From White Hot to Red Hot
Even as the Fed raises rates, the job market remains “stubbornly robust.”
Here are today’s highlights:
Gene Marks suggests ways to minimize your taxes.
Companies that offer tools to support remote work continue to thrive.
Businesses are beginning to recognize the need for cyber security protection.
The Shams sisters decided to open a bakery in Boise even though none of them knew how to bake: “[Bahar Amir] Shams turned to the Internet. She subscribed to YouTube channels, enrolled in online courses, and scoured foreign websites for recipes she thought she could replicate. If a site was in another language — Ukrainian, say, or Bulgarian — she’d copy the instructions into Google Translate, line by line. Then she’d teach her sisters the recipes. The second-oldest, Khatera, caught on quickly. In 2019, the four sisters officially opened Sunshine Spice Bakery & Cafe with Khatera’s saffron pudding as their signature dish. The bright yellow dessert, made from rice flour and coconut milk and topped with crumbled pistachio, paid homage to pivotal places from their family history: Afghanistan, a center for growing saffron, and Turkey, where the sisters lived as young refugees.”
“As Bahar expanded her research and Khatera grew more confident in the kitchen, the menu expanded to include other global items like pillowy mantoo stuffed with spiced ground beef, homemade bread stuffed with Bulgarian cottage cheese, and pistachio baklava with hand-rolled phyllo dough.”
“Then one day this past spring, they got a call. Had they seen the news? Khatera was among a handful of bakers nationwide nominated by the James Beard Foundation for 2022′s outstanding baker. The sisters were shocked. People started showing up in droves.”
“They’ve also started to package and sell their signature green tea, infused with saffron imported from Afghanistan and harvested by women. A portion of the proceeds from tea will go toward supporting a handful of struggling mothers near Kabul, some of whom are battling breast cancer.” READ MORE
Gene Marks suggests ways to minimize your taxes: “The first and most important thing to do — and as early as possible — is to meet with your accountant, review the year together, and make estimates for the remaining months. Make sure you’ve paid in all of your estimated taxes to date — or make changes to these estimates because you don’t want to pay in too much or too little. Also, take the time to make sure all of your documentation is ready for your accountant to review and to maximize your deductions.”
“‘One of the things many of our clients overlook is keeping good travel logs so that they can take full advantage of the $0.585 per mile deduction that the IRS allows,’ says Joanne Bryson, a principal at CPA Help Now in Norristown [Pa.]. ‘They’re missing out on significant tax savings, particularly during these times of high energy costs.’”
“Another strategy worth consideration is to buy capital assets such as furniture and fixtures, machinery and equipment, and even automobiles. Most businesses can deduct up to $1,080,000 in expenditures for these items, and the main requirement is that the asset be placed into service by the end of the year.”
“‘Despite the potential of an economic slowdown, 2022 was a pretty decent year for many of our clients,’ says Robert Simpson, a partner at accounting firm Brinker Simpson & Company in Springfield [Pa.]. ‘We’re advising them to pay out bonuses to their employees before the end of the year, if they can.’” READ MORE
Surprising economists, the U.S. economy added 261,000 jobs in October: “Job growth remained stubbornly robust in October despite higher interest rates, defying policymakers’ efforts to dampen the labor market and curb the fastest inflation in generations. Employers added 261,000 jobs last month on a seasonally adjusted basis, the Labor Department said Friday. That was down from 315,000 in September. The unemployment rate rose to 3.7 percent. ‘The economy has transitioned from white hot to red hot,’ said Daniel Zhao, an economist at the career site Glassdoor. ‘It’s still a very hot labor market but it has cooled down.’”
“Economists have been expecting the labor market to cool as higher interest rates make it more difficult for businesses to grow.”
