With the acceleration of digital transformation in business, most CTOs, CIOs, and even middle management or analysts are now asking, “What’s next with data?” and what ongoing role will technology play in both digital and data transformations. Other questions that keep these individuals up at night include:
How can people throughout all organizational levels be more empowered to use data and help others make better decisions?
What prevents people from more deeply exploring and using data?
In what ways can analytics tools and methods help more people use data in the daily routine of business—asking questions, exploring hypotheses, and testing ideas?
With this in mind, plus observations and discussions with many Tableau customers and partners, it seems that today’s circumstances, behaviors, and needs make it the right time for predictive data analytics to help businesses and their people solve problems effectively.
Current realities and barriers to scale smarter decision-making with AI
With growing, diverse data sets being collected, the analytics use cases to transform data into valuable insights are growing just as fast. Today, a wide range of tools and focused teams specialize in uncovering data insights to inform decision-making, but where organizations struggle is striking the right balance between activating highly technical data experts and business teams with deep domain experience.
Until now, using artificial intelligence (AI), machine learning (ML), and other statistical methods to solve business problems was mostly the domain of data scientists. Many organizations have small data science teams focused on specific, mission-critical, and highly scalable problems, but those teams usually have a long project list to handle.
At the same time though, there are a large number of business decisions that rely on experience, knowledge, and data—and that would greatly benefit from applying more advanced analysis techniques. People with domain knowledge and proximity to the business data could benefit greatly, if they had access to these techniques.
Instead, there’s currently a back-and-forth process of relying on data scientists and ML practitioners to build and deploy custom models—a cycle that lacks agility and the ability to iterate quickly. By the end, the data that the model was trained on could be stale and the process starts again. But organizations depend on business users to make key decisions daily that don’t rise to the priority level of their central data science team.
The opportunity to solve data science challenges
This is where there’s an opportunity to democratize data science capabilities, minimizing the trade-offs between extreme precision and control versus the time to insight—and the ability to take action on these insights. If we can give people tools or enhanced features to better apply predictive analytics techniques to business problems, data scientists can gain time back to focus on more complex problems. With this approach, business leaders can enable more teams to make data-driven decisions while continuing to keep up with the pace of business. Additional benefits gained from democratizing data science in this way include:
Reducing data exploration and prep work
Empowering analyst experts to deliver data science outputs at lower costs
Increasing the likelihood of producing successful models with more exploration of use cases by domain experts
Extending, automating, and accelerating analysis for business groups and domain experts
Reducing time and costs spent on deploying and integrating models
Promoting responsible use of data and AI with improved transparency and receiving guidance on how to minimize or address bias
Business scenarios that benefit from predictive analytics
There are several business scenarios where predictive capabilities can be immensely useful.
Sales and marketing departments can apply it to lead scoring, opportunity scoring, predicting time to close, and many other CRM-related cases. Manufacturers and retailers can use it to help with supply chain distribution and optimization, forecasting consumer demand, and exploring adding new products to their mix. Human resources can use it to assess the likelihood of candidates accepting an offer, and how they can adjust salary and benefits to meet a candidate’s values. And companies can use it to explore office space options and costs. These are just a few of the potential scenarios.
A solution to consider: Tableau Business Science
We are only at the beginning of exploring what predictive capabilities in the hands of people closely aligned with the business will unlock. AI and ML will continue to advance. More organizations, in a similar focus as Tableau, will also keep looking for techniques that can help people closest to the business see, understand, and use data in new ways to ask and answer questions, uncover insights, solve problems, and take action.
This spring Tableau introduced a new class of AI-powered analytics that gives predictive capabilities to people who are close to the business. In this next stage of expanded data exploration and use, we hope business leaders embrace data to help others make better decisions, and to provide transparent insight into the factors influencing those decisions.
When people can think with their data—when analysis is more about asking and answering questions than learning complex software or skills—that’s when human potential will be unleashed, leading to amazing outcomes. Learn more about Tableau Business Science, what this technology gives business teams, and the value it delivers to existing workflows.
Olivia Nix is a Senior Manager of Product Marketing at Tableau. She leads a team focused on the use of AI and ML in analytics and engagement, including how to use technology to enable more people in organizations to make data-driven decisions. Olivia has been at Tableau for four years where she has worked closely with development teams on new product launches. Prior to Tableau, Olivia worked as an analyst at the Pew Center on Global Climate Change (now C2ES) and Johnson Controls. She has her MBA from the UCLA Anderson School of Management.
In business, predictive models exploit patterns found in historical and transactional data to identify risks and opportunities. Models capture relationships among many factors to allow assessment of risk or potential associated with a particular set of conditions, guiding decision-making for candidate transactions.
The defining functional effect of these technical approaches is that predictive analytics provides a predictive score (probability) for each individual (customer, employee, healthcare patient, product SKU, vehicle, component, machine, or other organizational unit) in order to determine, inform, or influence organizational processes that pertain across large numbers of individuals, such as in marketing, credit risk assessment, fraud detection, manufacturing, healthcare, and government operations including law enforcement.
One of the best-known applications is credit scoring,[1] which is used throughout business management. Scoring models process a customer’s credit history, loan application, customer data, etc., in order to rank-order individuals by their likelihood of making future credit payments on time.
Predictive analytics is an area of statistics that deals with extracting information from data and using it to predict trends and behavior patterns. The enhancement of predictive web analytics calculates statistical probabilities of future events online. Predictive analytics statistical techniques include data modeling, machine learning, AI, deep learning algorithms and data mining.Often the unknown event of interest is in the future, but predictive analytics can be applied to any type of unknown whether it be in the past, present or future.
For example, identifying suspects after a crime has been committed, or credit card fraud as it occurs.The core of predictive analytics relies on capturing relationships between explanatory variables and the predicted variables from past occurrences, and exploiting them to predict the unknown outcome. It is important to note, however, that the accuracy and usability of results will depend greatly on the level of data analysis and the quality of assumptions.
Predictive analytics is often defined as predicting at a more detailed level of granularity, i.e., generating predictive scores (probabilities) for each individual organizational element. This distinguishes it from forecasting. For example, “Predictive analytics—Technology that learns from experience (data) to predict the future behavior of individuals in order to drive better decisions.”In future industrial systems, the value of predictive analytics will be to predict and prevent potential issues to achieve near-zero break-down and further be integrated into prescriptive analytics for decision optimization.
You know how adults always told you to “eat your veggies” and greens when you were a kid? Well, that nagging advice doesn’t necessarily stop in adulthood. As a financial planner, I’m constantly giving people good advice they don’t want.
I know no one wants to hear this kind of money advice. But those who do listen — and more importantly, implement these ideas — tend to have better control over their cash flow, higher savings rates, and more financial power.
You might not like it, but much like eating broccoli and kale, taking it in is often for your own good.
1. Don’t buy so much house
Buying a home is rarely a data-driven decision. It’s an emotional one, and for good reason. For many people, homeownership represents stability, security, and even status.
These are not unimportant things, but too many people use their emotions as excuses to throw financial reality out the window when it comes to house hunting.
Set a budget and stick to it. We often recommend keeping your total annual housing costs to no more than 20% of your gross annual household income.
This helps ensure you retain flexibility in other areas of your cash flow so that you can own your home and keep pursuing other important goals or have money available for your other priorities.
2. And don’t assume your house is a good investment
I often caution people against thinking of their home as an investment. Again, that doesn’t mean buying is a bad idea or your house isn’t worth as much as you think it is. But an investment should provide a return.
A single-family home that serves as your primary residence (and does not provide rental income) may be an excellent utility. It is not, however, what I would consider a good investment.
Home values do tend to rise over time, but the cost of ownership, maintenance, and upkeep often erode most of the “gains” you might see when just looking at the transaction of buying and then selling your home on paper.
A reasonable, real return on single-family homes runs about 2%. That’s not nothing, but it’s also not something you can assume will fund your full retirement, either (especially when you have to live somewhere, retired or not, and most people put the equity from a home sale into their next purchase).
3. Save more than you think you need to
It’s really important to me that I help my clients strike a balance between enjoying their lives in the present while also building assets and future financial security. This would be much easier to do if we had a crystal ball and could accurately predict what life would be like in 10, 20, even 30 years.
