slow-growing economy will mean more deliveries for companies like FedEx that can handle fast shipments.

FedEx, which is closely watched as an indicator of consumer demand and economic health, anticipates handling more than 280 million shipments during the holiday season between Thanksgiving and Christmas.

The company said the impact of an increase in holiday shipments was included in its fiscal 2013 earnings outlook.

For the second time this year, FedEx cut its forecast for global growth in 2013, citing slower growth in China, recession in some European economies and high energy prices.

FedEx can add the same number of seasonal workers as last year because it has been hiring staff throughout 2012, especially at the Ground and SmartPost divisions that will handle the bulk of the holiday volume, said T. Michael Glenn, executive vice president of market development and corporate communications.

December 10 is expected to be its busiest day ever with some 19 million shipments – a 10 percent increase from last year. E-commerce will drive the shipping volume on so-called “Green Monday,” which falls on the second Monday of December and kicks off the heaviest online shipping week of the year.

Geithner welcomes India’s new drive for reform

WASHINGTON, Tue Oct 9, 2012 – U.S. Treasury Secretary Timothy Geithner welcomed New Delhi’s new-found appetite for economic reform on Tuesday, barely three months after Washington had voiced concern about India’s deteriorating investment climate.

Hailing the latest reforms as “significant,” Geithner told a news conference with Indian Finance Minister P. Chidambaram in New Delhi that the policies offered “a very promising path to improving growth outcomes for the Indian economy.”

India’s economic growth has slowed to its lowest in nearly three years and earlier on Tuesday the International Monetary Fund (IMF) sharply cut its projection for GDP growth to 4.9 percent in 2012, one of the lowest official forecasts so far.

“The recent reforms advanced by Prime Minister (Manmohan) Singh and Minister Chidambaram will help provide a foundation for stronger economic growth, an increase in investment, and more widespread gains in income,” Geithner said.

Regulatory uncertainty and policy gridlock have battered foreign corporate investment towards India over the past year, adding to dramatic slowdown in growth.

Fed shooting for stronger jobs rebound: Bernanke

INDIANAPOLIS, Mon Oct 1, 2012 – Federal Reserve Chairman Ben Bernanke on Monday delivered a broad defense of the central bank’s controversial bond-buying stimulus plan, saying its actions are necessary to support a flagging economic recovery.

Bernanke pushed back against the accusations that the Fed’s policy is laying the groundwork for inflation in the future or enabling the government to run large budget deficits.

He said that while the country’s unusually weak economic performance had forced the Fed to resort to less conventional tools after bringing interest rates all the way down to effectively zero, the Fed’s goals of price stability and maximum sustainable employment have not changed.

“These goals mean, basically, that we would like to see as many Americans as possible who want jobs to have jobs, and that we aim to keep the rate of increase in consumer prices low and stable,” Bernanke told the Economic Club of Indiana.

He reiterated the Fed’s commitment, made at the September meeting where it announced a new, open-ended program of asset purchases, to keep a heavy dose of monetary stimulus in place even after the economic rebound appears to gain traction.

“As long as price stability is preserved, we will take care not to raise rates prematurely,” Bernanke said.

Driving global sales for manufacturers

Andrew Dorn, Industry Leader, Information Intensive Business, Acxiom Corporation

When Andrew Dorn, Industry Leader, Information Intensive Business, Acxiom Corporation, was recently researching the top manufacturers in the United States, one topic kept coming up — the strong growth expectations focused on the world’s emerging markets. With the economies of the U.S. and Europe in flux, Dorn felt that, now more than ever, manufacturers need to be attentive to those emerging markets.

“The world is now flat,” says Dorn. “Competition comes from everywhere, so manufacturers need to be everywhere.”

Because of that, Acxiom has partnered with Smart Business to present a special one-hour webinar: “Driving Global Sales for Manufacturers: Why global growth for manufacturers is more important than ever.”

During the webinar — on Wednesday, September 19 at 1:00pm EST — we will discuss why global sales for manufacturers is critical, what factors should be considered in developing or refining the  international strategy, and, finally, present a roadmap that can be employed to optimize chances for success.

Featured panelists will be Zia Daniell Wigder, Vice President and Research Director, Forrester Research; Jennifer Barrett Glasgow, Global Privacy and Public Policy Executive, Acxiom; and Michael Biwer, Managing Director, Acxiom.

