All posts by Alison Meadows

About Alison Meadows

Alison Meadows has a PHD in Economic Trends in Modern Times and is a known writer who focuses on hedge fund investments. Meadows, her husband, and three kids live in Boston, where she grew up and attended college. Contact Alison at alison[at]businessdistrict.com

Chris Lucas Stepping Down From Post at Barclays

Companies,
Chris Lucas
Lucas Stepping Down

Finance Director Chris Lucas of Barclays PLC will be leaving the bank half a year sooner than expected due to ill-health, the bank announced on Wednesday.

Mr. Lucas was due to exit his position on the board on the last day of February, 2014, but will be moving his departure this Friday. Lucas, who is 52, did not explain his decision other than to say it is for “health reasons.”

“My health was a key factor behind my decision to step down which we announced in February. Whilst I had hoped to be able to continue working until early next year,” Lucas said in a statement.

Even with Increased Tax Revenue Debate Continues

Economy, , , ,
House Speaker John Boehner
House Speaker John Boehner

Our national deficit has been casting its black shadows over the political landscape for years, resulting in some draconian measures of late, mostly in the form of “sequestering.” Now that the government is experiencing a rise in tax revenue and the debt is ever so slightly receding lawmakers need to decide whether to: continue with budget cuts, end them, or make some other changes?

Revenue is up 14 percent through June as compared to the same time last year. Expectations are that this trend will continue. July’s numbers will be released next week, and data for August will be published on September 12, just three days after legislators return to work from their summer recess. At that time there will be pressure coming from many conservative lawmakers to close down the government as of October 1 or to face default on the national debt just a few weeks later, a threat to the economy of potentially disastrous proportions.

Since the government is seeing income rising Republicans in Congress have dug in their heels even more in their opposition to tax increases for the wealthy, something the Obama government and his fellow Democrats have been demanding.

“This year the federal government will bring more revenue in than in any year in our history,” says House Speaker John Boehner of Ohio. “We have a spending problem in Washington. It has to be addressed.”

But Obama and the Democrats who back him would prefer to get rid of at least some of the spending cuts and are set against any further cuts to save money and reduce the deficit, unless there is concomitant increase in revenue through more taxes.

“Democrats know we must do more to reduce the deficit,” says Senate Majority Leader Harry Reid of Nevada. “We believe in a balanced approach that pairs spending cuts with having those that can afford it pay more.”

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Economic Prosperity Optimism?

Economy, ,

According to the latest McKinsey quarterly review, there is greater optimism on America’s economic prospects amongst North American business people than executives living in other areas in the country.  However, whereas they are optimistic about America’s economic growth, this is not extended to the global economy.

Overall, executives around the world are more positive than negative about future global conditions, the report said. Still, only 32 percent of North American executives believe that global economic conditions will be better in six months, while 50 percent believe that they will stay the same. In the euro zone, 49 percent of business executives say that the global economy will improve in six months, and 37 percent that it will stay the same.

Looking at statistics on how the country’s economy is faring however, perhaps this optimism is misplaced. When analyzing the country’s GDP and employment levels, it seems that America’s economic growth acceleration has begun a reversal.  The first quarter witnessed 2.4 percent real GDP, indicating a strong economy but in the second quarter this figure plummeted to less than two percent, indicating a decelerating not accelerating economy.

It seems like one of the key reasons global economic instability was so pessimistic is due to geopolitical instability.  As political unrest increases – most notably in North Africa and the Middle East – so does pessimism on the global economy amongst North Americans.  Indeed, even in terms of the domestic economy political unrest was put down as one of the greatest potential risks.  Still, business executives in the States, in general, were positive about their country’s economy as opposed to the economy in other countries with 40 percent anticipating a drop in unemployment rates over the next six months for example.  It is also felt that long-term, government-spending cuts (which result in tax increases in America) are ultimately a good thing.

In general, North American executives are looking to the future with hope at home but problems abroad.

Nikkei Climbs on News of Improving US Employment Figures

Economy, , , ,

The Japanese and other Asian markets reacted positively to better than expected employment data coming from the US last month. Tokyo’s Nikkei 225, the largest market in the region, expanded by 3.8 percent to reach 13,363.18. Also influencing the Asian markets were promises from the Japanese prime minister that he was introducing tax reductions.

The price of a barrel of oil was sustained above $96 as investors’ fears that the US Federal Reserve would end its economic stimulus program were reduced.

The US Labor Department announced that the United States, which is still the world’s largest economy, added 175,000 jobs to its economy in May, about 10,000 more than had been predicted.

“The relief from U.S. jobs was palpable,” said Mizuho Corporate Bank in a report. It said gains were “gentle enough to avert concerns” that the Fed might be tempted to halt its “quantitative easing.”

Budget Deficit Doing Better

Economy, ,

The most recent projections for the budget deficit coming out of the Congressional Budget Office are showing a distinct and significant improvement in the country’s finances. Higher than expected tax revenues will help to reduce the deficit to only $642 billion this year, which is 4 percent of GDP. That amount turns out to be the lowest aggregate deficit in 15 years. It is also less than half the size of 2009’s deficit which was 10.1 percent of GDP.

Even more startling is the speed with which the improvement is advancing. The CBO has sliced $200 billion from its deficit projection for this year, just since February. The total reduction over the next ten years has been estimated to be $618 billion. The new figures have come to light in just the past three months.

The dramatic change is almost entirely due to higher than anticipated tax revenues. Individual income tax receipts climbed by 5 percent, or $69 billion. Corporate tax income are most likely going to be about 16 percent higher for a total of $40 billion more money for the government. Fannie Mae, the government mortgage bank, also supplied an additional $95 billion to the Treasury.