One of the hottest political topics of late has been the upcoming increase in taxes for wealthy Americans starting in January 2013. In particular, income for individuals making $200,000 or more will be subject to an additional tax of 0.9%. Married couples filing jointly and making $250,000 or more will be subject to the same increase. Many believe that this increase will cause the wealthy to spend less causing companies to have to let go of staff, which will then cause the economy to be even worse off than it is today. If true, this will have a large effect on local economies especially since many of the wealthy live near each other. Where do the wealthy live? To find the wealthy we can look at two factors: net worth and income.

Net worth

There are about 18.9 million households in the U.S. (or about 16%) with a net worth of $500,000 or greater. (read more…)

Stop the presses. Karl Rove and James Carville agree on something. They agree that demographics and message were huge factors in the 2012 election. But as expected, the two political gurus agree very little on how those demographics are shifting and how those messages need to be tweaked.

In a spirited sparring match at CME Group’s annual Global Financial Leadership Conference, Rove and Carville offered up their insights on the outcome of the 2012 election. Armed with a binder full of data, Rove said Republican challenger Mitt Romney closed the gap on President Barack Obama and cited how much better Romney did than John McCain in certain demographics. Carville added that the demographics of the U.S. are shifting in the favor of the Democratic Party.

Rove conceded that the GOP would do well to tweak their platform to make it more inclusive. Not surprisingly, Carville was less kind in his assessment of the GOP’s message, saying Republicans are out of touch with the electorate on numerous issues and that their platform needs to undergo a more tectonic shift. (read more…)

The election is over and we still have a divided Congress and impending “fiscal cliff.” So what can the construction industry expect during Congress’ lame-duck session, and next year? That was the topic of a conference call last week with members of the Associated General Contractors of America.

Post-election numbers show a slightly smaller Republican majority in the House and a slightly stronger Democratic majority in the Senate, said Jeff Shoaf, senior executive director of government and public affairs at AGC. This translates into either party facing difficulty if they try to move major legislation without garnering bipartisan support.

Fiscal cliff and taxes

The fiscal cliff is the No. 1 issue.

If it is not dealt with, the country faces $109 billion being slashed from federal defense and nondefense programs Jan. 2. AGC estimates that this could mean about $6 billion less in federal construction spending, said Jimmy Christianson, AGC’s director of congressional relations/PAC. (read more…)

High-frequency trading and the “futurization” of swaps were hot topics Monday during the “Evolving Capital Market Dynamics” panel discussion at CME Group’s annual Global Financial Leadership Conference in Naples, Fla. Market experts weighed in on what is and isn’t high-frequency trading, how it can be improved and whether it poses a threat to market stability. They also discussed the role futures will play as the market evolves and what will become of proposals in various jurisdictions to implement a financial-transaction tax.

The panel included GETCO CEO Daniel Coleman, Jeff Jennings of Credit Suisse, “The Speed Traders” author Edgar Perez and Richard Prager of BlackRock

Highlights:

  • Perez on trading losses at Knight Capital Group: The technology is there, but there are also human processes involved. It wasn’t a high-frequency problem. “At the end of the day, it was a human error.”
  • Prager on the futurization of swaps: “Futures products can outpace [over the counter] if they can be offered with margin efficiency and in a safe environment.”
  • Jennings on the image of high-frequency trading: ” We have to do a better job as an industry of demystifying the markets and the trading strategies.” It is hard to fix after a market event has occurred.
  • (read more…)

The architecture, engineering and construction industry is in better shape than it was a year ago, and the upward trend could continue, three economists said during a webcast by Reed Construction Data. However, the “fiscal cliff,” troubled state economies, tight lending standards and the Obama administration’s regulatory agenda are headwinds that could alter the trend, they said.

Housing starts improve in 2012

Housing starts are up 35% since 2011, with private residential construction leading the way, said Kermit Baker, chief economist at the American Institute of Architects. Private residential spending soared a seasonally adjusted 20.9% between 2011 and 2012. However, “lower house prices, a large inventory of distressed homes and weak household-formation numbers have held back stronger recovery,” Baker said. “We’re a long way from long-term potential.”

Multifamily spending is the star in this sector. Spending increased 49% in a year, and this trend could continue, said Ken Simonson, chief economist at the Associated General Contractors of America. (read more…)