Car Dealers Opening Storefronts in Shopping Malls
From The Kiplinger Letter, July 17, 2014
Coming to a mall near you soon: Car shopping. The idea is to infect consumers who casually stop by between errands with new-car fever, rather than to clinch sales then and there. Dealerships and third-party companies that represent multiple brands will showcase models from several different makers and focus on showing consumers features, options, color choices, etc. For test drives, some cars will be stored in mall parking lots. In most cases, once the consumer has the bug, he or she will be ushered to a dealership to actually make the buy.
For malls plagued with empty space, the idea is a welcome innovation.
Russia Won't Suffer from Malaysian Flight's Downing-- From The Kiplinger Letter, July 17, 2014
Russia faces outrage and talk of sanctions after the civilian jet shootdown. But don’t be shocked if the calls for an economic crackdown come to naught in the long run. There’ll be plenty of talk, but little actual action in the months ahead.
Europe will be reluctant to comply because it needs Russia’s gas this winter.
But uncertainty will slow Russia’s recovery from an apparent recession. GDP there shrank by 0.5% in Jan.-March and likely waned further in April-June. For the year, growth will be flat, at best, with downside risks rising as tensions mount.
At the heart of Moscow’s woes: Massive capital flight...nearly $51 billion in the first three months of the year, with investors pulling out more every week.
Don’t expect Russia to soften its aggressive stance regarding Ukraine. Six months from now, the standoff is likely to look about the same.
Feds to Focus on Cutting Our Salt Intake-- From The Kiplinger Letter, July 10, 2014
Uncle Sam wants Americans to eat less salt. New guidelines due from the Food and Drug Administration will recommend that food makers gradually cut back on the salt content of packaged foods to give consumers’ taste buds time to adjust. The guidance will be voluntary but is likely to spur the push already under way among retailers, restaurants and food processors to use less salt for health reasons.
The average consumer now eats twice as much salt as the feds recommend, about 3,300 milligrams per day vs. a suggested limit of 1,500 milligrams. Excess salt has been linked to high blood pressure, which can lead to heart disease and stroke. In response, chains such as Walmart and Subway are carrying lower-salt products, while Morton Salt has opened a new lab to help develop recipes that use less salt.
Higher Flying Fees Don't Translate to More Security-- From The Kiplinger Letter, July 10, 2014
Budget for higher fees if you’ll be flying later this summer. The security levy charged by Uncle Sam to fund airport safety measures is set to rise July 21 from $2.50 for each leg of a flight to $5.60 per one-way trip…costly for direct flights. What’s more, most of the revenue will be used to avoid cutting other federal programs, rather than on bulking up airport security…adding insult to injury for air travelers.
Airlines are charging more, too. More carriers will follow the lead of Spirit and Frontier, which now charge for carry-on bags. And if your bag exceeds the limit the airline defines for carry-on luggage, expect to pay up to $50 to check it at the gate.
Improved Storm, Flood Warnings this Year-- From The Kiplinger Letter, July 10, 2014
Coastal residents can look forward to better hurricane forecasts this year. The National Hurricane Center is rolling out an experimental mapping tool that can pinpoint areas along the Atlantic and Gulf coasts that can expect flooding when a hurricane is imminent. Coastal flooding is one of the most damaging threats posed by tropical systems, but folks often don’t realize when they’re in harm’s way.
Flood warnings will appear whenever a hurricane watch or warning is posted, with updates on at-risk coastal areas offered four times daily until the storm passes.
Also on tap: Enhanced storm path predictions from more-powerful computers that will help meteorologists sharpen the accuracy of predicting where storms will hit.
Your Next Movie Is Likely a Sequel-- From The Kiplinger Letter, July 10, 2014
Hollywood’s plan for hiking box office revenues this year and next: Sequels. Lots of them. The potential blockbusters will help offset a dip in ticket prices. On tap: Hunger Games: Mockingjay-Part 1; The Hobbit: The Battle of the Five Armies; Paul Blart: Mall Cop 2; Star Wars: Episode VII; and Mission: Impossible 5.
A growing market for U.S. movies abroad: China. It’s building new theaters like crazy and typically allows only American movies that are big hits to be shown.