“As you enter the global market, it is imperative you understand the privacy laws in each country as they are quite complex and some are very stringent, for example, having criminal penalties for some violations,” says Barrett Glasgow.

Other topics to be discussed include:

  • How to determine which countries to enter and what data to gather to understand regional customer requirements
  • Recommended approaches to building country-specific strategies that can help facilitate smooth transitions, lowest possible cost-of-entry, and consistent performance
  • Considerations for navigating the complex web of country-specific data protection and privacy laws companies must adhere to in their efforts to connect with customers and prospects
  • Best practices used by leading companies that have successfully entered new markets

“The U.S. and European economies are still recovering and the balance of growth is constantly shifting,” says Dorn. “For example, China and Brazil have been experiencing strong growth. They are encountering a maturity curve, but that doesn’t lessen the importance of the issue — manufacturers need to be diversified and have a presence in all major world markets.”

The webinar, “Driving Global Sales for Manufacturers: Why global growth for manufacturers is more important than ever” will be held at 1:00 pm EST on Wednesday, September 19.

Click here to register for this free event!

Economic factors are still driving fraud activity at businesses of all sizes

Jason Buhlinger, Supervisor, Financial Advisory Services, Brown Smith Wallace LLC

When times are tough, the temptation for employees to dupe the system and steal cash or assets increases. The economy is a key driver in fraud activity, and over the last several years, organizations of all sizes have been victimized.

So is the fraud environment improving now that there’s news of an uptick in the economy? Not yet, says Jason Buhlinger, a supervisor in financial advisory services at Brown Smith Wallace LLC, St. Louis, Mo.

“While there may be signs of the economy getting a little better, people still feel uncertain — and as long as that feeling is in the back of their minds, there is motivation and a rationalization to steal,” Buhlinger says.

Companies are running leaner, which means there is less management oversight at some firms, and others have eliminated internal audit personnel. One person may be doing the job of two or more employees, so the work force is spread thin. And that may mean that no one is watching should an employee decide to commit fraud.

“Imposing internal controls becomes harder to accomplish with less staff,” Buhlinger says.

Now is not the time to let your guard down as a business owner.

“The longer the economy trickles along, we’ll continue to see people who are looking for easy ways to get cash,” Buhlinger says.

Smart Business spoke with Buhlinger about the types of fraud being committed and how to establish strong internal controls to protect your business.

What specific economic factors drive individuals to commit fraud?

The recession began in December 2007, and at one point, the Dow Jones Industrial Average was down as much as 50 percent. People had to become more frugal. Those who planned on retiring early had to re-examine that goal as they watched their investment savings dwindle. And home prices dropped significantly in some areas of the country.

All of a sudden, the asset values that many people counted on were gone and they had to figure out a way to supplement that. This is where the fraud triangle comes into play — opportunity, rationalization and pressure. All three of these stress points have increased in the past several years, and this continues to be the case.

As long as people feel a sense of economic uncertainty, that can evolve into rationalization and pressure to find more money somehow. When the opportunity to commit fraud presents itself, rather than taking the higher moral road, as they might in better times, they justify the act and take that opportunity. Your organization can’t realistically eliminate all rationalizations and pressures, but it can manage the opportunity side of the triangle.

What types of fraud are most common today?

Asset misappropriation remains the most common type of fraud. That includes, but isn’t limited to, cash theft, payroll schemes and inventory theft, to name a few. A worker might file false expense reports and pocket the cash, or take product from a warehouse and sell it for a profit.

Stealing from cash registers $20 at a time can go unnoticed if proper controls aren’t in place. Asset misappropriation tends to involve smaller amounts of money, but those dollars add up over time.

What are the components of an effective fraud awareness program?

Organizations need to take a proactive approach to prevent fraud. Owners need to be involved in the financial aspect of the business rather than passing that role off entirely to a manager. For example, we recently handled a fraud case in which a CFO had complete financial control of the company and could take whatever he wanted. If their company had implemented the critical concept of segregation of duties, it would have been more difficult for him to pull off fraud.

Segregation of duties is critical to prevent fraud, and this can be a challenge in small businesses. That’s why owner involvement is critical at every level of a business, from reviewing financial statements to checking in at the cash registers. It also helps if organizations provide a way for employees to anonymously report fraud through a tip line or even a simple suggestion box.

