Rate Hikes on Hold Until September, Global Economic Breather Affects U.S. Growth Momentum
ATLANTA–The 35-day partial government shutdown was likely economically insignificant except for those who suffered delayed paychecks, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s Robinson College of Business.
“The real bad news was the severe drop in retail sales in December,” Dhawan wrote in his “Forecast of the Nation” released this week. “With job growth in the 200,000-plus monthly range for the year, why did people scrimp on holiday spending?”
Dhawan suggests the negative wealth effect from what he characterized as “brutal” market losses in October and December dampened consumer desire for holiday spending, triggering what the forecaster described as an “alarming” drop in consumer expectations and CEO confidence.
“In an aging expansion, when the low-hanging fruit of investment has been picked clean, policy makers must be nimble. Net-net, the Federal Reserve is on hold for rate hikes until September,” Dhawan said.
Dhawan doubts the United Kingdom (U.K.) will leave the European Union on March 29 without agreements in place for future EU-U.K. relations. But, he anticipates negotiations will go to the wire. With the Bank of England preparing for a potential recession at home, Germany barely avoiding one, and Italian and French economies far from strong, Dhawan does not expect America’s Atlantic trading partners to provide global economic growth in 2019. This leaves China, he said.
China’s economy is in a serious slowdown and its monetary authority is trying to jump-start domestic consumption with cheap credit and other measures. But the biggest threat China faces is threatened escalation of the 10 percent U.S. tariff rate to 25 percent. The war of words between China’s General Secretary Xi Jinping and U.S. President Donald Trump is expected to be resolved soon, which is likely to help both economies continue to grow.
Highlights from the Economic Forecasting Center’s National Report:
• Expect GDP growth of 2.9 percent in 2018, followed by 2.5 percent in 2019, moderating further to 1.8 percent growth in 2020 and 1.6 percent in 2021.
• Investment growth will moderate from 6.9 percent in 2018 to 4.1 percent in 2019, then to 2.9 percent in 2020 and 2021. Monthly job gains will be 189,900 in 2019, drop to 107,200 in 2020 and 105,000 in 2021.
• Housing starts will average 1.258 million in 2019, 1.246 million in 2020 and 1.242 million in 2021. Vehicle sales will be 16.2 million in 2019, 15.8 million in 2020 and 15.6 million in 2021.
• The 10-year bond rate will average 3.1 percent in 2019, 3.4 percent in 2020 and remain in that range in 2021 following Fed rate cuts.t in 2021.
Why Goodwill Is Important to Your Business
Goodwill can enhance the value of your business, but what does the term mean when buying or selling a business?
Usually, the term “goodwill” is a reference to all the effort that a seller puts into a business over the years that he or she operates that business. In a sense, goodwill is the difference between an array of intangible, but important, assets and the total purchase price of the business. Don’t underestimate the value of goodwill in the long-term and short-term success of any given business.
Goodwill is defined by Investopedia as an intangible asset associated with the purchase of one company by another. An intangible asset can be thought of as asset that is carried on the balance sheet, and it may include a company’s reputation or a recognized name in the market, according to the M&A Dictionary. If a company is purchased for more than its book value, then the odds are excellent that goodwill has played a role.
Goodwill most definitely contrasts and should not be confused with “going concern value.” Going concern value is usually defined as the fact that a business will continue to operate in a fashion that is consistent with its original intended purpose instead of failing and closing down.
Examples of goodwill vary. Some of the more common and interesting examples:
- A strong reputation
- Name recognition
- A good location
- Proprietary designs
- Trademarks
- Copyrights
- Trade secrets
- Specialized know-how
- Existing contracts
- Skilled employees
- Customized advertising materials
- Technologically advanced equipment
- Custom-built factory
- Specialized tooling
- A loyal customer base
- Mailing list
- Supplier list
- Royalty agreements
In short, goodwill in the business realm isn’t easily defined. For example, standards require that an outside expert annually value companies which have intangible assets, including goodwill. A business owner simply can’t claim anything under the sun as an intangible asset.
Understanding what is a real and valuable intangible asset or example of goodwill can be a key factor in the buying and selling process. Whether you are buying or selling a business, you should leverage the know how of seasoned experts. An experienced business broker will be familiar with goodwill and how to properly evaluate the worth of it in setting a valuation for your business. A business broker guide you in both understanding and presenting goodwill variables, as well as steer you though the buying and selling process.
Copyright: Business Brokerage Press, Inc.
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