Across the Great Divide

Across the Great Divide

The Rich and the Poor. As per the records of the World Bank, the US holds the position as the 9th richest country in the world. Recently following the recession in 2008, the job market has improved, though cost of education health care, real estate and commodities in general seem to be on the rise. That is why it is not surprising to note that the ever -existing divide between the affluent and the mediocre/poor has become even wider.

As is expected, periods of economic doom and boom reflect on the wealth of the country though not much difference is expected in the metropolitan areas, both affluent and impoverished. As mentioned before the wealth gap widens. This is measured in terms of GMP- gross metropolitan product. GMP is a measure in terms of money in relation to the value of goods/ services within a metropolitan area during a specific period of time, but is masked by the population in surge and out surge. The US median household income in 2014 was lower than that in 2009 after adjusting for inflation.

Silicon Valley, where the technological headquarters is located, is in Northern California. Subsequent to the changing economy, the title of the richest city in the US had been awarded to SanJose California and this is owing to the recent surge in the tech market. This boom gave the upswing to the US economy as well. Real estate market in Northern California showed an upswing with hike in the rent rates.

As per the records of US bureau of economic analysis published in 2014, the GMP per capita here is $105,482, which amounts to twice the national average. Bridgeport Connecticut stands a somewhat close second with a value of $94,489. Third position is held by SanFransisco at$80,643. Seattle and Boston stand neck to neck in the subsequent positions at $75,874 and $74746 respectively. Closely behind in line are Durham ($73593), Washington ($72191), New York ($70830) and Houston ($70 097). Other cities worth mentioning are DesMoines, Dallas, Portland , Hartford , Madison, Minneapolis , Denver, LosAngeles, Saltlakecity, Philadelphia and SanDiego, in that order. It is noteworthy to mention here that Seattle's per capita has shown a growth of 7.9% since 2009. This could have been assisted by online companies like Amazon Inc. and Zulily Inc. Also other cities like Portland, Washington and Boston which is hub for biotechnology have also improved their positions since 2008.

These technical hubs are populated by educated crowd holding white collared, scientific and technical jobs and they draw high income as per the latest statistics. This could explain the reason behind surge in the rate of return to college for higher education. This significant difference in the pay packet between the graduate degree holder and a high school diploma holder is another one of trending emergences of this economy. The economists only hope that this expansion of the technological centres will continue through the future years.

Properties governing the property business

Properties governing the property business

Investment of one's had earned money could be a tricky business. Like the stock market, the real estate market too is temperamental and may exhibit unpredictable behaviour. In the US, as much as one- third of an average American's total assets after deducting the liabilities lie in the real estate area. It is further interesting to note that 48% of the American millionaires have made their wealth in real estate.

Even with the elements of uncertainty and risk looming over many people are drawn towards property investment. Let us explore what makes real estate business attractive to an ordinary American.

Several factors encourage even the most cautious of individuals towards making an investment in commercial real estate. These are 1) it is income generating 2) tremendous appreciation of the capital investment 3) the fact that the investment can be made with up to 30% cash down 4) upholds some value of security and 5) offers lots of diversity.

Having seen the attractions of property investment, an understanding of the factors determining the trends of real estate business is also equally important.

These include:

1) state of economy: this essentially affects people's capacity to purchase. The global economy when becomes dull, real estate business also generally slows down.

2) bank interest rates: when there is a hike in the rates, naturally the buying power drops.

3) legislative factors can exert a considerable influence on properties. Policies of the government involving tax deductions and subsidies can affect the market considerably.

4) demographic statistics like age/ gender/ income/ migration data/ population expansion etc. can affect prices in the real estate market significantly.

As was accurately predicted in the late 90's, the US economy took a turn to the down in 2008. Even with this prior knowledge in hand, nobody seemed to be prepared for the devastating destruction it caused.

The real estate market typically and invariably falls through a cycle of 4 stages and it pays to have an understanding of this to know the trending in the market.

These stages will be: 1) the stage of recovery- as implied, here the government takes measures to lower the interest rates prompting investment and when the economy is low, prices to drop. And the process of recovery thus starts when vacant places start getting occupied. 2) stage of expansion where occupancy becomes near total and demand increases. Prices especially rents start to go upward. Increased profit will naturally attract more investment and so expansion continues. 3) stage of expansion along with increased supply where prices are high demands are high and supply is also high. 4) stage of recession: the first pointer to this is the stagnant rent rate even with the high occupancy rate. Now the occupancy starts falling. Though this will arrest measures to provide new supply, those that have been already delivered have to stay and remain unoccupied. The rent rates drop and subsequently the income of the investors. Next, the interest rates go up. The combination of dropped rates of rent as well as occupancy and increased rates of borrowing will considerably eat up the investors resources with not much scope for profit prompting foreclosures.

So what is the duration of this cycle? Statistical records prove that on an average this cycle can range between a time period between 10-20 years with the exception of WW II and 1979.