We’d know your budget. We’d know what kinds of emergencies you’d have to deal with, and prepare accordingly. And we’d understand what your life would look like (including how long it would be).
With that clarity, it would be possible to say, “you need $X. Save just that and feel free to spend the rest.” That is, obviously, not how life works.
The solution? Save more than you think you need to, because then you give yourself a margin of safety. By saving more than you necessarily must save to “be OK,” you can better:
Handle emergencies
Take advantage of opportunities when they come up (either to spend on an unexpected trip, for example, or to use money on an investment you feel passionate about)
Incorporate new goals into your planning over time
Saving more that you think you need today also buys you more choice and freedom in the future. The usual guideline I give to clients to help them achieve this is to save 25% of annual gross income.
4. Have a backup plan
It might sound like a doom-and-gloom approach to finances, but I preach about always having a backup plan — or those margins of safety, or wiggle room, or contingencies.
You can do this in a number of ways, including some we’ve already talked about, like saving more than you think you need to save.
Other ways of building in backups is by maintaining an emergency fund, using conservative assumptions around income, and overestimating your expenses when you do any kind of long-term financial projection, and not counting on any kind of windfall (from bonuses and commissions to inheritances) to make your plan work.
5. Stop trying to time the market
It is so tempting to think we can successfully time the market. Why? Because drops and spikes in the stock market look stupidly obvious with hindsight.
It’s very easy to look back at something like 2008 (or maybe even the spring of 2020 at this point) and feel like you know when the best times to buy and sell would have been… because they already happened.
Guessing what comes next without the benefit of knowing how things played out is not the same thing. Data shows us that even professionals fail to time the market repeatedly. You may get lucky once, but repeating that performance over and over again for the next few decades is virtually impossible.
Build a strategic investing plan — and then stick to it, regardless of current events.
It’s probably not as fun and may not be as sexy as bragging about your stock picks on Robinhood, but it works a whole lot better in the long run.
Latresa McLawhorn Ryan knows well the havoc that COVID has reaped upon small businesses of color in the Atlanta area and believes the effects of COVID are likely to hang over these businesses for some time. She also knows that small businesses of color can bounce back if they get the right kind of assistance.
“We’ve lost a lot of businesses, some that were really anchors in their community,” said McLawhorn Ryan, executive director of the Atlanta Wealth Building Initiative, a nonprofit organization of community investors, advocates, and activists that supports Black-owned firms. She added that the casualties have included yoga studios, restaurants, and other businesses that rely on high traffic and face-to-face interaction. “It will take three to five years, depending on the sector, for businesses to recover from the impact of COVID.”
Because small businesses of color are an important driver of employment and asset building in their communities, the COVID-related business failures send a message throughout the community that perhaps it is more vulnerable to market forces, McLawhorn Ryan added.
The Federal Reserve Banks of Atlanta and Kansas City published a recovery guide in late 2020 to offer strategies that can help small businesses of color bounce back from the COVID crisis. The guide begins by discussing the state of small businesses of color before the COVID-19 pandemic, placing these firms’ challenges into historical context.
Entrepreneur-In-Residence Scott Shigeoka talks with economic experts and small business owners about overcoming hardships and their message of hope for recovery after COVID-19. Robert Brown, Sr. Director of Business Analytics at GoDaddy, breaks down Venture Forward, a multi-year study looking at the impact of micro and small businesses on the American economy. Resources for Small Businesses: Venture Forward study: https://www.godaddy.com/ventureforward Up-to-date info on COVID-19: https://www.cdc.gov
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A second section provides recommendations for communities looking to assist small businesses of color in the areas of credit and capital, education and training, policy, and community support. The final section shares tools for communities to develop an entrepreneurship network focused on small businesses of color.
Atlanta Fed president Raphael Bostic led a January 14 panel discussion with Southeast community leaders discussing ways to support small businesses. The webinar focused on the need to establish networks that can deliver resources and coaching.
Issue number 1 is funding
Janelle Williams, a senior adviser in the Atlanta Fed’s Community and Economic Development group who wrote the recovery guide with two Kansas City Fed advisers, said businesses owned by nonwhites face especially daunting challenges to regain their footing, with access to funding and credit topping the list.
“There are still structural barriers that limit small businesses of color from securing the capitalization needed to sustain and scale their businesses in a valuable way,” she said.
Much of the funds approved by U.S. lawmakers last year under the Paycheck Protection Program (PPP) to help businesses preserve employment did not reach the smallest companies and many firms owned by people of color. For example, a Federal Reserve Bank of New York analysis found that PPP loans were given to just 20 percent of eligible companies in states with the highest densities of Black-owned firms. In Fulton County, Georgia—which includes the city of Atlanta—a total of 20.8 percent of businesses received loans from the program. In Florida’s Miami-Dade County, just 15 percent of eligible firms obtained PPP funds.
In mid-January, a third round of PPP loans opened. Small business owners of color are hopeful that more funds will reach them this time. A portion of the $284 billion approved for small businesses in the December 2020 COVID relief legislation was set aside for firms with 10 or fewer employees and lenders that cater to underserved communities, including minority-owned banks and community development financial institutions.
Small businesses of color face barriers that make it harder to gain access to capital. They often lack relationships with traditional banks and access to social networks that could help them learn about and apply for available loans. Most entrepreneurs of color don’t have family wealth that could be used to start a business.
Other factors hinder the success of nonwhite small businesses. Williams noted research showing that in the six southeastern states that are part of the Atlanta Fed’s coverage area, small businesses of color are overrepresented in sectors such as food services and retail that have been particularly vulnerable during the pandemic because of required lockdowns, social distancing guidelines, and lower demand for goods and services.
“There is a need for a broader conversation around addressing barriers to entry for small businesses of color that seek to access higher-growth industries that are moderately insulated from market pressures,” Williams said.
Different approaches to financing
The tougher path to viability that small businesses of color face has been well documented. A 2017 report from Prosperity Now, a public policy nonprofit group, notes that deep and persistent patterns of racial discrimination against business owners of color have resulted in greater loan denials and higher interest rates for loans they do obtain. Those financing outcomes result in lower profit margins and limit the opportunities for businesses of color to build thriving enterprises.
The Reserve Banks’ recovery guide notes that the needs of small businesses of color call for financing methods that are nimbler and more accessible to help level the playing field. Those could include interest-free loans, loans with rates that start low and gradually rise, deferred payments and longer repayment time frames, and flexible underwriting terms. Many community organizations consulted in developing the recovery guide “shared that grants, forgivable loans, and patient equity capital will be needed” to help these businesses spring back, the report states.
Williams said the pandemic has challenged the funders that support small businesses of color to think about the kinds of financial assistance that would be meaningful and to understand that some types of aid may not help. “Small businesses of color already are debt averse, so asking them to incur additional debt is a challenge, especially when many rely on their personal income to stay afloat,” she said.
To address these issues, community stakeholders have begun to embrace alternate financing solutions, Williams said. She noted that philanthropic groups were offering program-related investments that provide capital at lower interest rates, while community development financial institutions were introducing funding products that include opportunities for credit enhancement.
The Atlanta Wealth Building Initiative launched a COVID relief fund last year that has provided money to at least 65 small businesses and 18 nonprofits, mainly located in the northwest, southwest, and southeast parts of metro Atlanta where residents’ health and personal income both suffered acutely. The program offers loans that include flexible terms, a six-month grace period, and 30 months of repayment. Through three rounds of grants and two rounds of loans to date, the nonprofit group has dispersed about $800,000 to Black-owned businesses, McLawhorn Ryan said.
The grants and loans have helped in many ways. One restaurant, for example, used a loan from the nonprofit to acquire a food truck that enabled it to sell in different communities and expand its customer base, she said.
“All of our loans were accompanied by specific technical assistance—it helps to have capital, but it also helps to have access to expertise to help think through how to get to the next stage or how to manage cash flow,” McLawhorn Ryan noted.
McLawhorn Ryan said it’s important for funding partners to keep offering funding and general support that will enable small businesses of color to recover and advance to the next phases of development, and she cautioned against a return to business as usual over the next few years.
“This is a new economy, and therefore it requires a new perspective,” McLawhorn Ryan said. “If we are intentional about creating inclusive products, inclusive opportunities for businesses to thrive and survive during this time, we have to be dedicated to the tools that are needed to create a truly equitable environment.”
