UNITED STATES TRANSFORMATION – TRUMP ERA BEGINS

BY: PAUL YOUNG, CPA, CGA

NOVEMBER 10, 2016

DISCLAIMER

• This presentation looks a issues facing the United States. The presentation will include key stats as reference point as United States changes from a Democratic led government to Republican government in November 2016.

PAUL YOUNG - PRESENTER

Bio

• CPA/CGA

• 25 years of experience in Academia, Industry and Financial solutions

• Youtube Channel - https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

AGENDA

• USA Economy

• What is required?

• Election issues

USA / GDP• Higher consumer spending and a rebound in hiring show the economy snapped back to life in the spring and a

report card on the nation’s growth this week is likely to offer undeniable proof. But that doesn’t mean U.S. growth is strong enough to satisfy the Federal Reserve.

• The Fed is expected to stand pat and leave its benchmark short-term interest rate near zero after bank VIPs meet on Tuesday and Wednesday to survey the economic landscape. Yet before and after the two-day meeting, a score of indicators including second-quarter GDP are forecast to show the U.S. remains on a stable growth path.

• What most worries the Fed is weak corporate investment amid a squeeze on profits and the unsettled nature of the global economy in the wake of the shock vote by Britain a month ago to exit the European Union. The central bank seems to want more time to gauge the fallout before raising its short-term rate.

• Source: http://www.marketwatch.com/story/gdp-other-vital-signs-show-us-economy-stable-even-if-fed-not-convinced-2016-07-24

WHAT IS REQUIRED• Environmental

• Balance approach to supporting clean technology as well as carbon based business

• Joint agreements with Canada and Mexico on water and land management

• Reform government spending

• Emphasis on value for money

• Reducing the size of government

• Public Safety

• Refine immigration policies

• Investment in national defense and public safety (local, state and federal agencies)

• Economic Polices

• Bank reforms

• Trade deals (fair trade)

• Key infrastructure investments in ports, rails, pipelines

• Key investment in education including skill trades

• Tax Reforms

• Corporate Tax Code streamline

• Corporate Tax rates cuts from 39% to 30% over next four years

• National consumption tax of 3-4% that should be harmonized with state, county, city sales taxes

• Adjusting sales collection to match eCommerce growth

• Restructuring Obama Care, especially co-pay options

• R&D reforms

• Sign on to OECD tax avoidance deal

ELECTION ISSUES FOR 2016• Jobs

• Income inequality

• Taxation

• Trade

• Public Safety

• Immigration

• Infrastructure

• Education

• Healthcare

CURRENT STATE / GDP • The U.S. economy grew at its fastest pace in two years in the third quarter as a surge in exports and a rebound in inventory investment offset a slowdown in consumer spending.

• Gross domestic product increased at a 2.9 percent annual rate after rising at a 1.4 percent pace in the second quarter, the Commerce Department said on Friday in its first estimates. That was the strongest growth rate since the third quarter of 2014 and beat economists' expectations for a 2.5 percent expansion pace. Business investment improved last quarter, though spending on equipment remained weak.

• Despite the moderation in consumer spending, the third-quarter rise in growth could help dispel any lingering fears the economy was at risk of stalling. Over the first half of the year, growth had averaged just 1.1 percent.

Source - http://www.cnbc.com/2016/10/28/us-advance-q3-gdp.html

TRUMP PLAN / RE-PATRIATION OF CASH• President-elect Donald Trump’s campaign proposal to slash taxes on

cash U.S. companies have stashed outside of the country could benefit the tech industry most of all.

• Companies like Apple, Microsoft, and Google are among the top holders of over $1 trillion of cash held outside of the country. The build-up is largely the result of the companies’ efforts to avoid paying taxes—including the 35% U.S. corporate tax rate—on the money in any jurisdiction.

• But Trump has proposed slashing the rate to repatriate the cash to 10%. A similar temporary rate cut to 5.25% under President George W. Bush in 2004 prompted companies to bring back $312 billion. To be sure, Trump has not discussed his tax plans extensively since winning the election and might not actually go through with the repatriation rate cut plan.

Source - http://fortune.com/2016/11/09/apple-google-trump-tax-break/

Summary:• There has been a benefit when Bush

instituted the change in 2004. • Weak economy does not guarantee

money will be spent on capital equipment

UNITED STATES / WAGES

• Source - http://www.tradingeconomics.com/united-states/wage-growth

• The US extended its record private sector hiring streak in October as wage growth accelerated to its fastest pace since 2009, underscoring the solid jobs market as Americans prepare to go to the polls on Tuesday.

Source: https://www.ft.com/content/4cb1fdb6-a28b-11e6-aa83-bcb58d1d2193

EMPLOYMENT / OCTOBER 2016

http://www.bls.gov/opub/mlr/

• Jed Kolko, chief economist at Indeed, described the data as very strong, with the important caveat that “the labor market is still not what it was before the recession. Most of these measures are still below where they were in the early 2000s.”