Funding Dispute Means Migrant Children Will Stay for Years-- From The Kiplinger Letter, July 10, 2014
Don’t look for a quick solution to the child immigration mess in the U.S. A split Congress won’t give President Obama all the money he asked for — $3.7 billion — for additional immigration judges, detention facilities and agents to patrol border crossings from Mexico into the U.S., mostly in Texas and Arizona. Unknown thousands of kids from Central America were sent here by parents who are under the impression that once minors get here they can’t be deported. They can be sent home, but a law signed in 2008 by President George W. Bush gives undocumented children the right to due process before being sent back.
Even if some of the money is approved, deportation takes a long time, as much as three years, given the backlog of cases and the limited number of judges who are assigned to hear the cases in federal immigration courts.
Meanwhile, the children must be properly cared for. Many are screened at military bases and are sent to other federal facilities as their cases unfold.
Nearly half of the cash Obama seeks would pay for care of the children while the cases wend through immigration court. That money would go to the Department of Health and Human Services, a magnet for criticism by Republicans.
Big Tech Changes Ahead for Truck Fuel Economy-- From The Kiplinger Letter, July 3, 2014
Looming standards on truck fuel economy spell big technological changes as truck makers scramble to wring more miles from every drop of diesel. Mileage standards that kicked in this year and continue into 2018 require savings of between 10% and 20%, with the largest trucks facing the most stringent standard.
Look for a shift to automatic transmissions on big rigs. Easier to maneuver than conventional manual gearboxes, they’ll also optimize fuel usage in trucks, shifting to high gear sooner on the highway, for instance, with less work for the driver. Already becoming commonplace, automatics will be almost standard in five years.
New Source for U.S. Oil Production-- From The Kiplinger Letter, July 3, 2014
U.S. oil production is about to get a boost from another source: Oil shale, which is a thick, tarry crude mixed with shale and sand formations in Western states. Several firms are eyeing effective new ways to tap the huge deposits of the fuel.
Utah figures to see the first large-scale development. Red Leaf Resources of South Jordan, Utah, aims to process up to 600 million barrels of oil shale deposits, with French oil giant Total backing the work. First production is expected this fall. Other producers are hard at work lining up state permits on nearby sites, too.
But the work won’t go forward without a major fight from environmentalists. Local groups say mining oil shale can pollute groundwater and cause other damage. A potential lawsuit to halt development could escalate the issue into a national debate.
Credit Card Lenders to Offer More Rewards Programs-- From The Kiplinger Letter, July 3, 2014
Odds are you’ll be seeing more offers for credit cards with rewards programs in your mail in coming years. Lenders see rewards cards, which sport deals on air travel, cash back and more, as the best way to keep credit-wary consumers spending. Their growing popularity will lift total credit lines by 5% in 2014, after a 4.6% gain last year, even as cards with no rewards component see continued declines in usage.
Claiming rewards, however, will get tougher. Failing to read the fine print detailing redemption restrictions and other rules already costs consumers one-third of the $50 billion they rack up in card benefits each year. And as more folks sign up for rewards cards, expect banks to attach even more strings to keep their costs down.
More Jobs for State and Local Governments-- From The Kiplinger Letter, July 3, 2014
Expect state and local governments to keep hiring, continuing the rebound that has added more than 50,000 workers to government payrolls since January. Improving tax collections and ending last winter’s emergency spending measures have state and local officials feeling increasingly willing to take on additional staff, even as Uncle Sam cuts back. So far this year, 16,000 federal jobs have been axed.
Better fiscal prospects for states and cities spell a boost to the economy, too. Spending by those governments peaked in late 2009, following the Great Recession, and has been a drag on GDP growth every year since. That streak will end in 2014. In fact, government spending might even make a slim contribution to growth this year.
But many challenges remain, such as underfunded pensions and depleted reserves. Such long-term fiscal issues will hold state and local spending gains to a modest pace.
Obama Administration to Seek Fix on Contraceptive Coverage Ruling-- From The Kiplinger Letter, July 3, 2014
On tap: A regulatory fix for providing women with contraceptive coverage, in light of a recent ruling by the U.S. Supreme Court. Though the Affordable Care Act requires firms with 50 or more workers to provide birth control, the Court nixed that mandate on private employers who object on religious grounds.