The Federal Reserve regularly assesses Americans’ financial situation. This Economy Matters article summarizes the Fed’s latest snapshot and looks at how the early stages of the coronavirus pandemic affected people’s finances.
Nearly all firms have been hit by the coronavirus pandemic, but small firms have been hit the hardest. A recent Federal Reserve study surveyed small businesses about business conditions and expectations, and this Economy Matters article looks at the results.
Residential real estate, long a bulwark of the southeastern economy, has been dampened by COVID-19. This Economy Matters article examines recent poll results to view the pandemic’s impact on the industry.
The coronavirus pandemic has profoundly affected employment. This Economy Matters article introduces the Atlanta Fed’s updated state-level Jobs Calculator, using it to show possible future scenarios, including what it would take to return to pre-pandemic employment numbers.
Much has been written about the digital revolution’s impact on developed economies, but what about developing and emerging economies? The Economy Matters podcast features an Atlanta Fed economist who discusses his research into the question.
In this special episode of the Economy Matters podcast, Atlanta Fed president Raphael Bostic talks with researcher Anthony Orlando about income inequality and how a seemingly national problem can have solutions that begin close to home.
In this special episode of the Economy Matters podcast, Atlanta Fed president Raphael Bostic talks with author James Fallows about Our Town, his book that attempts to deepen our understanding of American social, regional, and cultural diversity.
Trade negotiations always require patience and persistence, and the pending deal among the United States, Canada, and Mexico was no different. An Economy Matters story presents the perspectives of Mexico’s and Canada’s diplomats.
The insights of the members of the Federal Open Market Committee go into formulating the “dot plot,” a visual depiction of how they see the future path of the fed funds rate. This Economy Matters article explains what the dot plot is—and isn’t.
Venture capital is always on the lookout for the Next Big Thing. Economy Matters looks at the research of an Atlanta Fed economist who furthers our understanding of the important role venture capital plays in the U.S. economy.
What role does venture capital play in finding and nurturing the Next Big Thing? The Economy Matters podcast tries to answer that question by talking to an Atlanta Fed economist about venture capital’s impact on firm growth and employment.
In this special episode of the Economy Matters podcast, Meghan Cummings of the Women’s Fund of the Greater Cincinnati Foundation talks with Atlanta Fed research director Dave Altig about the benefits cliff and ways employers can make the workplace more accommodating to lower-wage employees.
China and its economy—the world’s second largest, after only the United States—have become staples of the daily news cycle. Economy Matters spoke to an Atlanta Fed economist about Chinese trade, economic growth, the unrest in Hong Kong, and more.
Restricting teens’ ability to drive has had measurable improvements on accident rates, but the restrictions have also impeded their ability to participate in the labor force. An Economy Matters article looks at Atlanta Fed research into the impact of teen driving restrictions.
What ignites an economic expansion? What brings one to a halt? The answer: it depends. Economy Matters looks at the business cycle and why its behavior is inherently challenging to predict.
Gaining a better understanding of people’s health is key to fashioning policies that serve them better as they age and become more frail. Economy Matters examines Atlanta Fed research into the frailty index, a tool that helps assess individuals’ well-being.
States have grown increasingly strict about novice teenage drivers. The Economy Matters podcast talks to an Atlanta Fed economist about the impact of stricter policies on teen labor force participation.
Some workers are forced to choose between a pay raise and the loss of a crucial form of public assistance. Economy Matters looks at the vexing phenomenon known as the “benefits cliff” and how to reduce its challenge.
Sometimes an area’s rents increase faster than house prices. But sometimes they don’t. This episode of the Economy Matters podcast discusses the price-rent ratio and what it indicates about housing markets.
The 2017 tax law implemented extensive changes to people’s deductions, but the law’s impact varied widely among states. Economy Matters looks at some conclusions based on recent research from the Atlanta Fed.
Safeguarding personal data is a challenge in our digital era. In this special episode of the Economy Matters podcast, Atlanta Fed president Raphael Bostic speaks with Heinz College professor Alessandro Acquisti about the field of privacy economics.
Does economic history hold any lessons about an economy in a sustained period of full employment? Atlanta Fed economist Julie Hotchkiss discusses her recent research into the question on this episode of the Economy Matters podcast.
Brazil, Latin America’s largest economy and an important U.S. trading partner, is feeling optimistic about its economic future after years of sluggish growth and uncertainty. Economy Matters presents some expert views of the country’s prospects.
The popular perception of millennials is that their habits differ markedly from those of older generations. But Economy Matters looks at recent survey data and learns that—at least in terms of how they spend money—they’re not very different after all.
If one thing is certain, it’s that the Atlanta Fed is measuring uncertainty. Economy Matters discusses the Survey of Business Uncertainty, which recently made its debut.
When the unemployment rate becomes very low, is it beneficial to try to keep it there? An Atlanta Fed economist looked into the question, and Economy Matters discusses her research.
Arriving at answers about economic inequality requires research from a variety of perspectives because isolating the relevant factors behind it is a formidable challenge. Some top researchers recently visited the Atlanta Fed to discuss their work on the matter.
Wages and their movements offer an important perspective on the macroeconomy. A new episode of the Economy Matters podcast features an Atlanta Fed economist discussing his observations on recent trends.
What relationship did the growth of subprime loans have to booming house prices last decade? The Economy Matters podcast talks to two Atlanta Fed economists who researched the question.
How our food is sourced has changed dramatically over time. In this Economy Matters podcast episode, Atlanta Fed president Raphael Bostic talks with Purdue University professor Jayson Lusk about food production and economics and their impact on people’s lives.
A relação dos EUA com Cuba tem sido tensa por dácadas, mas continua a evoluir. A revista EconomyMatters discute algumas das recentes mudanças e quais poderão ser seus impactos econômicos.
A relação dos EUA com Cuba tem sido tensa por dácadas, mas continua a evoluir. A revista EconomyMatters discute algumas das recentes mudanças e quais poderão ser seus impactos econômicos.
The U.S. relationship with Cuba has been a fraught one for decades, but it continues to evolve. Economy Matters discusses some of the recent changes and what their economic impact might be.
What factors go into where people choose to live? What makes some places more attractive than others? The Economy Matters podcast talks to an Atlanta Fed economist about new research into these questions.
In the run-up to the housing crisis, Atlanta Fed economist Kris Gerardi and his Fed colleagues were seeing an alarming increase in mortgage defaults. This Economy Matters story looks at Gerardi’s research in the housing market, before the crisis and now.
In this special episode of the Economy Matters podcast, economic historian Ran Abramitzky discusses ways he has tried to measure the economic effects of immigration.
Tariffs have largely fallen into disuse, which complicates a study of their economic effects. Economy Matters looks at how tariffs and their implementation have evolved over decades.
For economists, examining the job market is like looking through a kaleidoscope: many perspectives are available. In this Economy Matters story, Atlanta Fed economist John Robertson discusses some of the ways he views the labor market and some of the tools he has helped develop to improve that view.
Economies throughout the Americas are tightly linked, and understanding those linkages is vitally important. Economy Matters looks at the work of the Atlanta Fed’s Americas Center, which furthers our understanding of these relationships.
Before the U.S. housing market grabbed the headlines, Atlanta Fed economist Scott Frame devoted himself to intensely studying it. Economy Matters looks at Frame’s work and what led him to his professional path.
Taking the pulse of businesses and attempting to divine the future from the findings is an exacting business. In this Economy Matters article, the Atlanta Fed’s director of surveys discusses the craft of constructing useful surveys.
Budgeting is rarely easy, and decisions, especially for young adults, can have lifetime implications. Economy Matters looks at the choices involved in saving for retirement while paying off student loans.
Los presupuestos rara vez son fáciles, y las decisiones, especialmente para los adultos jóvenes, pueden tener implicaciones de por vida. Economy Matters analiza las opciones de ahorro para la jubilación mientras paga los préstamos estudiantiles.
Understanding an increasingly complex economy requires increasingly powerful tools. Economy Matters looks at the research of Atlanta Fed economist Nikolay Gospodinov, who is committed to supplying them.
Industry regulators often return to work in the industries they had overseen. This episode of the Economy Matters podcast talks to an economist about approaches that have been successful (or not so successful) in remedying the revolving door.