By keeping fraud at the forefront of your business, you will discourage those who are teetering on the edge of committing fraud. And with internal controls in place, you will be more likely to catch fraud early before it causes significant damage to the business.

How can a business be proactive about creating a culture of honesty?

It’s important to create a fraud prevention program and talk about it regularly with employees. Hold quarterly meetings to discuss fraud and internal controls. Let everyone know your organization has a zero tolerance policy. By making employees aware that fraud is on the radar and no one is going to get away with it, you decrease the rationalization and opportunity for fraud to occur.

Begin a fraud prevention program to learn what areas of your business are susceptible to fraud. A risk assessment will help you zero in on entry points for fraud so you can watch those areas carefully.

A certified fraud examiner (CFE) can help you get that fraud policy on paper, and it’s a good idea to incorporate it into your employee handbook. Secure a commitment in writing from every employee that they understand the policy and the ramifications if fraud is committed.

 

Jason Buhlinger, CFE, AVA, is a supervisor in financial advisory services at Brown Smith Wallace, St. Louis, Mo. Reach him at  (314) 983-1310 or [email protected]

Insights Accounting is brought to you by Brown Smith Wallace LLC

Chrysler’s Ram 1500 pickup truck relying on fuel economy, price

DETROIT, Fri Aug 24, 2012 – Chrysler Group LLC is betting that better fuel economy and a moderate 1 percent increase in price from last year’s models will help its line of 2013 Ram 1500 pickup trucks gain ground on industry leaders from Ford and Chevrolet.

The first redesign since 2009 for the biggest-selling vehicle in the Chrysler lineup has led to a pickup truck with more technology and less weight to go along with the usual pickup truck marketing features of power and towing ability, analysts who have driven the new Ram 1500 said.

The Ram 1500 goes on sale in the United States in October.

The starting price will be $23,585, including destination charges, Chrysler said on Friday. The highest-priced version in the Ram 1500 lineup will be a four-wheel-drive “Laramie Longhorn” crew cab at $48,415, including destination charges.

Chrysler, majority-owned by Italy’s Fiat SpA, won’t be able to topple the top-selling Ford Motor Co. F-150 or the No. 2 General Motors Co. Chevrolet Silverado in U.S. sales, but this improved Ram offering may narrow the gap, said analysts.

Edmunds.com director of vehicle testing, Dan Edmunds, said the Ram 1500, even an improved offering, faces an uphill battle against Ford and GM because pickup truck customers have fierce brand loyalty.

“There’s definitely some technical benefits and there’s some real benefits to the customer,” Edmunds said. “They’ve got a good solid product here. The question is – does it overcome years of brand loyalty? That’s hard to say.”

How has the economy changed your organizational chart and how has it impacted your business?

Dennis Swearingen, Business Development Representative, Sequent

Offense or defense? Which of these wins ball games? Sports fans  have heard this question raised many times. If the offense scores a lot of points but the defense allows more, you lose. If the defense stands tough, allowing very few points but the offense scores none, you lose. The answer may be as random as the opening coin toss, says Dennis Swearingen, a business development representative at Sequent.

“Over the past few years, the economy has affected many businesses to the point that some have reduced their work force, while others have either closed their doors or sold their company,” says Swearingen. “The analysis of what to do has been difficult and the decisions have been twice as hard.”

He says that some executives chose to add sales representatives but slice the expense of advertising and marketing their product or services, while others made reductions in areas that they believed provided no revenue or profit opportunities. In a sense, executives have made a choice to take either an offensive or defensive strategy, and how they view the role of their HR department has played a large part in that.

Smart Business spoke with Swearingen about how to view your HR department and how it can help you increase the profitability of your organization.

Should the human resources function be considered a profit center or overhead?

When it came time for work force reductions, some owners or executives (depending on the size of the organization) started their cuts with the human resources department because it is typically viewed as an overhead function, not adding value to the organization. However that is not the case, and a strong HR department can be critical to the success of your business.

Let’s review some of the offensive strategies to the HR function. There are many facets of human resources that, if managed properly, can help increase the profitability of your organization. There are two basic ways to proactively impact your profits — either increase revenue or decrease expenses. Below are a examples of how a strong HR function can increase the profitability of your organization.

