No recession? Strong U.S. growth tops estimates

It is conventional wisdom today that all of the United States of America, including California, are in a recession. However, as is often the case, the conventional wisdom appears to be incorrect:

A recession is typically defined as two consecutive quarters of negative economic growth, but the just-released second quarter 2008 U.S. economic growth rate numbers show a healthy growth rate of 3.3%, akin to the average rate of growth in the Reagan and Clinton administration "boom" years, and topping estimates of 1.9% (which accounted for the economic stimulus rebate checks). Q1 2008's growth rate was weak but positive, and Q4 2007 was recorded at negative 0.2% (-0.2%).

The U.S. Labor Department also reported a decrease in new unemployment claims numbers.

Arguably, one upshot of these figures is that those who believe now is not a good time to start or expand a business may not be correct.

See also UCLA forecast sees no California recession, San Francisco Chronicle, March 11, 2008:

[T]he UCLA Anderson Forecast predict that damage from the collapse of housing will be contained and that the state's feeble economy will avoid a headlong dive into negative territory.

Real estate weakness will remain a significant drag on the economy, leaving us treading water in 2008, but not slipping under the waves into recession," the report concludes.

December 2008 Update: An official U.S. recession was announced, with its effective start being named as December 2007.

Counterintuitive Ways to Save Money as Applied to Legal Services

TheStreet.com recently posted an article by Jeffrey Strain entitled 7 Counterintuitive Ways to Improve Finances, some of the advice in which applies, in the opinion of this blog's author, to something few people enjoy, but which can end up saving money in the long run; that is, spending money on legal fees:

Earnest attempts to save money here and there don't always add up to much. When traditional methods fail, it's time to consider a few counterintuitive options.

Spend Money

If you want to get the most for your money, you are going to have to spend. One of the biggest mistakes people make when they are trying to get their finances in order is to stop spending money alogether.

Not all spending is the same. You should limit unnecessary purchases, but spending on essential upkeep, preventive measures and items that will save money in the long run is vital for getting and keeping your finances in order. Scrimp now on items and services that can help prevent larger expenses in the long run--such as routine car maintenance and energy-saving bulbs--and you could pay for it later. . . .

Think estate planning for disability and death, forming a corporation or limited liability company for your business. Having proper Web site terms of use, privacy policies, and vendor and employment contracts in place before you are sued.

Don't Buy What Is Cheapest

"Cheap" rarely means "the best value." To get the most out of your hard-earned money, you must think value rather than price. A car that is inexpensive, but costs a lot to drive and needs frequent repairs has less value than a car with a higher price tag but costs less to run and maintain.

This concept of buying value over price can be applied to anything and will mean that you rarely buy items which are the least expensive. . . .

Think online "incorporation services", paralegal and document preparation services, as well as high-volume or newly-admitted-to-the-bar "discount" lawyers versus established, experienced, and more costly attorneys provided personal service.

See also:

Online incorporation services review;

The Top Ten Distinctions Between Millionaires and the Middle Classby Keith Cameron Smith (2007) (Millionaires think and plan long term; the middle class does not.); and

The Millionaire Next Doorby Thomas J. Stanley & William D. Danko (1998) (Millionaires think long term; willing to spend a lot on important, long terms, and preventative things and measures, but not much on the instant gratification of new cars, clothes, or jewelry.).

Birmingham Business Journal Announces - BAN

Just an FYI...Friday the BBJ did a great article on our own Birmingham Angel Network.

Take a look: New 'angel' group hopes to fill city investment gap

Federal Minimum Wage Increase

The federal minimum wage increases from $5.85 to $6.55 per hour, effective today, July 24, 2008. The minimum wage will increase to $7.25 next year.

Note that the California minimum wage applicable to California employers and employees is already higher than the current or future federal increases.

Birmingham Angel Network

I am very pleased to announce the formation of the Birmingham Angel Network (BAN). We look forward to seeing the group grow and become a powerful driving force in the Birmingham and Alabama economy.

As has been discussed for several years, Birmingham is in dire need of additional startup capital for our many worthy high growth and high tech businesses and BAN will be a great resource for many of those companies.

If you are an accredited investor interested in becoming a member or a company looking for funding you may contact the group directly at: www.birminghamangels.com , which should be completely finalized and "live" within the next couple of weeks.

Employee versus Independent Contractor

California's Employment Development Department (EDD), in conjunction with the Internal Revenue Service (IRS), is offering a seminar on employment status issues; that is, whether a worker is an employee or independent contractor. The seminar is available live from time to time, but also online as a webinar or on CD, free. The seminar offers an overview of California law in this area, as well as debunking some common employer misconceptions.

CA EDD Payroll Tax Seminars

IRS Increases Standard Mileage Rate

The IRS has announced that, effective July 1, 2008, the standard mileage rate will increase from 50.5 cents per business mile to 58.5 per business mile. The change is in recognition of higher gasoline costs.

The medical and moving rate also increases, from 19 to 20c per mile, but the charitable purposes rate of 14c remains unchanged.

The 2009 mileage rate has yet to be determined and announced.

To those Californians that wonder, if - given the higher gas costs here - the rate varies state by state, the answer is no, although, for some taxpayers in certain instances, using actual automobile operating expenses rather than the standard mileage rate is an option that should be discussed with their accountant. Employers typically reimburse employees for business miles at the IRS standard rate.