What is the cost of rising unemployment to a family? The Economy Matters podcast talks to an Atlanta Fed economist about her new research that seeks to find out.
What is the financial consequence to people when they lose public health insurance? An episode of the Economy Matters podcast looks at new Atlanta Fed research that attempts to quantify the effects.
About half of Americans over 50 will stay in a nursing home at some point. Yet only about 10 percent of those over 65 have long-term care insurance. Atlanta Fed economists are researching this and other puzzles in U.S. health insurance.
After an extended period of relative stagnation, wages have been showing signs of growth. This episode of the Economy Matters podcast discusses recent wage trends and how the Atlanta Fed views wage behavior.
Everyone knows that money woes can prey on one’s mind. But what about on one’s health? Economy Matters looks at recent Atlanta Fed research that explores the impact of delinquent debt on mortality.
Once off limits to U.S. tourists for decades, Cuba is now luring growing numbers of American visitors. But a number of questions loom, and the answers to them will determine if this growth will continue. Economy Matters looks at the perspective of Cuba experts to learn more.
It’s no surprise that carrying unmanageable debt is stressful. But can it also bring adverse health effects? The Economy Matters podcast features an Atlanta Fed economist who looked into the question.
After a decade at the helm of the Atlanta Fed, Dennis Lockhart is preparing to step down as president and CEO. In this Economy Matters podcast episode, Lockhart looks back at his time leading the Bank.
The problem of financial institutions whose distress would be large enough to imperil the larger economy has vexed policymakers for decades. The Economy Matters podcast looks at some of the challenges involved in solving too big to fail.
Today’s labor market poses numerous questions for economists. Economy Matters looks at some of these questions and considers the good news they portend, as well as the not-so-good news.
When low-skill immigrants arrive in the United States, and middle-skill jobs are offshored, how are wages affected? An episode of the Economy Matters podcast looks at research into the question.
The Chinese economy—the world’s second largest—is of broad interest to economists and many others, and efforts to better understand it are numerous. This episode of the Economy Matters podcast talks to Atlanta Fed economists who have worked to provide clearer data about China’s economy.
This final article in a three-part series in Economy Matters looks at trade flows between China and the rest of the world, comparing them with the trade flows of the United States. How have these patterns changed over time and across what types of goods?
Este último artículo de una serie de tres partes publicado en Economy Matters aborda el flujo comercial entre China y otros países del resto del mundo, y lo compara con el flujo comercial de Estados Unidos. ¿De qué manera han cambiado estos patrones comerciales a través del tiempo y con respecto a los tipos de bienes?
Este último artigo de uma série de três da Economy Matters examina os fluxos comerciais entre a China e o resto do mundo comparando-os aos fluxos comerciais dos Estados Unidos. Como esses padrões de comércio mudaram ao longo do tempo e entre quais tipos de mercadorias?
A China é a segunda maior economia do mundo, mas ainda é desafiador entender totalmente sua economia. Uma equipe de economistas do FED de Atlanta está trabalhando para abreviar esse desafio. Economy Matters conversou recentemente com a equipe sobre este trabalho.
China’s growing economy has increasing influence on the economy of the United States. Economy Matters talks to some Atlanta Fed economists who are working to better understand China’s economic data.
China es la segunda mayor economía del mundo pero entender su economía es un desafío. Un equipo de economistas de la Fed de Atlanta está trabajando para dilucidar este desafío. Economy Matters conversó recientemente con ellos acerca de su trabajo.
The housing crisis made clear that not all mortgage bonds are equally good investments. But what can we learn today from how mortgages are offered for sale as investments? The Economy Matters podcast talks to an Atlanta Fed economist to find out.
The Atlanta Fed is home to a Research Data Center (RDC), which gives qualified researchers access to data available in few other places. In this Economy Matters podcast episode, Julie Hotchkiss, director of the Atlanta RDC, discusses how the facility enables research that otherwise would not be possible.
Just as the economy has evolved over many decades, so too have the ways economic activity is measured. What was once perhaps a key metric might now be only a marginally useful vestige in an economist’s toolbox. Economy Matters looks at some newer tools and how they help assess the economy.
All businesses seek the right hires, but for a small business, having the right employees is arguably even more crucial. The fifth and final installment of Economy Matters‘ Gazelle Project talked to some founders of gazelles—or fast-growing small businesses—about the role of hiring in establishing and building a business.
The number of Americans 65 and older will increase by 66 percent over the next two decades. This article offers highlights of a recent ECONversations webcast in which two Atlanta Fed research economists discussed the economic and fiscal implications.
The surge in the population of older Americans is fueling the growth of “senior living facilities” to house this population. Economy Matters looks at this nascent industry.
¿Cuánto importa y exporta China en los mercados globales y que tipos de bienes intercambia? La segunda entrega de una serie de tres partes de Economy Matters describe el comercio entre China y el resto del mundo en las últimas décadas.
How much does China import and export globally and what types of goods are exchanged? Economy Matters charts China-world trade over the past few decades in the second of a three-part series.
Quanto a China importa e exporta globalmente, e que tipos de mercadorias são comercializadas? A segunda parte da série de três artigos da Economy Matters faz um mapa da participação chinesa no mercado mundial nas últimas décadas.
The European Central Bank loosened monetary policy to boost the euro area economy. But that brings economic risk, said a German central banker at a recent luncheon at the Federal Reserve Bank of Atlanta. Economy Matters offers highlights of his presentation.
Medical demands of the increasingly aging population will boost the health care and social assistance sector, contributing substantially to the U.S. labor market. This Economy Matters article investigates where the jobs will be and looks at the balance between aging patients and an aging workforce.
If you remember the job you held as a teenager, you might be part of a dwindling group. Fewer teens are entering the labor force today, and Economy Matters looks at some of the factors behind the decline.
Soon after the release of Michael Lewis’s book The Big Short, some Fed economists wrote an analysis of the book for the Atlanta Fed’s Real Estate Research blog. Read about them here.
Founders of small businesses always have a vision for what they want to achieve, but they don’t always have all the answers. Economy Matters talked to some founders of gazelles—or fast-growing small businesses—about the role of mentors in establishing and building a business.
By some calculations, labor resource utilization rates across the United States still have not returned to prerecession levels. But according to this story in Economy Matters, the Atlanta Fed’s ZPOP measure paints a brighter picture.
Regionally, the real estate sector has been important to the economy and has acted as a bellwether for other sectors, such as employment. In the new episode, two Atlanta Fed experts discuss real estate—and whether we’re in a new bubble.
With the U.S. labor force aging and baby boomers moving into retirement, pensions have garnered much attention in recent years. Economy Matters spoke with an Atlanta Fed pension expert about the challenges and opportunities ahead.
Soon after the release of Michael Lewis’s book The Big Short, some Fed economists wrote an analysis of the book for the Atlanta Fed’s Real Estate Research blog. Read about them here.
Just as every picture tells a story, numbers can also be quite telling. Economy Matters has selected a few interesting integers about the trade relationship between the United States and China.
Quão atrelado ao desempenho econômico da China está o desempenho da economia dos EUA e o desempenho das economias em todo o mundo? Esta primeira parte de uma série de três artigos da Economy Matters lança uma luz sobre essa questão.
How tied up in China’s economic performance is the performance of the U.S. economy and the performance of economies around the world? This first installment of a three-part series in Economy Matters sheds some light on this issue.
Cuál es el grado de asociación de la actividad económica en China y el desempeño de la economía Estados Unidos y del resto del mundo? Esta primera entrega de una serie de tres partes en Economy Matters arroja algo de luz sobre esta cuestión.
In a recent speech, Atlanta Fed President Dennis Lockhart observed a number of improving economic barometers. Can a monetary policymaking move be far behind? Economy Matters summarizes his remarks.
Setting monetary policy requires an understanding of current conditions, but it also takes into account how policy changes reverberate down the road. Economy Matterslooks at recent remarks by Atlanta Fed President Dennis Lockhart about considerations that go into the policymaking process.
Since its 2014 debut, the Atlanta Fed’s GDPNow tool has compiled an impressive track record in estimating changes in the gross domestic product. In this episode, Atlanta Fed economist Pat Higgins, the creator of GDPNow, discusses the tool, how it works, and some of the challenges involved in measuring the economy.