  • Periodically review your outsourced vendors, such as your payroll processor and 401(k) provider, mandated by the Pension Protection Act, to determine if you have the best system and product for your organization that provides best service at a reasonable price.
  • Evaluate not only your medical plan design and premiums but educate your employees on consumer-driven health decisions and the use of your preventive and wellness benefits.
  • Manage the unemployment process closely. For example, if a company has 100 employees and its unemployment rate is reduced by 1 percentage point, it could save the company approximately $9,000 in state unemployment taxes the following year.
  • Focus on employee retention. Depending on your industry, the cost avoidance of turnover can save your company thousands of dollars in hidden costs of retraining, production, efficiency and even customer retention.

What is the cost of noncompliance?

What about the defensive side of human resources? In other words, does your organization have a professional, certified HR person who is proactively implementing and managing the risk and compliance programs within your organization?

If you have eliminated or reduced your human resources staff, or have never had one, the probability of your company to be noncompliant in any area of HR is high. Over the past few years, there has been a substantial increase in the number of audits that have been conducted by the numerous agencies enforcing employment regulations.

Following are just some examples of where noncompliance can easily cost your bottom line, and even your company.

  • Payroll tax filing with the IRS. If your provider fails to file your payroll taxes in a timely manner, it is likely that your company will pay the penalty. The IRS views nonpayment of payroll taxes as theft. Verify what certifications your vendor has obtained to protect your liability.
  • Are your job descriptions classified properly as exempt or nonexempt under the Fair Labor Standards Act? If not, you could be liable for unpaid overtime and subject to fines up to $10,000 and possible imprisonment.
  • Cross the I’s and dot the T’s on the I-9 Employment Eligibility Verification Form. Civil violations alone can range from $110 for each form out of compliance to $16,000 for each person hired knowing the individual is not authorized to work in the United States. Imprisonment could occur for criminal violations.
  • The Department of Labor is monitoring 401(k) fiduciary liability more closely than ever.  Whether the violations occur with the broker, investment advisor or third-party administrator, the ultimate responsibility may lie with the fiduciary, which often is the owner of the company. Penalties could reach hundreds of thousands of dollars.

Should the human resources function be managed in-house or outsourced?

The most common factor in determining when human resources should be managed internally is typically based on the number of employees a company has but is not the only basis. Additionally, there is not a magical cutoff when a company should hire a professional HR person. In order to provide the most efficient and compliant HR function, many factors must be considered.

With the economic challenges that we face today, cost will rank as one of the leading deciding factors. Another important component is how much valuable time is not being spent on increasing revenue and profitability for the future growth of your organization. So ask yourself whether human resources be managed in-house or outsourced. With the ever-changing compliance issues that employers face, the answer must be one or the other.

Dennis Swearingen is a business development representative at Sequent. For a free consultation, reach him at (513) 535-1970 or [email protected]

Insights HR Outsourcing is brought to you by Sequent

Fed’s Dudley: Too soon to say economy out of danger

SYRACUSE, New York,. Thu Apr 12, 2012 – The disappointing performance of the U.S. labor market in March shows it is too early to conclude the economy is out of the woods, despite months of encouraging economic data, New York Federal Reserve Bank president William Dudley said on Thursday.

The Fed is gathering more data to determine whether last month’s non-farm payrolls report, which showed the economy added way fewer jobs than expected, was just a weather-related setback or a sign the recovery is losing momentum again, Dudley said.

An influential voting member of the U.S. central bank’s monetary policy committee, Dudley appeared to leave the door open to additional stimulus measures as he noted that the economic data also “looked brighter at this point in 2010 and again in 2011, only to fade later in those years.”

Signs that the economic recovery was losing steam have encouraged the Federal Reserve to launch in the past few years two rounds of monetary stimulus measures known as quantitative easing. Bets on a third round have again increased following the latest jobs report.

“The somewhat softer March labor market report that was released last Friday may reflect the earlier positive influence of the mild weather on job creation in January and February, although other less sanguine interpretations are also plausible,” Dudley said in prepared remarks to be delivered at a conference in Syracuse, New York.

On Thursday, the Fed’s vice chair Janet Yellen said further monetary easing could be warranted if the economy proceeds at a slower-than-expected pace.