Economists had initially predicted demand for long-lasting goods would rise in 2016, but in reality, it declined. The manufacturing sector had a largely mediocre year. However, toward the end of 2016, the manufacturing sector began to stabilize as more companies developed positive expectations for the new year with Donald Trump as president of the U.S.

They are expected to enjoy lower taxes, better infrastructure, and general support from the president who cares about goods being produced on American soil.

Orders for Durable Goods Declined, But the Manufacturing Industry Stabilized

Demand for long-lasting goods in the United States decreased in December 2016 because defense-related orders declined significantly. Products that are built to last more than three years are considered durable goods. Examples of durable goods include minivans and machinery.

Orders for durable goods dropped 0.4% from November to December, as recorded by the Commerce Department. The decrease came as a surprise. According to a survey conducted by The Wall Street Journal, economists predicted a 2.3% increase in orders for long-lasting goods.

Orders for defense capital goods declined by 33.4% in December 2016, which was the biggest reduction since May 2014. A sudden drop in orders for defense capital goods is not a huge surprise because it is a volatile category.

High volatility is an industry term meaning the price of the good fluctuates dramatically. If the defense industry is excluded, orders increased by 1.7% in December.

With the entire year of 2016 considered, durable goods orders dropped 0.3% from 2015. Although U.S. manufacturers didn’t have an outstanding year, the manufacturing sector increased in stability during the last month of 2016.

Excluding aircraft, non-defense capital goods orders increased by 0.8% in December 2016, which was the third monthly increase in a row. Overall, orders for non-defense capital good orders fell in 2016.

More Background on the Manufacturing Industry and Future Projections

According to Berenberg Capital Markets economist Mickey Levy

“Prospects for future activity look better than they have in some time.”

He also noted that unfulfilled orders are increasing

“pointing to the need for companies to increase activity for what seems to be better demand.”

Business investment growth was slower than economic growth in 2016. This indicates that companies were being cautious. However, investment growth increased in Q4 of 2016. Q4 is the fourth financial quarter in a year, meaning the months October to December. Some experts believe that this investment growth is a result of the presidential election tipping in Donald Trump’s favor.

Some experts believe that this investment growth is a result of the presidential election tipping in Donald Trump’s favor. Many business owners are optimistic because of President Donald Trump’s proposed tax code that cuts taxes for all Americans, including companies.

Only hedge funds won’t enjoy a tax break as per Trump’s tax code proposal. Manufacturing companies are also positive about their future in America because Trump has placed an importance on improving the country’s infrastructure.

The U.S. dollar has strengthened as well since Donald Trump was elected president. This is causing American-made goods to be more expensive for foreign buyers.

There are also plenty of tensions and conflicts surrounding America’s trade policy, adding a layer of uncertainty. Mexico has made it clear that it will retaliate if the U.S. imposes tariffs on their exports and starts building a wall between the two countries. This could cause Mexico and America to enter a trade war.

Conclusion

After a year of decline, the manufacturing sector in the United States showed signs of stabilizing in December 2016. With Donald Trump as the new president of the United States, some manufacturing companies are positive about their performance in 2017.

Two major reasons why they have a positive outlook are lower taxes for businesses and prioritization of improving America’s infrastructure. Trump has made it clear he cares about America making its goods in the country again, another good sign for manufacturers.

Image Source: Wikipedia

It’s no secret that many U.S. college students have been defaulting on their loans or simply find them very difficult to pay back. The burden of student debt has become somewhat of a go-to bitter joke, with the issue making an appearance on virtually every TV show or movie about young adults. Today, Americans have a better sense of just how many students have failed to pay even $1 on their loans.

A memo recently released from the Education Department showed that half of the students at over 1,000 colleges defaulted on their loans within the last seven years. This sharp increase from the numbers previously released by the Education Department has reawakened calls for reforming this federal department.

Student Debt Is A Bigger Issue Than Previously Imagined

When analysts at the Wall Street Journal looked into these new numbers, they found that the Education Department inflated repayment rates by 99.8 percent from their last report. Previously, the Education Department said only 347 colleges experienced a loan default rate of 50 percent or more, but now that has increased to 1,029. The original numbers were released back in 2015 under the Obama administration’s watch.

Students on the 2015 report were supposed to start repaying their loans between 2006 and 2007. Those numbers were the first officially released numbers on the “College Scorecard” set up by the Obama team. After the 2015 numbers, there was a second batch of statistics released in September. This data showed a rise from 347 to 477 colleges with loan defaults 50 percent or higher.