Founders of small businesses face innumerable challenges, chief among them financing. Economy Matters talked to some founders of gazelles–or fast-growing small businesses–about how they financed their endeavors and how financing affected their business strategies.
Mexico, one of the largest trading partners of the United States, has been experiencing significant economic changes. A representative of Mexico’s central bank recently visited the Atlanta Fed to discuss some of them, and Economy Matters recaps his remarks.
There are as many reasons for founding a business as there are businesses. Economy Matters talked to some founders of gazelles, or fast-growing small businesses, to learn their reasons for setting out on their own.
The Dutch bank florin—the dominant currency in Europe during much of the 17th and 18th centuries—lost its reserve currency status during the period 1781–92. In this Economy Matters podcast, Atlanta Fed economist Will Roberds talks about the rise and fall of the currency and what lessons it holds for today’s central bankers.
Some economists have been fretting about the declining labor force participation rate. But how big a source of concern should it really be? Economy Matters looks at a recent examination of some trends to draw conclusions.
If a young person gets a raise at work, could the extra money lead to increased reckless behavior such as drinking and driving? A new Economy Matters podcast discusses Atlanta Fed research into the question.
Setting monetary policy requires an understanding of current conditions, but it also takes into account how policy changes reverberate down the road. Economy Matters looks at recent remarks by Atlanta Fed President Dennis Lockhart about considerations that go into the policymaking process.
Gross domestic product, or GDP, is an important measure of the economy’s health. However, official figures are released with a delay, posing challenges in gauging current conditions. Economy Matters explores the Atlanta Fed’s GDPNow model, which provides several real-time forecasts each month.
Economists often base decisions on efficiency, but does this sort of decision making consider its gender impact? Economy Matters sat in on a recent talk by an academic who discussed the question.
Could government-issued and privately issued electronic money coexist? Based on the 1914 to 1934 experience in the United States, the answer is yes, according to an Atlanta Fed working paper. Economy Matters summarizes the paper.
More than three-quarters of all part-time workers in the United States choose to work fewer hours. The remaining quarter are involuntary. Economy Matters tells you who the part-timers are and their reasons for working part-time.
Young, high-growth companies—sometimes known as gazelles—have traditionally been an important source of job creation, but the number of U.S. start-ups is in long-term decline. Economy Matters looks at the impact a diminishing herd of gazelles could have on the employment market.
Track your own personalized level of inflation with myCPI, a new calculator from the Atlanta Fed that tailors the U.S. inflation measure to individual circumstances. Economy Matters introduces this tool for the “armchair economist.”
When the U.S. housing market swooned in 2008, the housing agencies Fannie Mae and Freddie Mac became distressed and entered into a government conservatorship that was intended to be temporary. In this Economy Matters podcast, Atlanta Fed economist Scott Frame discusses the circumstances leading to the ongoing conservatorship.
Conceptually creative people do dramatic things, while experimentally creative people just keep working away, eventually accomplishing great things. Economist David Galenson posits two types of creativity, and argues for more research.
Healthy wage growth has been an important missing ingredient in an otherwise strengthening economy. But recently, the Wage Growth Tracker, a new tool from the Atlanta Fed, showed a sharp rise in wages. Economy Matters introduces this tool for the “armchair economist.”
Atlanta Fed research director Dave Altig recently sat down with Economy Matters to discuss productivity, technological innovation, and the reasons he feels optimistic about the future of the U.S. economy.
All eyes have been on the Federal Open Market Committee as the central bank’s main policymaking body considers when to raise the federal funds rate for the first time since 2008.
Not many people get the opportunity to sit in on a meeting of the Federal Open Market Committee. But in this debut Economy Matters podcast, Atlanta Fed President Dennis Lockhart, a voting member of the FOMC, takes us behind the scenes, describing how participants conduct deliberations, reach consensus, and cast votes on setting national monetary policy.
Wage growth matters to the Fed. Wages and broader labor costs are crucial to both components of the central bank’s dual mandate: price stability and maximum employment.
Through 2014, a range of indicators suggested that the underutilization of labor market resources gradually diminished. But how much labor market slack remains?
Every business has to start somewhere, and most start with one employee. New Atlanta Fed research—summarized in this Economy Matters article—looks into how these firms—known as nonemployers—obtain financing.
Warren Buffett, the chairman and CEO of Berkshire Hathaway, turns 91 in August. Remarkably, at an age where most people’s cognitive functions have entirely regressed, where many are now at the hands of caretakers, Buffett still captures the world’s attention as the fifth richest person on the planet.
The greatest investor of this generation has amassed a following of millions who’ve learned, like Buffett, that long-term success is achieved by making smart decisions — in investing and in life.
Here are four Buffett lessons that will yield good returns when you choose to act on them.
1. Master the practice of “boundaries”
With all the demands on him every day, Buffett learned a long time ago that the greatest commodity of all is time. He simply mastered the art and practice of setting boundaries for himself. That’s why this Buffett quote remains a powerful life lesson. The mega-mogul said:
The difference between successful people and really successful people is that really successful people say no to almost everything.
Buffett’s advice is a bull’s-eye to our conscience. We have to know what to shoot for to simplify our lives. It means saying no over and over again to the unimportant things flying in our direction every day and remaining focused on saying yes to the few things that truly matter.
2. Invest in your personal development
What assets should you be investing in the most? In a 2019 interview, Buffett said: “By far the best investment you can make is in yourself.”
As Buffett has repeatedly taught us, it means to never stop acquiring knowledge — the kind of knowledge that betters yourself as a whole person, not just as an investor.
Buffett’s lifelong pursuit of learning, which he shares with his longtime Berkshire Hathaway partner and colleague Charlie Munger, is the secret sauce of his success.
3. Model the leadership behaviors of the best managers
In Buffett’s 2015 letter to shareholders of Berkshire Hathaway, he summarized how one arrives at leadership greatness in a few words:
Much of what you become in life depends on whom you choose to admire and copy.
The quote was in reference to Tom Murphy, who taught Buffett everything he learned about managing a company. Murphy, who was Buffett’s biggest admirer, gave plenty of lessons on the best management practices that Buffett has adapted for his own companies, including:
Give autonomy to workers.
Delegate your authority effectively and wisely.
Hire for integrity.
4. Build a positive reputation
Buffett’s reputation is founded on his principled and level-headed approach to his personal and professional life. When it comes to building a good reputation, these are some things worth prioritizing:
Establishing trust, transparency, and fairness
Offering good value and high-quality products and services
Treating people with dignity and respect
Communicating clearly and promptly
Providing a service to the community
You should treat your business practice as a reflection of yourself, and that means being thoughtful and considerate of how your decisions affect others. If you embrace professional opportunities as a chance to add value to your community, your reputation will reflect your own personal growth.
This is one of several upcoming articles focused on financial-literacy tips and activities for parents inspired by the new Entrepreneur Kids book series. The first title in the series, Entrepreneur Kids: All About Money, is available for purchase now via Amazon | Barnes & Noble | IndieBound | Bookshop | Entrepreneur Press.
When my wife and I were raising our children, it was an easier time. We could have the kids go out and sell lemonade on the corner. They delighted in hearing the jingle of the coins in their pockets and then spending the cash on candy (or whatever) at the store. Times have changed. It’s important not to fumble the financial teaching of our kids today.
Parents: You have to do this financial-readiness teaching for your child; no one else will. Fortunately, there is some time-tested guidance and tools to help you adapt to our changing world.
There is so much debt nowadays. Your child is not going to make it financially unless you teach them. You want them to know how to be an entrepreneur? Teach money management and time management first, and give them ample opportunities to practice with money.
Many millennials and older Gen Z adults are back living with their parents because the cost of living on their own isn’t as attainable as it once was. It’s vital for parents to help prepare their kids for living in an increasingly complex world.
Start young with financial teaching
It’s hard in the best of times, but when parents don’t have a lot of money, it can be that much harder to teach a child fiscal responsibility. We are busy, and when you add in pandemic-related stresses, teaching a young child about money may not seem that essential, but the lessons learned from our current macro-economic circumstances are all the more reason to make instilling them in our kids a priority.
Even a child between three and five can learn that money has to be earned. They can learn about spending, saving and giving. When you take them to the store, even sharing some financial information such as, “Mommy and daddy are so lucky to have good jobs so that we can buy this food” is meaningful.