• The data may provide some of that evidence. The U-6 rate, a broad measure of unemployment that includes part-time workers who would like to be full-time, fell to 9.5 percent, its lowest level since the recession. The labor-force participation rate was 62.8 percent in October, almost flat from 62.9 percent the previous month. The biggest job expansion came in professional and business services, followed by health care and financial activities.

Source - https://www.washingtonpost.com

SUMMARY / SEPTEMBER 2016• Sales at U.S. retail stores rebounded in September, with auto dealers and gas stations racking up the biggest gains, in a sign consumers are still

spending enough to keep the economy on a slow but steady growth path. Retail sales have grown more slowly for a year and a half, partly because much cheaper gas allowed Americans to save on fuel. Yet shoppers are still frugal, seeking out deals and relying more on cheaper Internet sites such as Amazon AMZN, -0.76% rather traditional store-front retailers such as Macy’s M, -3.34% - Source: http://www.marketwatch.com/story/us-retail-sales-climb-06-in-september-2016-10-14-81033311

• Years of increased hiring and a slow acceleration in worker pay have laid a foundation for steady household spending. While third-quarter purchases will probably fall short of the vigorous pace from April through June, the broad-based pickup across the retail spectrum shows household demand may be gathering pace. Source: https://www.businessoffashion.com/articles/news-analysis/us-retail-sales-rose-in-september-by-the-most-in-three-months

• Friday’s retail-sales report showed sales rose last month across the majority of segments, though it didn’t track spending on most services, including health care and housing. Spending at restaurants and bars jumped 0.8% from August, the largest one-month jump for the category since February. Americans last month continued to shift their spending to e-commerce platforms likeAmazon.com from traditional brick-and-mortar retailers. Sales in the nonstore category, including online retailers, were up 11% in the first nine months of 2016 compared with a year earlier. Sales at department stores were down 4.8% over the same period. Sales at electronics and appliance stores fell 0.9% in September despite the release ofApple Inc.’s new iPhone 7. The release of new iPhone models in September 2015 had coincided with the only monthly sales increase for the electronics category during the second half of last year. But Ms. Rosner said a delayed sales boost could materialize in the coming months. Source: http://www.wsj.com/articles/u-s-retail-sales-rose-0-6-in-september-1476448594

RETAIL SALES BY KEY SECTORSSource: https://www.census.gov/retail/marts/www/marts_current.pdf

ECOMMERCE – ONLINE / BUSINESS MOBILITY• Mobility will continue to shape its growth.

More and more businesses today will keep on growing through mobility. The introduction of new phone apps and ecommerce strategies makes mobility a winning breakthrough! Can you imagine how far we can still reach by the year 2020?

• Online retailers will use the comfort of ecommerce mobile webs.• Every marketing channel will be excited to bring your business in a higher level. As for today’s online marketing trends, accessing online stores via mobile browsers

will be easier. Ecommerce using mobile browser is one of today’s tool to unlock your business growth.

• Online stores will leverage its products with various innovating trends.• Experts have forecasted that ecommerce will give a healthy boom. Mobile browsers will get better and better while online retailers will create more profound

online stores with competitive products for customers.

• Social Media and Mobility will be BIG Hit together.• Facebook, Pinterest, Instagram, Twitter, Tumblr, and others will continue to pave ways on creating super effective strategy on promoting your products and services

on the market. Social media nowadays (both paid and organic strategies) can reach the right target audience, thus resulting to conversions and sales.

• Business Owners will strengthen their Technology Solutions• Of course, business owners will be more informed and curious on finding the best IT solutions for their business. The more information they need to handle, the

more tools they would check and try. They will be more updated with what’s trending and what will bring new opportunities for their growth.

Source: http://launchtechus.com/2016/10/14/5-exciting-ecommerce-trends-that-will-impact-your-business-mobility/

USA HOUSING PRICES

http://www.builderonline.com/money/economics/us-house-price-index-inches-up-in-august_o

• U.S. house prices rose in August, up 0.7 percent on a seasonally adjusted basis from the previous month, according to the Federal Housing Finance Agency (FHFA) monthly House Price Index (HPI). The previously reported 0.5 percent increase in July remained unchanged.

• The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. From August 2015 to August 2016, house prices were up 6.4 percent.

• For the nine census divisions, seasonally adjusted monthly price changes from July 2016 to August 2016 ranged from no change in theWest North Central division to +1.2 percent in the New England division. The 12-month changes were all positive, ranging from +3.3 percent in the Middle Atlantic division to +7.9 percent in the Pacific division.

Source - http://www.fhfa.gov/

TRADE / SEPTEMBER

• The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $36.4 billion in September, down $4.0 billion from $40.5 billion in August, revised. September exports were $189.2 billion, $1.0 billion more than August exports. September imports were $225.6 billion, $3.0 billion less than August imports. The September decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.6 billion to $57.5 billion and an increase in the services surplus of $1.4 billion to $21.1 billion.

• Year-to-date, the goods and services deficit decreased $9.2 billion, or 2.5 percent, from the same period in 2015. Exports decreased $60.5 billion or 3.5 percent. Imports decreased $69.7 billion or 3.3 percent.

http://www.bea.gov/newsreleases/international/trade/tradnewsrelease.htm