The Obama administration will likely pattern the fix after existing rules for religious-affiliated nonprofits, such as schools and hospitals. They allow such nonprofits to opt out of the mandate but still require insurers to cover contraceptive services at no cost to the organization or its workers. In fact, the Court hinted at such a move. Ongoing legal challenges to the rules for nonprofits aren’t likely to be successful.
Regional Economic Outlook: South, West in the Lead-- From The Kiplinger Letter, June 27, 2014
The South and the West continue to lead a regional pickup at midyear, fueled by slow, steady manufacturing gains and a rising housing market. Texas and other states in the South are showing strong growth, mostly in energy, but there are new jobs in professional and business services and construction. In the West, improving home prices and sales numbers are driving the recovery. Investors were big buyers in Ariz., Nev. and Southern Calif. during the downturn, but now inventories are expanding as more owners put their homes up for sale.
The Midwest and the Northeast are rebounding, too, albeit less robustly. With manufacturing rising, the Midwest’s economy seems to have more upside. Its auto plants and parts-making factories suffered from cutbacks over the winter. But inventories were drawn down in the first quarter, and production will ramp up in the coming months. In the Northeast, manufacturing is revving up. Another story, though, for the big financial services sector: It’s stuck in neutral. One bright spot: High-tech in and around Boston. Exports may be bright, too, as Europe strengthens.
Big Money Offered to Protect Pentagon Networks-- From The Kiplinger Letter, June 27, 2014
The Pentagon will hand out a lot of money to protect online networks. It’s offering a $2-million prize in a contest to try to find a security system that will stop cyberattacks in their tracks. Existing security systems rely on humans to write programs to repair networks that have been hit, usually after cyberthieves have made off with mountains of data or have disrupted security systems.
The Cyber Grand Challenge includes 30-some teams from universities and businesses. They’ll attempt to reverse engineer special software to find and fix built-in flaws. The real-time computer security competition will play out over the next two years.
Firms Fighting Back over Federal Blacklist Threat-- From The Kiplinger Letter, June 27, 2014
Some federal contractors risk being blacklisted under legislation passed by the House. Two fiscal 2015 appropriations bills would bar several departments… Housing and Urban Development, Defense and Transportation…from contracting with any firm found in violation of federal wage-and-hour standards since fiscal 2010. There’s concern that similar provisions will be added to other funding bills as well.
Big firms are the target…those with at least $10 million in federal contracts. Companies previously hit either with $5,000 in penalties or payments over $100,000 in restitution or damages to employees are ineligible for federal money in fiscal 2015.
Business interests are up in arms, determined to scotch the provision. They want to keep it out of the Senate’s appropriations bills, clearing the way for it to be removed from the final version of the law or…at the least…watered down.
Jobs Go Wanting in Shale-Gas Energy Boom-- From The Kiplinger Letter, June 20, 2014
Help...and a lot of it...is wanted in the booming U.S. oil and gas industry. Energy producers are going to create as many as 1.3 million new jobs in all sorts of fields...engineering, accounting, etc...over the next decade and a half. Chalk up the hiring spree to the drilling-intensive nature of the shale energy surge in North Dakota, Texas, Pennsylvania and other states with gas fields ripe for exploration and drilling.
Though geologists and engineers are highly sought after, and highly paid… Energy drillers say finding enough rig crews will be the real headache. Expect more firms to start partnering with high schools and community colleges to recruit future workers and steer them toward drilling-related training programs.
Second Home Sales Going Gangbusters-- From The Kiplinger Letter, June 20, 2014
One segment of the housing market that’s booming: Vacation homes. Sales of second homes will grow 10% this year, following a 30% bump last year…much stronger than the flat rate that we expect to see for all homes. Vacation homes made up 13% of overall housing sales in 2013; this year…about 15%.
What’s more, investors will play less of a role.With prices up significantly and interest rates likely to rise, a home in the mountains or by the shore may not pay for an investor seeking a quick gain. Many buyers will seek a retreat for themselves.
Benefiting most from second-home demand: Places in the South and West where prices remain well below peak 2006 levels and a temperate climate beckons.
U.S. Sees More Trade Opportunities in Africa-- From The Kiplinger Letter, June 20, 2014
Look for President Obama to bolster ties with sub-Saharan Africa, with the aim of building its export markets as well as improving security in the region through shared intelligence on the many radical groups operating there. A U.S.-Africa summit in Washington, D.C., in August will put a spotlight on such efforts.