Simple conversations go a long way toward informing kids that it takes money to do things. Begin at about age three, and continue until their late teens. If you start young, they’ll better understand the connection between finding a job and having money for needs and fun by the time they’re in high school.
If you head to the movies or some other recreational outing, reiterate the same concepts: “Aren’t we so lucky that we have good jobs so that we can afford to go skiing?” “We are so happy that we can work hard so our family has money to go to movies.” These conversations begin to have a cumulative effect.
Support is out there
Some parents might be relieved that their children didn’t grow up grappling with the hard realities of money, but as I watch so many millennials struggling financially, I’m grateful I opened my mouth with my kids. Did it feel weird and uncomfortable? Certainlty, but we don’t have the luxury of silence anymore.
Luckily, there are many more resources now than there used to be. Check out the National Financial Educators Council for some great age-appropriate advice. And there are many books written for very young kids to start learning about money matters. One of the best I’ve seen is the Kyng & Kyren Generational Wealth Building Activity Book. Grab one that works for you and your family, and get started.
The cause-and-effect stage
When a kid is about seven-to-10 years old, they’re ready to begin earnestly understanding the operations of money. Think of it as their, “If I don’t do my chores, I won’t get an allowance” stage. In the past, we meted out cash as a reward. In an increasingly cashless society, that may prove more challening.
There are credit cards available with kids in mind that parents can stricly monitor, which might be the most practical route. It’s also an effective way to teach them purchasing power, particularly when they realize there’s not enough money left on the card to cover what’s in their cart.
Years ago, one of my kids decided to buy a pair of Air Jordans. They were three times the price of regular sneakers, but the child had earned the money, and it was his to spend as he wished. Later, he said, “These shoes wore out just as fast as my other shoes.”
I asked, “What did you learn?” At first, he said, “I learned that I can have more shoes if I don’t have Air Jordans.” Later, he revised his opinion, saying, “I’m buying another pair of Air Jordans because I have the money,” adding that he wanted to make more so that he could buy Air Jordans for everyone. Now that’s an entrepreneur.
With this guidance as a bedrock in their earliest years, your kids will hopefully mature into money-wise teenagers and, eventually, young adults. Parents, it is your great privilege to help your children succeed and move forward financially and in business. Take the challenge, and hopefully you can all bank on the results.
By: Peter Daisyme / Entrepreneur Leadership Network VIP
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The global market in government bonds has been bleeding red lately. “Bond market screams for help but no one answers”, says Bloomberg. It is “the worst start to a year in bonds since 2015”, according to the Financial Times.
Though bonds have been declining since last summer, the sell-off became a lot more violent in February. This meant that the yield on ten-year US Treasury bonds, which is inversely related to the price, rose by around 60% to peak at over 1.6% a couple of days ago, before falling back to 1.5% at the time of writing.
The US ten-year strongly influences the price of everything from mortgages to business loans in the US, and by extension around the world, so such a sharp rise has the potential to reduce borrowing and weaken the economic recovery from COVID –especially when there is so much debt in the global system. The world’s rampant stock markets responded by going into reverse in February as they factored in higher interest rates, as well as higher production costs because of surging commodity prices.
Bond prices can fall for several reasons. It can mean that the market thinks that economic growth is going to pick up (meaning investors shift their money into riskier investments). But it can also reflect fears that inflation is on the way without much accompanying economic growth, meaning that interest rates need to go higher so that lending is still profitable.
In the present case, it is a bit of both: the rollout of the vaccination programmes has made many observers more optimistic about the prospects of a recovery. But the rise in the price of commodities like oil, copper and coffee is more about pandemic-related supply issues than because this optimism has prompted a step-change in demand.
When Fed Reserve Chairman Jay Powell failed to announce any immediate intervention to put a floor under the sell-off in bonds during a public appearance in early March, it appeared to trigger more selling – a sign that falling bond prices have been more a reflection of fears than optimism.
Interestingly, in the hours since the new US$1.9 trillion (£1.4 trillion) US stimulus package has been agreed by Congress, the bond market and stock market have both been rising. Though there have been fears that sending US$1,400 stimulus cheques to most Americans will cause a further surge in inflation, the extra consumer demand will also prop up the economy. On balance, then, this appears to have been received as a net positive by the markets.
QE and perverse consequences
Any attempt to explain what is happening in the markets needs to be in the context of quantitative easing (QE). Shortly after the first wave of lockdowns in early 2020, central banks stepped in to help their national economies. They announced huge new QE plans in which they would create new money with which to buy government bonds and other financial assets. This drove up bond prices and hence kept yields (and interest rates) at very low levels to encourage as much borrowing from consumers and businesses as possible.
Most central banks originally began QE programmes after the 2007-09 financial crisis (besides the Bank of Japan, which began a few years earlier). This was primarily to help companies get access to capital to boost their business, in the hope that they would then hire staff, which would help to reduce unemployment rates that had been sent soaring after the crisis.
However, some companies took advantage of these low interest rates in another way: they borrowed cheaply and invested it in the stock market. With investors doing likewise, this has helped to drive the relentless rise in global stock markets over the past decade. It also helps to explain why these markets have been mainly climbing ever since the COVID panic sell-off of March 2020.
In the coming months, economies are going to reopen, but interest rates are to stay low. Fed Reserve Chairman Jay Powell may have declined to announce any new interventions to date, but it is fairly clear that he will only let yields rise so far.
This gives investors a great opportunity to continue taking advantage of the situation. So long as the gain from your investment in stocks is greater than the interest rate you have to pay on your borrowings, you are a winner. Better still, buy stocks in a company such as Apple whose bonds central banks have been buying as part of their QE activities. Apple is still trading at over double the lows of March 2020, even after the February correction.
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Sen. Bernie Sanders, an independent, and Sen. Josh Hawley, a Republican, are looking to modify a $908 billion plan with an amendment that would authorize a second check for up to $1,200. The unamended proposal doesn’t include another direct payment. If Sanders and Hawley’s amendment is successful, the new payment would likely follow the same outlines of the first stimulus check for speed and simplicity, but even minor changes could have a significant impact for millions.
Read on for more information about what may happen to stimulus eligibility now. We update this story often.
How the qualifications could change with a new bill
While many members of Congress agree on the need for more aid, they differ on the specifics, and the two sides continue to discuss who needs assistance and how much to spend. Based on proposals that’ve been on the table this fall, here’s what lawmakers could do (or have already done):
Update the definition of a dependent: The CARES Act capped eligible dependents at kids age 16 and younger. One proposal this summer expanded the definition to any dependent, child or adult, you could claim on federal taxes. That means families with older kids or older adults at home could potentially see $500 more in their check total per individual if that proposal is adopted.
If the definition of a dependent changes, your family could benefit. Angela Lang/CNET
Raise the amount of money per child dependent: One White House proposal from October would’ve kept the definition of a child dependent used in the CARES Act but increased the sum per individual to $1,000 on the final household check. (Based on that, here’s how to estimate your total stimulus money and here’s the IRS’ formula for families.)
The White House’s new Dec. 8 proposal would reportedly raise the sum for each qualifying child to $600, up from $500 in the CARES Act.
Include noncitizens: The CARES Act made a Social Security number a requirement for a payment. Other proposals would’ve expanded the eligibility to those with an ITIN instead of a Social Security number because they’re classified as a resident or nonresident alien. A Republican plan this summer would’ve excluded those with an ITIN.
Who could qualify for a second stimulus check
Qualifying group
Likely to be covered by the final bill
Individuals
An AGI of less than $99,000 (Same as CARES)
Head of household
An AGI of less than $146,500 (Same as CARES)
Couple filing jointly
An AGI less than $198,000 (Same as CARES)
Dependents of any age
No limit (HEALS proposal; up to 3 in Heroes)
US citizens living abroad
Yes, same as CARES
Citizens of US territories
Likely, with payments handled by each territory’s tax authority (CARES)
SSDI and tax nonfilers
Likely, but with an extra step to file (more below)
Uncertain status
Could be set by court ruling or bill
Incarcerated people
Excluded under CARES through IRS interpretation, judge overturned
Undocumented immigrants
Qualifying “alien residents” are currently included under CARES
Disqualified group
Unlikely to be covered by the final bill
Noncitizens who pay taxes (ITIN)
Proposed in Heroes, unlikely to pass in Senate
Spouses, kids of ITIN filers
Excluded under CARES, more below
People who owe child support
Included in Heroes proposal, but excluded under CARES
Would the income limits be similar with another check?