Currently we are moving to expansion from recovery and 8 years ahead of the recession of 2008. So when is the next catastrophic crash predicted? As per experts' opinion it might be in the year 2024.

In summary, the real estate market in the US is not all that unpredictable after all. A proper understanding of its fairly regular behavioural pattern can bring higher returns and security to the investor. So the dear investor makes an effort and the property market beckons.

Financial Crisis 2020 Fact or Fable

Financial Crisis 2020 Fact or Fable

Expert economists are of two kinds, those who believe in the economic cycle theory and those who don't. The theory of economic cycle has helped predict most of the financial market collapses and peaks of the past. As per this theory, the US could be heading for one of the worst financial crisis ever around 2017-2020. Is this bound to happen? If yes, what would be the circumstances leading to such a predicament and more importantly what could be its impact on the already widened economic strata of the society?

Unemployment crisis that especially aggregated by military layoffs and tech company layoffs that shook the nation is now slowly settling down. Job market does not bleak mow and more people are changing their status to employed from unemployed. But even then, the crisis is hovering around the corner waiting to smother us down. It has not developed overnight, but is the result of a series of events that have been slowly, steadily and stealthily making the economy unstable and leading us towards doom. Currently, as a result of inflation rearing its ugly head, the prices of commodities are on the rise and dollar on the low. The cost of education, healthcare and properties are on the rise. At the same time, income/wages is stagnant and does not show any inclination to increase. The US market is very much consumer based and has always encouraged the consumer to spend more and more. The consumer does exactly as prompted, even going beyond his/her means by borrowing more and more. The rich will get more money to invest back in the market. This widens the chasm between the rich and the mediocre/ poor of the society, making the rich richer and the poor, poorer. This could be the saddest but realistic fate of 90% of the Americans in 2017.

So the answer to what would be the circumstances that lead to 2017 crisis is without doubt, a debt laden market. Inflation is also the culprit causing more layoffs, increasing the need to borrow more and this will in turn cause more inflation raising the interest rates culminating in less economic activity. Turning a blind eye or denying its existence does not resolve the issue as it is very much here and now. There may be some economists who might fear deflation, but one begs to differ here as nothing can empty a bank account like inflation. Though inflation is said to shift the money from the savers and investors to the debtors, the wages lag and cost of living rises unbearably.

So the net effect here is economic stagnation and decline.

The summary of an analysis on this financial crisis which appears to be inevitable is though this crisis will make the rich richer, the market again is dependent on how much the mediocre / poor will spend. So the way to survive would be to curtail spending and to live well below means.

Some Business Fields That Will be Hot by 2020

Some Business Fields That Will be Hot by 2020

Predicting the future is a very hard task especially in the event that there are still problems with discovering what's happening in the economy of today. Anyway, it is still essential to predict the future when you are starting a fresh career, enrolling in college or investing in new skills.

The rate at which the business world is changing these days is getting higher than ever. Two of the major contributions to the fast rate of business world change are better technology and globalization. A method to actually predict which exact fields will get hot in the future is by staying away from those which aren't hot. Every year, the government's Bureau of Labour Statistics draws up a list of industries that are declining and have common trends. The list most of the times might involve jobs that are cheaper overseas, like jobs that are in low – skill assembly or machines that are becoming good human replacements, for instance call centres. Other fields that require cutting costs and downsizing are vulnerable as well.

In essence, building a lot of skill sets can be an effective way to be distinguished from others in the market. Some of the skill sets that can be considered include analytical expertise and liberal-arts background or a law degree with scientific knowledge. It is important to keep in mind that the best lasting skills are usually those that are transferable between different fields.

Either way, one will have to set up one's career in a field, so these are some fields that will most likely flourish by 2020.

Therapy and Counselling: The fact that mental heath is just as important as physical health has definitely been established. Also according to the Bureau of Labour Statistics, the demand for family and marriage statistics is most likely to increase by 41% in 2020.

Data Crunching: The time of big data is just beginning as many organizations are demanding to have information databases for their customers, competitors and themselves. Marketing and market research are two fields that are growing in the use of data exploding.

Finance. The movement and management of money is technically complex, and integral to most companies. That means there will be more need for finance experts. There may even be a shortage as students that were once involved in finance look into other different fields.

Computer Engineering: These days, most software developments are done overseas but there is still strong demand for high level computer experts to put systems together. For example, computing at high speed is rapidly becoming a competitive advantage and majority of organisations require faster and more secure networks.

Scientific Research. New innovation will keep on generating leaps forward in pharmaceutical, assembling, transportation, and numerous different fields, which implies there will be solid interest for labourers educated in science, maths, and designing. A few territories that show specific guarantee should also be considered: biotechnology and biomedicine, nanotechnology, mechanical autonomy, and 3D printing, which permits the assembling of physical items from an advanced information record.