The second report included students who were supposed to pay back their loans in 2007 or 2008. Although 477 is a sharp rise from 347, it’s nowhere near the jump from 477 to 1,029. The Education Department is blaming this change in numbers to a technical programming error.

One of the worst schools on this list in terms of loan repayments was the University of Memphis (U of M). Over the past seven years, the loan repayment rate for the U of M was 47 percent after recalculation. Officials at the U of M said they were shocked by the revisions and vowed to change how they collect their data. The U of M’s official statement said,

Given the magnitude of the numerical changes in the report,…the University of Memphis will be challenging the accuracy of the newly adjusted data.

Although the U of M saw one of the greatest revisions, no college or trade school had better repayment rates after the recalculation.

Calls For Reform From D.C.

While this recalculation was extremely embarrassing for the Education Department, this wasn’t the first time the department has publicly failed. One government report released not too long ago critiqued the Education Department’s method of tracking information. In particular, this report scolded the Education Department for looking at the budgetary aspects of student loan forgiveness.

Some higher education experts believe this history of unreliable data coming out of the Department of Education is a quality control issue. Robert Kelchen, who works as an assistant professor of higher education at Seton Hall University, told reporters that the Department of Education “needs to be regularly audited” in order to avoid these embarrassing issues.

Can President Trump Change Loan Policy?

There’s some talk in Washington about making schools accountable for low loan repayment rates. It’s unclear at the moment whether or not a Trump administration will attempt to punish colleges if their students cannot pay back their loans.

On the campaign trail, Donald Trump said he would work to cap annual student loan payments at 12.5 percent of a student’s income. President Trump also said that all outstanding loans should be forgiven after 15 years, in an effort to reduce the overwhelming burden of student debt. There are now at least 44 million Americans with a total of $1.4 trillion in student loans.

 

Image source: pexels.com/photo/person-wearing-blue-black-jacket-standing-near-gray-bookshelf-203237/

Many users of the communication platform Google Hangouts have experienced difficulties with the platform’s audio in recent years. In order to address this issue, Google has just announced a new acquisition that is sure to enhance the audio quality of Google Hangouts in the years to come.

The company Google acquired, Limes Audio, has been an industry leader in the field of speech enhancement and audio technologies for at least a decade now. Google expects to use the technologies and expertise of Limes Audio to enhance the quality of Google Hangouts and other communication apps.

How News Broke Of Google’s Latest Acquisition

News of Google’s acquisition of Limes Audio broke on Google’s official blog on January 5th. Serge Lachapelle, Google Cloud’s Director of Product Management, wrote the first blog post officially welcoming Limes Audio to the Google team. Lachapelle said the main reason they acquired Limes Audio was to help Google improve the audio quality on their various communications platforms. Lachapelle wrote,

As more and more businesses adopt our video conferencing solutions…it’s critical that we provide a great audio experience.

Mr. Lachapelle went on to say that Limes Audio “has been building solutions that remove…distortion and echoes that can affect online video and telephony meetings.” He believes Limes Audio will greatly enhance the Google Hangouts and the Meetings powered by Chromebox experiences.

Most techies are probably already aware that Google has acquired Swedish startups in the past for this same purpose. In 2007, Google bought the Swedish communication company Marratech for $15 million. Google acquired Marratech to enhance both Google Hangouts and Google Talk. Lachapelle tweeted that the acquisition of Limes Audio makes this fourth time Google has bought a Swedish startup.

Tech experts note how aggressive Google has been recently in the video chat market. In addition to Google Hangouts and Chromebox, Google just announced its video-calling app named Duo. This app has been designed to offer users a one-on-one calling experience and lets people preview who’s calling them with a Knock Knock feature.

Some analysts speculate that Google is trying to compete with the likes of Microsoft and Apple, both of which have tremendously popular video chat platforms. Google did not officially mention how much it paid for this acquisition.

Some Background Info About Limes

Limes Audio was founded in 2007 by two Swedish academic researchers named Fredric Lindström and Christian Schüdt. The main focus of Limes Audio has always been to make the clearest audio technology on the market. Work on this audio technology began as Schüdt and Lindström worked on their PhD projects in Applied Signal Processing at the Blekinge Institute of Technology.

The team at Limes Audio is perhaps best known for their TrueVoice software suite, which many people in the tech industry believe to be the best acoustic echo cancellation software on the market. As the company became more successful, it added about 20 co-workers experienced in signal processing and embedded software. Limes Audio’s main headquarters is in the eastern Swedish city Umeå, but they also have offices in Stockholm and Palo Alto.