Under the CARES Act, here are the income limits based on your adjusted gross income for the previous year that would qualify you for a stimulus check, assuming you met all the other requirements. (More below for people who don’t normally file taxes.) With the amendment proposed by Sanders and Hawley on Dec. 10, the requirements guidelines would follow those set out in the CARES Act.
You’re a single tax filer and earn less than $99,000.
You file as the head of a household and earn under $146,500.
You file jointly with a spouse and earn less than $198,000 combined.
What role do my taxes play in how much I could get? What if I don’t file taxes?
For most people, taxes and stimulus checks are tightly connected. For example, the most important factor in setting income limits is adjusted gross income, or AGI, which determines how much of the total amount you could receive, be it $600 or $1,200 for individuals and $1,200 or $2,400 for married couples (excluding children for now).
Our stimulus check calculator can show you how much money you could potentially expect from a second check, based on your most recent tax filing and a $1,200 per person cap. Read below for your eligibility if you don’t typically file taxes.
How much stimulus money you could get depends on who you are. Angela Lang/CNET
What should retired and older adults know?
Many older adults, including retirees over age 65, received a first stimulus check under the CARES Act, and would likely be eligible for a second one. For older adults and retired people, factors like your tax filings, your AGI, your pension, if you’re part of the SSDI program (more below) and whether the IRS considers you a dependent would likely affect your chances of receiving a second payment.
If I share custody or owe child support, how does that affect eligibility?
The race to commercialize self-driving car technology has attracted billions of dollars of investment but not created many billionaires. Luminar founder and CEO Austin Russell is among the rare exceptions. With the Nasdaq listing of the laser sensor company he founded at age 17, the optics prodigy is one of the first billionaires to emerge from the autonomous-vehicle world—and the youngest self-made billionaire in the world.
“It’s been insanely intense, grueling . . . everything through every day that we’ve had to go through, scaling this up. And of course it’s incredibly rewarding to have an opportunity to be able to get out there now and get into the public markets and scale through this IPO SPAC,” 25-year-old Russell tells Forbes in a video interview from his office in Palo Alto, California. “I’m still relatively young, but … a lot of blood, sweat and tears have gone into it. And I was fortunate enough to be able to retain a good enough stake.”
Good enough, indeed. Russell’s 104.7 million shares, about a third of Luminar’s outstanding equity, was worth $2.4 billion at the close of Nasdaq trading on Thursday. The listing, announced in August, resulted from a merger with special purpose acquisition company Gores Metropoulos, a unit of Beverly Hills-based finance firm The Gores Group, and raised Luminar’s estimated market value to $3.4 billion prior to the start of trading. Investors in the newly public company include fellow billionaire Peter Thiel (net worth: $4.6 billion), who helped get Russell started with Luminar by making him a Thiel Fellow in 2012; Volvo Cars Tech Fund; Alec Gores of The Gores Group, another billionaire ($2.2 billion), who is also a Luminar board member; and billionaire Dean Metropoulos, the company’s chairman.
Thiel, the Paypal cofounder who famously created a fellowship offering extraordinary young people $100,000 to drop out of college to pursue their dreams, has been an advisor to Russell since he left Stanford to start Luminar in 2012. As a mentor, Thiel is impressed not just by the new tech billionaire’s intellect, but also his ability to hold on to a significant chunk of Luminar as it moved from Russell’s garage concept to Nasdaq.
“You can build a billion-dollar business but that does not mean you can become a billionaire,” says Thiel. “It’s remarkable from a financing perspective to retain a financial stake of that size.”
Russell, who’s also a Forbes 30 Under 30 alum from the class of 2018, isn’t looking to take on self-driving tech giants like Alphabet’s Waymo or GM-backed Cruise, but instead is perfecting sensors that help autonomous cars “see” their surroundings by bouncing a laser beam off objects in their path. Known as lidar for “light detection and ranging,” the technology is fundamental for autonomous vehicles. Luminar is competing in that space with Velodyne, the early leader in lidar for autonomous vehicles, and newcomer Aeva, both of which are also going public via SPAC mergers. Russell has sold prototype sensors to major auto companies for the past few years, but more recently secured production orders from Volvo Cars, Daimler and Intel’s Mobileye that may ensure revenue growth for several years.
You can build a billion-dollar business but that does not mean you can become a billionaire. It’s remarkable from a financing perspective to retain a financial stake of that size. Peter Thiel
Luminar will likely post sales of just $15 million this year, but could generate at least $1.3 billion by 2026, based on estimates in an SEC filing.
Russell’s abilities extend beyond the lab to the boardroom, according to Alec Gores, who helped arrange Luminar’s listing. “When we were negotiating, he was so on top of everything, the small details. Sixty-year-old guys who’ve been in the business for 40 years don’t understand this stuff, but he took time to study the SPAC,” he says. “I’m looking at this guy and saying, ‘You asked more questions than anybody I’ve seen that’s been doing this sh*t for a long time.’”
The lanky 6-foot-4 Russell, with shaggy strawberry blonde hair and a light beard to match, was racking up notable achievements long before his new billionaire status. As the story goes, he memorized the periodic table of elements at 2 years old and rewired his Nintendo DS game console into a crude mobile phone when he was in the sixth grade after his parents forbade him from having one. At 13, he filed his first patent: an underground water recycling system that catches sprinkler water and saves it for future gardening to reduce wastewater. Rather than go to high school, he spent his teen years at the University of California at Irvine’s Beckman Laser Institute.
Next came admission to Stanford to study physics, but that didn’t last long. He dropped out midway through his freshman year after winning a $100,000 Thiel Fellowship stipend for his lidar concept, founding Luminar not long after obtaining his driver’s license.
Excluding inherited fortunes, Russell is one of about a dozen people on the planet to make a billion dollars before they turned 30.
Lidar was an early fixation for Russell as he believes it has the potential to save lives both as part of self-driving cars and as a component of advanced driver-assistance systems that Volvo and other carmakers are bringing to market in the next two to three years. As a teenager, he’d looked at what Velodyne and other companies were doing with laser sensors, but determined a completely different approach was needed to make them cheap enough to be ubiquitous.
“It should not be a 16- or 17-year-old and then subsequently a 25-year-old that can build a business like this,” says Russell. “We’ve been able to accelerate this because no one has really done this before.”
It doesn’t hurt that Russell has zero distraction from social media or time-sucking general education requirements of college and high school degrees. Unlike most 25-year-olds, he has neither Twitter nor Instagram accounts, but confesses to learning most of what he knows about the world from avid Wikipedia and YouTube explainer consumption.
As a Gen Y billionaire, Russell is also thinking about his impact. Though he has no immediate plans for Bill Gates-like philanthropy, he sees his contribution as eradicating automobile accidents. “When this becomes a new, modern safety technology on vehicles that’s integrated on every vehicle globally produced, that’s when I’d firmly say that we’ve accomplished the goals that we set.”
From Los Angeles, the U.S. capitol of cars and congestion, I try to make sense of technology-driven changes reshaping how we get around. Find me on Twitter at @alanohnsman
I’m the Under 30 Editorial Community Lead at Forbes. Previously, I directed marketing at a mobile app startup. I’ve also worked at The New York Times and New York
Business is full of bets, especially where investing is concerned. If you’re interested in rolling the dice by purchasing a business, making an angel investment in a startup or even allocating your hard-earned money for your first employee, it’s important to know what makes a smart bet and how to protect yourself from a worst-case scenario. It’s worth stating that even deciding to go into a business of your own is a form of a bet, and merits the same type of background due-diligence.
This may require testing or gaining new knowledge, but a thorough understanding is critical, especially with glaring statistics regarding the failure rate for startups at a whopping 50 percent, according to Small Biz Genius. With statistics like these, there’s no way to ensure success. However, there are definitely ways to think through potential pitfalls in business models and feel more secure regarding where you invest your money and your time.
When it comes down to it, a sure bet in business is dependent upon how much customers want what it is that you’re selling. If you can do some market research and verify demand, you’re in good shape. Demand can come from the product’s value — such as its ability to solve a problem — or even from the person who’s selling the product, like a major celebrity who has established trust with millions of followers online.
