The MHEDA Journal - Second Quarter, 2013 - (Page 24)

The Next Economic Cycle With the proper precautions, the looming recession could be a non-event for MHEDA members. BY ALAN BEAULIEU T hough many people are still feeling the effects of the latest recession, the U.S. economy has actually been on an upswing since the second half of 2009. That recession was the worst of our lifetime, with a 14.5 percent year-over-year decline in the quarterly U.S. Industrial Production figures. Recovery has been slow, but steady. However, though it seems like just yesterday, we are actually poised to enter another recessionary period starting in the latter stages of 2013 and extending through 2014. With the “Great Recession” so fresh in our minds, the prospect of another recession seems daunting. But this coming recession will be much milder, with a projected 3 percent year-overyear decline. In fact, with the proper planning and precautions, this can be almost thought of as a non-event. To understand how to prepare for a recession, however, we must examine its root causes. Contributing Factors In the 2nd Quarter 2012 issue of The MHEDA Journal, we wrote, “I will be keeping a close eye on the Congressional elections, because those are the races that will have a longterm impact on the economy. To me, 24 MHEDA | themhedajournal.org it’s all about who controls the Senate after November 1. I am looking for a strong fiscally conservative majority. A veto-proof Congress of fiscal conservatives should give distributors encouragement going forward. While it may not affect 2012, a lack of fiscal conservatives would leave us at ITR feeling further deflated about 2013 and 2014.” Suffice it to say, it didn’t break that way. Congress looks remarkably like it did before the 2012 elections, which could signal more gridlock and, worst of all, more regulation. Taxes The dawn of 2013 saw us faced with the “fiscal cliff” debate, which ended quickly with a deal struck on January 2. While the potential impact of going over the fiscal cliff was wildly overblown by the media, the compromise will have some impact on businesses. Taxes were raised significantly, slight spending cuts were agreed upon, and the can was kicked down the road for two months on more talks on spending cuts regarding the debt ceiling. There are three good things to come out of the discussions. One, the increased taxes will be applicable to households making $450,000 as opposed to the originally proposed $250,000. In addition, the dividends and capital gains tax increases are gentler than would have occurred without the bipartisan agreement. Lastly, the dreaded Alternative Minimum Tax annual problem looks to have been successfully handled, saving a potential 20 million households from a sharply higher tax bill on 2012 income. The AMT should not be an issue in the coming years because of the pending legislation. Health Care With President Obama winning re-election and Democrats retaining control of the Senate, any prospect of repealing the Affordable Care Act, or “Obamacare,” is gone. It is the law of the land. And this health care law is an added expense for businesses. The Supreme Court ruled that it was a http://www.themhedajournal.org

Table of Contents for the Digital Edition of The MHEDA Journal - Second Quarter, 2013

President’s Perspective
From the Desk of Liz Richards
Ask Your Board
MHEDA Member Profile
At Work
The Next Economic Cycle
In Case of Emergency – Disaster-Proofing Your Supply Chain
Annual Convention
Convention Program
Exhibitors' Showcase Floor plan
Absorption Measures Performance and Sustainability
Exhibitors’ Showcase Product Guide
The Parachute Congress Made
Get Your Game On
An Expert, Advisor, Resource and Single Point of Contact
What Looks Good on Paper
Instilling Work Ethic in the Emerging Workforce
How to Get People to Do What You Want Them to Do
Search Engine Marketing Value Proposition
New Members
Spotlight on Association News
MHEDA University Calendar
MHEDA Milestones
New Products
Index of Advertisers by Product Category

The MHEDA Journal - Second Quarter, 2013