Obama wants stronger relations to be a part of his foreign policy legacy, a goal he can achieve without having to negotiate with or get an OK from Congress. More U.S. involvement will also help to counter China’s growing influence in Africa.
In coming years, U.S. businesses will see many expanding opportunities in both East and West Africa. Trade between the U.S. and sub-Saharan Africa is expected to rise to about $90 billion a year by 2020, from $72 billion in 2012.
Among growing African needs: Telecom infrastructure and equipment, medical devices, vehicles and farm goods, plus clean water technology and products.
The U.S. will buy more from Africa…chemicals, textiles and apparel, etc.
FAA Approval Close for Some Private Drones-- From The Kiplinger Letter, June 13, 2014
Expect a select fleet of private video drones to be cleared for takeoff soon. The Federal Aviation Administration is mulling requests from farmers, filmmakers and pipeline operators to waive the current prohibition on commercial drone flights. Odds are good FAA regulators will grant a handful of exemptions within four months.
But approval will come with strict limits: OK’d drones will be able to fly only for 30 minutes at a time, in restricted airspace and with prior notice to the FAA. Allowable models will have to weigh less than 55 pounds. Any approvals will be made on a case-by-case basis and won’t affect the broader drone rules the FAA is now writing.
Still, the early action will set a strong precedent for more drone use later. Other industries eager to use drones, such as real estate, will pay close attention to the first approvals and look for clues on when and where the FAA will allow them.
Cooling Systems Also Targeted by New Obama Rules-- From The Kiplinger Letter, June 13, 2014
One overlooked component of Obama’s climate regs: New limits on HFCs… hydrofluorocarbons...coolants that are used in air-conditioning units and refrigerators. Though emitted in tiny quantities, HFCs are much more potent greenhouse gases than carbon dioxide, the main target of the feds’ new rules on power plant emissions. The White House quietly signaled last summer that it intends to cut back HFC use.
Look for rules to pop up this summer. The first, likely in coming weeks, will OK alternative coolants for air conditioners and fridges. Later in the summer, regulators will announce which types of HFCs will be nixed. That will give makers of commercial-grade cooling units a couple of years to make the necessary switches. Most consumer versions don’t require HFCs, so their makers expect little impact.
Supreme Court Case Could Shake Up Local Income Taxes-- From The Kiplinger Letter, June 13, 2014
A pending Supreme Court case has big implications for local income taxes. This fall, the high court will hear a case involving a Maryland resident with a stake in an S company that earns income in multiple states. A Md. court said the county tax the person pays is unconstitutional because it is assessed on the nationwide income with no credit allowed for the out-of-state taxes paid on income derived outside of Maryland.
Millions of tax dollars are at stake if the Court finds in the taxpayer’s favor. Many local jurisdictions fail to credit taxes their residents pay on out-of-state income.
Real-Estate Slowdown Won't Sink China-- From The Kiplinger Letter, June 13, 2014
Fears that China’s property market will soon collapse are overblown. Sure, the bloom is off the market, with home prices there down in May for the first time in nearly two years and some highly leveraged developers already in trouble. As credit tightens, more are at risk of falling into default. But there's no sign that real estate troubles are endangering the stability of banks.
Economic growth will slow only modestly, to about 7.3% this year and a tad lower next year. Beijing is adept at fine-tuning policies to guide the pace of expansion. Recent moves to spur small business and agriculture, for example, will help offset the drag exerted from real estate…some 15% of China’s economy.
And the government is encouraging investors to look at real estate abroad, lifting some restrictions to take some investing heat off its own property market.
The Consequences of Eric Cantor's Loss-- From The Kiplinger Letter, June 13, 2014
Two things are certain in the wake of Rep. Eric Cantor’s primary defeat: His House Republican colleagues will face more GOP primary challengers during the next few election cycles. The remaining moderates are obvious targets, but even some conservative incumbents will be labeled as not conservative enough.
And nothing of consequence will get through Congress for the rest of 2014. As House majority leader, Cantor was key in pulling the caucus together on big votes. The role cost him support he had earlier from the tea party and led to his June 10 loss in his Richmond, Va., district. Newly emboldened tea partyers won’t negotiate now… certainly not with Democrats, but not even with moderate Republicans in the House. Plus nervous incumbents, wary of the anti-incumbent mood, won’t take chances.