This is one of the reasons why big influencers and celebrities can land lucrative book deals. Publishers know that whatever they release will fly off the shelves. The demand from their fanbase is verifiable. Take comedian Amy Schumer, who landed a rumored $8-10 million book deal for 2016’s The Girl With the Lower Back Tattoo.
Verify demand through testing
If a celebrity or big-time influencer isn’t included in the equation and you’re just trying to figure out how a product will sell, try a “market as if it were real” test approach. According to Ron Rule from the Entrepreneur’s Handbook, this is because “the only way to truly know if someone is going to fork over their hard-earned cash to buy your product is to get it in front of them.” Otherwise, market research is all mere guesswork. It gets you more clarity than you would otherwise have, but it doesn’t mean much until a target customer’s wallet is involved.
Rather than going through the hassle and added investment of actually building out the product and then seeing if there’s a demand, Rule recommends creating a prototype of the product in Photoshop, setting up an ecommerce website and then leaving your payment processing in test mode so that it doesn’t actually charge a potential customer’s credit card for a fictional item.
Then, begin to direct ads to the page to see if customers actually buy. “Personally I would spend around $10,000 on a proper marketing test, but you can start with a lot less if you aren’t comfortable going that high right away,” Rule elaborates in his book. “I do recommend spending at least $1,000 because you want to get enough clicks and conversions for the data to mean something — trust me, it’s a heck of a lot cheaper to lose $1,000 on a marketing test than it is to lose tens or hundreds of thousands of dollars producing a product nobody wants.”
Sometimes, the best bets require a smaller upfront investment first for a big payout on the back end.
Engulf yourself into the industry
The more you know about what you’re investing in, the more educated your bets can be, which usually pays off on the back end. This piece of advice comes from sports gambler Zach Hirsch. At 18 years old, Hirsch is regarded as one of the top-performing sports analysts in sports gambling, with a 90 percent accuracy rate in his predictions (which is over 20 percent higher than the industry average).
Hirsch’s best advice on making sound bets is to “engulf yourself in the industry.” For Hirsch, he takes this piece of advice within the type of sport he’s betting on, but the advice carries for business investments, as well. “Learn everything there is to know, engage with the experts, and do whatever it takes to further your understanding of the craft,” Hirsch recommends. This advice can be extended to getting to know the founder of the startup you’re investing in or just ensuring you know as much as you can about your new industry, so you can see clearly how a product or service will perform. Do your backup research, then research some more. Keep having important conversations.
Even with verified demand and a thorough understanding of your industry, there’s no guarantee that your investment is 100 percent safe, but you’ll at least have the perspective to see potential bumps in the road or glaring stop signs in your betting decisions. These insights may make all the difference.
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Spend any amount of time in entrepreneurial social media groups and you’ll get a glimpse into the things that are happening in entrepreneurship.
You’ll see entrepreneurs posting screenshots of five- and six-figure months. You’ll see leaders talking about experiencing their highest-revenue months. You’ll see experts left and right offering advice. You’ll even see a few entrepreneurs posting about their struggles.
While looking successful on social media can feel good for a while, it’s not the path to building a business that creates financial security and options for an entrepreneur. One-hit wonder months aren’t sustainable and will have an entrepreneur frustrated by the lack of return for the effort they’re putting into building their business.
While entrepreneurship isn’t the same as having a traditional job, there are strategies an entrepreneur can use to create consistent revenue.
We live in the Digital Information Age. With more than 4.5 billion daily Internet users, the opportunity for an entrepreneur to reach their target clients has never been better. Creating consistent revenue is possible with a plan and an understanding of modern business development principles.
Lead generation and pipeline
The number one reason entrepreneurs aren’t experiencing consistent revenue months is that they don’t have a plan for lead generation that fills their pipeline with potential customers who want what their business offers.
Randomly posting on social media is not lead generation. Even consistently posting on social media is only one part of a solid lead generation strategy.
The issue is that you don’t own social media platforms. If any social media platforms decide to make a change that affects the reach of your content, it will have an impact on sales. That’s why social media is just one piece of a bigger lead generation pie.
Messaging people on messenger, sending prospects on social media to a funnel, or adding the names of people that didn’t give you consent to your email list is not lead generation.
Ways to create a lead generation system
Businesses thrive or close based on the systems they create for growth. Winging it only works in the movies and often leads to inconsistency. Clarity is one of the most under-utilized strategies to know what actions to take and how it all fits together.
Here are some ways to create a system that generates leads consistently and fills your pipeline with clients who help you grow your business and that you enjoy working with.
1. Use content to convince
There’s a lot of noise online. There is no shortage of entrepreneurs who post consistently trying to convince consumers of their expertise. What separates the noise from the real is seeing an entrepreneur demonstrate expertise through content.
Your content speaks before you ever do. If you’re publishing content on your topic on social media, your blog, newsletter or other mediums, your ideal target client can consume that content, get value and want to know more.
Content that hits on the pain points of your target demographic tends to get shared and engages online consumers of content. It builds your email list and those who want to follow what else you do.
It adds people to your pipeline because the consumer wants more. It’s a way to nurture prospects and turn followers into customers. It’s one of the strongest parts of any lead generation system.
In the digital age, the ability to be present has increased. While you can add value through content to your own audience, you can also be an expert on other outlets.
Podcasts are one of the premier audio means to deliver content today. They’re so powerful, entrepreneur Joe Rogan signed a reported $100 million dollar deal with Spotify because of the podcast he’s built. Imagine what being on Rogan’s podcast would do for your business? While you may not have the opportunity to be a guest on his podcast, there are many others you could be a guest on.
You can also host joint webinars, train in Facebook groups, get on TV and leverage other media opportunities. One of the best ways to generate leads is by showing cold consumers who you are, what you know and how what you offer can help solve their pain points.
3. Demonstrate expertise
One under-utilized way to use social media platforms — and to those who causally follow you — is by offering the chance to win training with you, then doing that training live.
It creates engagement because consumers want to win the session and more engagement because people want to see live training. It’s an incredible way to demonstrate the expertise of what you do and starts the “buying” process in your consumer’s mind. Consumers buy from someone they know, like and trust. They buy from entrepreneurs and businesses that have demonstrated an ability and a knowledge base of the topic your business is built around.
You can also upload the recording training session to your website. It creates an additional piece of content on your online real estate. Tell your social media audience they can get the reply on your website, which brings them to an opportunity to sign up for your email list. It increases website traffic dramatically because your consumer wants to see how your cookies are made, for example.
Showcasing your expertise in a variety of ways helps you generate leads and fill your pipeline because you’re visually demonstrating you know what you’re talking about and can offer practical value for the consumer.
Inconsistent months don’t have to be common in your business. Use content more strategically, leverage other audiences that are filled with your ideal prospects, and demonstrate your expertise by doing more than talk about it.
You can create the kind of lead generation that keeps your pipeline full and leads to increased sales. Don’t rely on old school tactics that don’t translate to a digital world.
Revenue streams or sales refer to how you generate cash from your clients. Without sales a business can’t function, so this is the most important aspects of any business. 7 most used revenue types include: 1- Asset sales refers to cases where you sell a product to a client who then becomes the owner of that product. 2- Usage fee refers to when a client uses your product or service but its ownership remains with you. 3- Subscription fee refers to when your clients subscribe on a monthly or weekly basis and can use your infrastructure. Examples of this include software as a service, gym memberships, etc.. 4- Leasing or renting or lending refer to allowing clients to use your assets for a period of time as if it is theirs 5- Licensing revenue is earned when you give clients a permission to use your intellectual property. 6- Brokerage fees are earned when you take commission from facilitating a business transaction between two parties 7- Advertising results from fees for advertising a particular product or service or brand. Empower Yourself with more Practical Business Education to Reach your Potential by visiting our site: https://www.potential.com/ Subscribe to our YouTube channel: http://www.youtube.com/subscription_c… Follow us on our social media channels: Facebook: https://www.facebook.com/PotentialCom LinkedIn: https://www.linkedin.com/company/pote… Twitter: https://twitter.com/potentialcom Goolge+: https://plus.google.com/+PotentialCom… Video Sample: https://www.youtube.com/watch?v=bH0eT.
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