Both Schüdt and Lindström appear to be pleased about joining the Google team. They announced in a letter on LA’s official website that they were “very excited” to join the Google team and they remained committed to producing the finest audio technology on the market.

The Future Looks Bright For Limes Audio

Although there have been no specific details released about this team, both Google and Limes Audio seem thrilled to be working on the same team. Limes Audio will most likely get to work on developing innovative ways to make the audio quality better for Google Hangouts. Tech experts expect Limes Audio will use technologies such as echo cancellation, automated mixing, and noise reduction, all of which they’ve already used extensively in their TrueVoice software.

 

Image source: pexels.com/photo/black-android-smartphone-177707/

Google announced that has just cancelled its solar Internet drone project. The news broke on January 11th in an interview with an executive from Alphabet, Google’s parent company, and 9to5Google. This solar drone project was a part of Alphabet’s X division and was officially known as the Titan project. Apparently the team at X hasn’t even looked at this project since late 2015. Most of the people who worked on Titan were reportedly reassigned to other projects in X.

Why Alphabet Pulled The Plug On the Titan Drone

One executive at X, Jacquelyn Miller, didn’t give a specific date when the Titan project was disbanded, and she also declined to say how many people lost their jobs. Miller only said many people working on Titan moved onto another project called “Project Loon.” Google apparently feels Project Loon, which is dedicated to making high-altitude balloons and helping connect people to the Internet in rural areas, is more realistic than the Titan’s attempt to connect the world using solar powered drones.

When asked about Project Loon, Miller said,

…at this stage the economics and technical feasibility of Project Loon present a much more promising way to connect rural and remote parts of the world.

Some tech experts believe Alphabet is letting Titan go to reduce spending on “moonshot” projects. This isn’t the first time Alphabet executives have attempted to remove economically unfeasible projects in recent times. Just a few months ago, Alphabet officially closed plans to expand Google Fiber, which is a home-internet service. Alphabet might sell Fiber later this year.

How Google Got Involved With Titan And Facebook’s Drones

This whole Titan project began in 2014 when Google bought Titan Aerospace. Titan Aerospace was focused on creating solar-powered drones with the ability to send Internet signals to the earth below. Once Google became a part of the larger conglomerate Alphabet, Titan moved into the X division. Google created the X division to house more experimental and “moonshot” technologies. Titan was officially a part of Project Wing once it joined X. Project Wing is concerned specifically with delivery drones.

Some critics doubted Titan’s long-term prospects years ago. Not only did the Titan team crash a drone in 2015, but the Titan division often reported having huge problems transmitting 5G data. Although Project Wing is still operating without Titan, some Alphabet analysts believe the project is in trouble. One reason people things may not be well with Project Wing is the fact that the leader of Wing, Dave Vos, recently left the company inexplicably last October.

Although some believe Wing won’t be around for much longer, Miller told reporters Alphabet is still funding the project. With the Titan project out of the way, many tech experts believe it’s time for Facebook‘s drone technology to shine. The social media giant bought British aerospace company Ascenta in 2014, and it too has been working on drones to bring the Internet to more remote locales.

While Facebook did try to get involved in the solar-powered drone space with its Aquila drone, they’ve also experienced similar problems to Alphabet’s Titan. In 2014, Facebook’s Aquila crashed in Arizona. Despite the crash, Facebook believes in the Aquila technology and is still funding this venture.

The New Alphabet Regime Is Here To Stay

The news of the ending of Titan may shock a few, but it really shouldn’t. After all, Google created Alphabet to put more pressure on experimental projects to deliver. One of the main critiques stock investors had with Google was it’s reckless spending on “moonshot” projects, and the creation of Alphabet was a reaction to these critiques. Now that all the projects under the Alphabet banner must operate separately, they all need to deliver good results fast to keep the funding coming.

 

Image source: Youtube Screenshot

After receiving a letter from Wet Seal dated January 20, 2017, the Wall Street Journal reported that the clothing store is closing all of their shops and laying off all employees. The retailer let employees know at their Irvine, California headquarters. Wet Seal has 338 stores with 171 located in the United States and almost 3,700 employees.

As all the shops are closing, both the employees and customers will be impacted, the first having to secure new jobs in a relatively short amount of time. The company decided to hald all retail activities because it couldn’t secure funding or find a strategic partner.

Wet Seal Sent a Letter Informing Employees That They’re Closing All of Their Stores

In the letter informing employees that they’re shutting down, Wet Seal’s Vice President and General Counsel Michelle Stocker explained:

“Unfortunately, the company was unable to obtain the necessary capital or identify a strategic partner, and was recently informed that it will receive no further financing for its operations.”