Amazing New Weapons Systems in the Works-- From The Kiplinger Letter, June 6, 2014
An amazing array of futuristic weapons systems are in the pipeline as the result of a collaboration between the Pentagon’s Defense Advanced Research Projects Agency and various contractors. Most are nearing field tests in coming months and years.
A ship-based gun that uses electromagnetic energy to fire projectiles at seven times the speed of sound to come from General Atomics and BAE Systems.
There's also a remote-controlled boat the size of a Jet Ski for patrolling coastlines from Raytheon and others. Some boats may even be equipped with weapons.
Portable 3-D war room maps -- holographic and interactive -- will be for use by battlefield commanders and others. Zebra Imaging is a leader in this field.
And a “flying Humvee,” which is a small vertical takeoff and landing vehicle that could also operate on land, is in research at United Technologies and Textron.
Company Health Care Policies to Focus on Cancer Education Programs-- From The Kiplinger Letter, June 6, 2014
A new focus for company health policies: Cancer prevention and care. Employers are footing the bill for screening and education programs for workers now, hoping to save on medical costs later. About 12% of total medical costs for companies is tied to cancer care, and the disease is one of the top causes of workplace disability -- both short term and long term. As many as one-third of new cancer cases in the U.S. will be tied to inactivity, poor nutrition and obesity. Some of them may be preventable.http://www.kiplinger.com/article/business/T008-C024-S005-torn-from-the-kiplinger-letters.html#cantor
Universities Are Going Digital-- From The Kiplinger Letter, June 6, 2014
Universities are turning to digital tools to streamline communications among professors, students and administrators. Customer management software, popular with many businesses, is seeing growing interest from universities, which are adapting it to personalize online learning, perform evaluations and more. Other uses of the software: Marketing, asset management and alumni relations.
Among vendors of education-oriented communications software: Microsoft, Salesforce and SAP. The rapid growth of online classes is sure to accelerate sales.
New Software Makes Writing Online Privacy Policies Easier-- From The Kiplinger Letter, June 6, 2014
Coming soon: Software that automatically writes online privacy policies. That’s usually a hassle, especially for big online firms with millions of lines of computer code that changes daily and often affects privacy terms and conditions.Right now, companies have to do it manually, which is a process that’s slow and tedious. Plus, if programmers and lawyers don’t communicate, policies may not be updated.
In the works from Carnegie Mellon Univ. and Microsoft: A program that was developed for the Bing search engine, which has tens of millions of lines of code, 20% of it changing daily. The software can rewrite privacy terms to match it in minutes. Usually it takes weeks, requiring many more workers and resources.
It’ll be especially useful for Big Data systems including electronic health records, giant search engines, financial software, etc. Firms are already showing interest, hoping to avoid privacy missteps and federal fines while saving money and time.
European Economy Remains in Limbo-- From The Kiplinger Letter, June 6, 2014
The euro zone’s economic health will remain precarious for a year or more.
The European Central Bank’s recent moves are likely to fall far short of a solution to the area’s stubbornly high unemployment and torpid growth rates. Across the 18-member zone, joblessness is running near 12% and is more than twice that rate in the hard-hit economies of Greece and Spain. At the same time, inflation has fallen to 0.5%, a fourth of the European Union’s target. Greece, Portugal, Slovakia and Cyprus have descended into deflation. Italy, Spain and Ireland teeter on the edge.
Still in the wings: Some form of quantitative easing, such as a bond buying scheme, similar to the Federal Reserve’s. Odds are it’ll be rolled out later this year or early next.
Meanwhile, progress on economic and fiscal reforms is slow and unpopular. Greek and Cypriot officials, for example, openly yearn for relief from strict austerity, amid public protests that living standards have been rolled back by decades. And despite pressure from EU officials to speed its economic and fiscal reforms, Italy is balking, fearing more spending cuts and tax hikes will push it into recession.
New Lenses Will Transform Cell Phone Pictures-- From The Kiplinger Letter, May 30, 2014
Cameras in smart phones will soon rival expensive professional versions. They’ll come with optical zooming to produce images without losing focus, a feature found today only in costly lenses used by pros and hard-core hobbyists. Phone maker HTC is expected to sell phones with optical zooming in two years.
