Accounting News and Notes

Although I fail to recall which U.S. Senator said it or their exact words of “a billion here and a billion there and all of a sudden you are talking about real money” and the advice to guard you wives, you family, your wealth, and your freedom while Congress is in session. This sage words have resonated through time and I believe they are no less true than today. By our living in a democracy we are able to peacefully impact our world by electing our leaders.

Often it is A Voice of One who is heard above all others by making their thoughts, conscience, and beliefs heard can indeed change the world we live in. Therefore being actively involved in issues which impact you the most and those, which are dear to your hear are essential rights and indeed moral obligations of our freedom so many have fought so hard for. Intuition and insight as to laws which are likely to best get to Congress’s floor and to be signed by the President are those which would should warrant the most attention as many “trial balloons” are sent up by Congress, Presidential candidates, and the press alike striving to see which issues both “stick and resonate with the people.” Thereby paying attention and having an influence on laws, which will soon impact you, are a critical part of the privilege of voting and the responsibility of sound business management and indeed a critical part of staying connected and informed as your business and future economic viability depend on it. 

For decades the United States government has tracked our rate of inflation which measures the rising cost of goods and services over time. This indication the CPI (Consumer Price Index) is a key indicator of the relative healthiness of our economy. In 2008, primarily due to rising gas prices and uncertainty in the markets, this index has risen on a monthly basis ranging from 50% to 100% higher than the indicators of the same month over 2007 totals. On the U.S. Department of Labor web-site you can find calculations of a whole host of items from all types of durable goods including food, transportation, lodging, etc. broken out by month and geographic location. The Bureau of Labor Statistics is the branch of the government responsbile for the dissemination of these calculations are are available to all who wish to read them concurrently.

Also on their web-site is a way to calculate what the equivalent price is of an item in any base year, which you may select at www.bls.gov/data/inflation_calculator.htm Proper utilization of this formula will assist in determining the “true price” of an item when comparing it to any base year. For example, its user may determine that after adjusting the sales price reflecting the impact of inflation that the actual buying power of a dollar for a particular item/a dollar itself has increased or decreased in price over time. The prices for electronic items (such as televisions and stereors) are a good example of items which truely cost less than they did years ago with the actual adjusted for inflation value is less than it was previously. Though much or our economy is driven by the published hype and the news media the CPI is a statistic which is steeped in fact rather than emotionalism.

Proper utilization of the CPI index can help in a myriad of planning options from planning for retirement to ensuring that one’s business plan is properly adjusted to reflect buying value, profits, and for pricing considerations. Failure to carefully consider these variables could easily spell defeat rather than success for those attempting to anticipatate and to plan for the future. For instance, the inflation rate alone/CPI and its attendant rise over time could easily diminish the “real value” of funds over time greatly reducing one’s ability to both adequately select one’s retirement age as well as the quality of one’s retirement as well. Therefore careful attention to this leading indicator will be critical as your plan for both your business and personal financial future.

The U.S. Department of Labor just announced that the unemployment rate is presently at 5.7%. This is an all time high for the year and is the highest rate since the 6.0% recorded in 2003. High gas prices, a weak dollar, the down real estate market, and continued record foreclosures serve to further weaken the economy. Though trying to see the good in all the bad with gas prices softening a bit as of late, fuel costs remain at highs never seen before in prior years, even after adjusting for inflation. There is cause for good news as the overall economy growth, albeight extremely slight, continues to prop up a sagging picture. At the Dept. of Labor’s web-site www.bls.gov/news.release/empsit.toc.htm you can learn about the variable measured statistics of the unemployment rate. Such variances tracked and availble include the age, sex, race, and duratation of the unemployed for those seeking greater insight as to what the statistics mean to them. 

Upon hearing the news that another large bank or lender is “glad” that the billions of loss they have occured in “write-offs” is good news as the billions were less and anticipated. Who would have guessed that this news would result in the slight increase in stock prices as values gained back a bit of their previous decline. Such is the mayhem which continues to flog our standard of living as illogical variables continue to drive our marketplace. With gas prices soaring over the last twelve months without major cause and ill fated loans being made without just financial cause, our economy is rocking unsteadily as the lack of reason continues to be the barometer of bad news. Our government continues to strive to respond to the news of the economy but it needs to react faster and more proactively to take care of our citizenry.