Wet Seal has $50 million-$100 million in liabilities and $10 million-$50 million in assets. Moreover, this is actually the second time the retailer has filed for bankruptcy, the first time being in January 2015. At the time, the company had a reorganization plan to fund operations during bankruptcy. Under the plan, B. Riley Financial Inc. would have received 80% of its stock exchange for a $20 million loan.

Shortly after the January 2015 bankruptcy filing, Versa Capital Management LLC acquired the teen retailer for $7.5 million. Versa Capital Management had promised to keep at least 140 stores open, but unfortunately, they are unable to keep the promise due to how bad their financials are.

More Background on Wet Seal’s Financial Troubles

Their location in Foothill Ranch, California had lost over $150 million over the past two years when they filed for bankruptcy in 2015. The store also defaulted on $27 million worth of senior convertible notes. Wet Seal’s sales had declined 15% in Q3, the third financial quarter, of 2014.

According to Internet Retailer, the retailer generated approximately $27.5 million in online sales in 2015, which was a 2% decrease from 2014. As revealed in court documents, Wet Seal owes the most money to FedEx Corp.,$608,977. The company has enlisted Hilco Streambank, an advisory firm, to sell their intellectual assets. Wet Seal is also currently running a 30% off everything sale online to clear out inventory.

Wet Seal isn’t the only American retailer struggling financially. Also in January 2017, Sears Holdings closed dozens of their Kmart and Sears stores. The Limited was the first retailer in 2017 to announce it would close its stores and file for bankruptcy protection. Talbots and The Loft shut down their shops at the Circle Centre Mall downtown.

Even American Apparel and Aeropostale have filed for bankruptcy over the past few years. As the spending habits of young people change, mall traffic falls, and retail competition increases, more retailers continue to struggle. In general, mall-based stores have been losing to online merchants and big box chains.

The End of Wet Seal

It looks like Wet Seal has really come to an end this time. They barely managed to escape shutting down the first time that they filed for bankruptcy in 2015. Business has not picked up for them since then, so there’s no choice but to close all of their stores and file for bankruptcy again. Wet Seal isn’t the only retailer that’s been struggling financially for years due to changing sociographic and higher competition.

Other major U.S. retailers are barely staying afloat or have had to file for bankruptcy too. Business analysts predict that clothing store will slowly be overthrown by on-line shopping giants such as Amazon that offer quality products at lower prices.

Image Source: Flickr

In recent years, the United States IRS (International Revenue Service) has been reducing its expenditures each year. The IRS has cut their budget again for 2017. It is $236 million less than in 2016 and $900 million less than in 2010. As a result of the funding cuts, the IRS has fewer personnel and resources at its disposal. This may have encouraged some people to claim higher deductibles or withhold reporting certain income, thinking that the IRS won’t find out. However, the IRS still conducts audits and might catch you if you try pulling a fast one.

As a Result of Less Funding, the IRS is More Likely to Go After Higher Income Earners

The IRS has 17,000 fewer employees than it did in 2010. IRS Commissioner John Koskinen shared at the American Institute of CPA’s National Conference:

“The agency estimates that $5 billion remains uncollected from tax returns that should be audited, but the IRS lacks the staff to do it.”

Although the IRS conducts fewer audits than they used to because they’re short on personnel, you shouldn’t be complacent about filing taxes. There are certain red flags the IRS looks for.

Simple errors are one of the reasons people get audited. Examples of these careless errors include incorrect social security numbers, typos, and calculation mistakes. You should double-check your tax return to prevent an unnecessary audit.

Due to limited resources, it’s no surprise that the IRS is more likely to audit high-income taxpayers. If you’re in a higher income bracket, then you must be even more careful to not make mistakes on your tax form or it could result in an unnecessary audit.

The most recent IRS statistics reports that 0.80% of individual returns were audited. Taxpayers who earn $200,000 to $1,000,000 per year have a 2% chance of being audited. Those who have incomes over $1,000,000 are audited at 10%.

Common Causes of an IRS Audit That Could Be Avoided

Another possible reason for receiving an audit is if your charitable donations are higher than average for your income level. If you have kept the receipts and proof of all your donations, then you’ll be fine. Those who haven’t held onto their receipts for charitable donations will have a difficult time with the audit. Get into the habit of recording proof of your charitable contribution as you donate.

For property donations, you should read “IRS Publication 526 – Charitable Contributions and Publication 561 – Determining the Value of Donated Property” to correctly enter figures from donated property. Miscalculating this type of donation can lead to an audit.

You should also ensure that you’re not including expenses that don’t qualify as deductibles. For example, you can receive business deductions for travel, automobiles, meals, and entertainment. But only for strictly business use. You shouldn’t include the costs of using your car for personal errands.

Some people think the IRS won’t notice if they include some of those expenses under business, but they often do. If your business deductions are abnormally high for the size and type of your business, the IRS may audit you. As with the charitable donations, business owners must always be prepared to prove their company’s expenses.

Conclusion

Being notified you’re under an audit isn’t necessarily a reason to panic. If you made an error while filling out your tax forms, then you could end up audited. Good record keeping is the best way to prevent audits and defend your tax forms in a potential dispute. Also, double-check your tax forms before submitting them. Typos or small errors can lead to an IRS audit. The IRS may have fewer staff members to handle audits, but you don’t want to be one of the unlucky people who get caught. As long as you’re honest on your tax forms and keep proof of charitable donations and business expenses, you won’t have much of a problem.

Image Source: Flickr

Alphabet, Google’s holding company name, is gradually improving their “other bets” category. Essentially, their other bets companies are those that aren’t Google. Alphabet recently reported their Q4 earnings and paid out dividends to investors, showing the financial progress of their bussiness from October 2016 to December 2016. Google’s overall revenue rose 25%, bringing in $25.8 billion in earnings. This prevents the loses in other bets companies from hurting the holding company.

What Alphabet’s Q4 Earnings Look Like

Alphabet reported their Q4 earnings on January 26, 2017. In the business world, the year is divided into four financial quarters: Q1, Q2, Q3, and Q4. The fourth quarter consists of October, November, and December. Google is their bread and butter. The holding company’s other bets generated $262 million in revenue in Q4. This is a $112 million increase from the fourth financial quarter of 2015. Alphabet’s losses in the other bets category were smaller this past year as well. They recorded a loss of $1.2 billion in Q4 of 2015 and $1.1 billion in Q4 of 2016.

Analysts predicted that shareholders would receive $9.67 per share on $25.22 billion in revenue for the company’s stock in this past financial quarter. It turned out slightly lower, however, at $9.36 per share on revenue of $26.06 billion. The 2.5% drop in Alphabet’s extended trading indicates some investors may doubt that the company is going in the right direction. Investors may also be concerned about the future of Google because ad value has been decreasing.

With the entire year considered, Alphabet’s other bets generated $809 million in revenue in 2016, which was an 82% increase from 2015. Ruth Porat, Alphabet’s CFO, assured that they would continue to

“exercise careful stewardship over the amounts and pace of investments.”

More Background and Future Projections

Some of Alphabet’s other bets companies include Nest, Verily (life science research organization), and Fiber (Internet and television provider). Nest, a home automation platform, is an “other bets” company to keep your eye on because it’s where Alphabet/Google predicts the market is headed. The era of desktop search dominating the search industry is over. Although mobile is king now, Google thinks search will be integrated with the home in the future and wants to position themselves to dominate home search just as they did with desktop traffic.

The amount of losses in Alphabet’s other bets category may shock some people, but the company has always embraced innovation. And to be innovative, you need to take chances. However, Alphabet knows that they still need to keep the company in good financial health in order to have the luxury to experiment with new ideas. Google already brings in a huge chunk of their income, but Alphabet has recently established another company Waymo, a self-driving car unit. Waymo is intended to provide cash flow for the holding company.

TechCrunch calls Alphabet’s performance in 2016 a transition year. They pointed out that Alphabet showed it is more than a search engine advertising business in 2016. Alphabet has been expanding into other industries because they know that depending on search revenue would lead to their downfall. It can’t stay afloat purely by monetizing desktop ads, which has been on the decline. Google’s cost-per-click decreased by 15% in 2016 Q4 compared to 2015 Q4.

What’s Next for Alphabet?

2016 was a good year for Alphabet as they worked on figuring out what comes next to them now that the era of desktop traffic is coming to an end. People aren’t going to stop using Google on their desktop computers, but Alphabet won’t be able to rely on that source of income forever as it slowly declines.

Some fields Alphabet has been experimenting with include virtual reality, voice-enabled interfaces, home automation, and self-driving automobiles. Although Alphabet’s other bets companies currently operate at a loss, as the company continues working on cutting what doesn’t work and improving what does, we’ll continue to watch them climb out of the red.

Image Source: Wikipedia

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