Making it possible: Rapid advances in microelectromechanical systems, which are smaller than a millimeter. The breakthrough in MEMS technology will also pay dividends for small projectors, telescopes, scanners and lasers.
Among optics companies working on small optical zooming: Maradin, based in Israel. Bridger Photonics in Montana and New Scale Technologies in New York.
Drought, Other Woes to Raise Food Prices in 2014-- From The Kiplinger Letter, May 30, 2014
One casualty of the weather lately: Food prices. They’ll rise faster than usual—about 3.5% this year, compared with a long-term annual average of 2.8% and an overall increase of just 1.4% in 2013. Drought is already driving up prices for beef from Texas and Oklahoma, and a winter freeze hurt citrus crops in Southern California. (Other factors are in play as well: A citrus disease in Fla. and huge export orders that drive up prices of eggs, soybeans and the like by cutting into available supplies.)
If El Niño, a warming trend in the Pacific Ocean that has wide-ranging effects on global weather, arrives this winter, look for food price increases to moderate next year.
New Life for Old Space Junk Through Crowdsourcing-- From The Kiplinger Letter, May 30, 2014
A surprising new use of crowdfunding: The American space business. A private firm has NASA’s blessing to raise money to revive an old probe that has been in aimless orbit since 1997. Skycorp is racing to raise enough cash to send signals to redirect the craft in late July, when it will reach its closest point to Earth in 30 years. The fix requires using outdated communications gear, since digital equipment was the stuff of science fiction when the probe went up in 1978. NASA has neither the resources nor the time to devote to the project.
Wages on the Rise, Even at Small Firms-- From The Kiplinger Letter, May 30, 2014
Look for wage gains to pick up later this year as a strengthening economy spurs more full-time hiring and puts more unemployed back on payrolls. One sure sign that pay will be trending up: 14% of firms with 50 or fewer employees are planning to dole out raises in coming months…the highest proportion since 2008. Rising prices for goods and services should also help beef up paychecks later this year.
The increases won’t seem dramatic … 2.5% to 3% by year-end, from 2% now.
But they signal a slowly healing job market after seven years of scant gains.
Federal Firefighters Better Prepared for a Hot Season-- From The Kiplinger Letter, May 30, 2014
A bad wildfire season looms in the West this year. Heat and severe drought in California and the Southwest are creating ideal conditions for fires to spread this summer, though the number of blazes so far in 2014 has been relatively low.
The good news: Uncle Sam has more funds and planes to fight the flames than last year, when the sequester took a bite out of the Forest Service’s budget. Four aircraft added to the fleet this year can fly faster and deliver more fire retardant with each pass. The feds are also getting more scientific about using weather forecasts to position firefighting crews and equipment where they’ll likely be needed the most.
New Energy Hope: Turning Used Plastic into Oil-- From The Kiplinger Letter, May 23, 2014
Another promising source of energy: Recycled plastic. A few small firms are turning plastic waste destined for landfills into synthetic crude oil. The process requires some very advanced chemistry, but the raw material is cheap and abundant, and the trickle of oil being made now figures to pick up as the technique gets refined. Also, environmentalists believe it could be a lucrative way to cut down on plastic litter.
Among producers making a play on oil from plastic: Utah-based PK Clean. RES Polyflow of Ohio. And JBI Inc. of N.Y., already producing 700,000 gallons a year.
States Fight Hard for Filming Business-- From The Kiplinger Letter, May 23, 2014
Count on states to become more creative in trying to attract movie projects. With 39 states offering tax breaks and other incentives, competition is stiff. But the payoff can be huge for states chosen as locations for film and TV projects. The biggest winner: Production companies. Most states are trying to take business from the biggies: California, New York and Florida. And those states are sweetening the pot to prevent defections. California, for instance, has added new tax credits for feature films.
Among the states auditioning for a leading role: Nevada, which offers breaks in return for filming at least 60% of a project and spending $500,000 on services such as transportation, housing, studio rental there. Alabama is serving up generous incentives to projects that hire state residents during production. Georgia, which sweetens its deal by cutting taxes even more if productions embed an animated state logo in the film. And Alaska, with its tax breaks for TV commercials and video projects produced there.