“So far, however, hiring has been remarkably resilient even as other aspects of the economy, like the housing market, have slumped.” READ MORE
Mark Zandi expects inflation to moderate meaningfully:
The Biden administration announced $9 billion in funding Wednesday to improve home efficiency, including by supporting the installation of heat pumps: “The electricity-powered systems — which keep homes comfortable by pushing heat into the home in the winter and pulling it out in the summer — will be crucial in weaning the world off of fossil fuels. But installing the units on a timeline in keeping with net zero goals will require both a robust supply chain and well-prepared labor force. While neither of these are fully in place in the U.S., the Defense Production Act and Inflation Reduction Act represent opportunities to build them out.”
“The U.S. currently relies largely on foreign suppliers of heat pumps, leaving the White House’s goal vulnerable to supply chain complications like those brought on by Russia’s invasion of Ukraine.”
“The DOE is planning to devote an initial $250 million, which isn’t part of the $9 billion, to encourage more heat pump manufacturing, funding which relies upon the DPA authorities that President Biden invoked in June to strengthen the domestic supply chain for clean energy technologies.”
“The country’s goal, Calisch said, should be that all HVAC systems are replaced by heat pumps at the end of their lives—‘definitely by 2030, faster if we can do it.’” READ MORE
Employers want employees back in the office, but startups and VC investors are betting that remote work is here to stay: “And those bets appear to be paying off. Remotebase, a two-year-old San Mateo, Calif.- based startup that connects businesses with remote software engineers, is seeing revenue growth this year of up to 30 percent a month, co-founder and Chief Executive Qasim Salam said. Annual revenue last year surged by roughly 600 percent, he said. Mr. Salam didn’t disclose the company’s revenue.”
“Other, later-stage remote-work startups are fetching hundreds of millions of dollars in investing rounds, drawing high-profile Silicon Valley investors.”
“Chicago-based startup Atlas, whose tech platform helps employers comply with local employment rules and regulations for remote workers in more than 160 countries, announced $200 million in new funding from Sixth Street Growth, the growth investing business of global investment firm Sixth Street.”
“Firstbase charges companies a monthly fee to equip homebound workers with ergonomic chairs, desks, laptops, monitors and other office gear, ordered over its platform.”
“Launched in 2019, the company had some 600 corporate customers on a waiting list when Covid-19 struck in March 2020. Within months the list had ballooned to more than 4,000, the company says.” READ MORE
It’s getting a lot easier to sell small businesses on cyber protection: “When Elana Graham started selling cyber-security software to small companies five years ago, business was relatively slow. Now demand is booming, driven by a rapid expansion in remote work that has left small firms vulnerable to attack. Business at her firm has tripled since the start of the year, she says, reaching an all-time high. ‘It was a total head-in-the-sand situation: It's not going to happen to me. I'm too small. That was the overwhelming message that I was hearing five years ago,’ says Ms Graham, co-founder of CYDEF, which is based in Canada. ‘But yes, it is happening.’”
“It typically takes 200 days from the moment of the hacking until discovery, says Yoohwan Kim, a computer science professor at the University of Nevada, Las Vegas. In many cases, customer complaints are what alert companies to a problem.”
“About 60 percent of small businesses shut down within six months of facing an attack, the National Cybersecurity Alliance estimates.”
“Experts say there are simple steps small firms can take to improve their protections, such as creating basic response plans and identifying what and where critical data is.”
“‘The biggest thing is to convey to small businesses that it's not hopeless. It's not an insurmountable task.’” READ MORE
THE 21 HATS PODCAST
Should You Be in a Business Group? This week, Sarah Segal, Jay Goltz, and special guest Leo Bottary have a hype-free conversation about why peer-advisory groups like Vistage, YPO, and EO can be life-changing for business owners and why they’re not for everyone. Sarah has been wondering if they’re for her. Jay, who’s been in six different peer groups, says it can be worth the price of admission just to see how other owners run their businesses—but there are reasons he keeps leaving the groups he joins. And Leo is a former Vistage employee who has written multiple books on peer groups and has built a related consulting practice. Surprisingly few business owners belong to a peer group. Are they missing out? All three guests suggest questions to consider before deciding for yourself.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren